The irony of this UN International Year of Older Persons is that the days when the State, or the children, will look after you in your old age may be coming to a close.

Changing demographics and the current economic environment mean the future cost of most long-term care may be provided by the individual. By 2030, there will be one person over 65 for every four workers, which will put significant strain on the State's social structure.

"In 1996, the number of older people requiring at least a moderate level of care was estimated at 102,900 (i.e., approximately 25 per cent of the population over the age of 65). This is projected to increase to 176,000 by 2026 (an increase of 71 per cent)," according to Mr John Costello of Eugene F. Collins solicitors who is preparing a book on legal issues and the elderly.

If current economic trends continue with both partners working to pay mortgage and creche expenses there will be even fewer people at home to look after ageing parents, aunts or uncles. The State is already overburdened as the number of spaces in voluntary homes, private homes and health-board homes fails to keep up with demand.

The majority of people believe the State will care for them in their old age. The reality is that health boards means test individuals before paying for long-term care in either private or public homes.

"Where an elderly person is in a private nursing home, the health board provides a subvention towards the nursing home's charges on a means test basis. The amount of the subvention varies, depending on the person's level of dependency from a minimum of £70 (€88.88) to a maximum of £120 per week," says Mr Costello. Since nursing home charges are now estimated at more than £350 a week, additional funding is essential even for those who obtain a subvention.

Health board public nursing homes provide care in either geriatric hospitals, welfare hospitals or district hospitals. Usually, the hospital retains most of the patient's Old Age Pension as a contribution towards care.

However, there is a severe shortage of such spaces and health boards usually take only the most needy patients.

Neither health-care provider in the Republic offers long-term health-care benefits.

A VHI spokeswoman says elderly people receive the same benefits as all members. Relevant benefits include: two weeks convalescence in an approved nursing home following an operation. Plan B pays £40 a day, while Plan C pays £45. Home nursing is covered as an outpatient benefit. Plans A-E offer £15 a day for 42 days, while the option plans provide £30 a day up to max of £600 a year.

Bupa's Essential Plus plan competes against VHI's Plan B option. In this plan, convalescence is covered at £20 per day for up to 14 days following eligible in-patient treatment in all State-registered nursing homes. Home nursing benefit is £25 per day up to 40 days per annum.

The demographic and economic sea-change means retirement planning may take a completely different tack in the future. Unfortunately, the Government's indecision concerning its role in long-term care provision means demand for privately offered long-term care insurance policies is negligible.

"Once the regime for what you can do with your accumulated pension fund is liberalised, it will create an opportunity to package products that comprehensively meet pensioners' needs when they've retired. But products may appear so expensive to a customer that tax incentives might be needed," says Mr Tom Collins, director and chief actuary at Lifetime.

The Government is examining the possibility of funding long-term care through the PRSI system. Since the issues are complex, a consultancy study will be undertaken in the second half of the year according to Ms Anne Vaughan of the Department of Social, Community and Family Affairs.

This policy black hole means long-term care protection options are limited. "The provision of long-term care is quite a contentious issue here, and research in the UK says that pension funds alone cannot provide for long-term care. There would be a need for a change in the legislation because at the moment, a pension is for retirement benefits. In other countries, you can take out insurance against long-term care," says Coyle Hamilton's deputy managing director and actuary, Mr Joe Byrne.

At the moment, life insurance cover may afford some level of protection over the long term. Most providers offer serious or critical illness cover or permanent health insurance cover. Serious and critical illness cover provides a lump sum payment if the policyholder is unfortunate enough to contract one of the specified illnesses in the policy, says Mr Ray Gordon of Irish Life. Long-term care costs may be covered using this lump sum.

Despite the name, serious illness policies do not cover every serious illness, they cover a defined list of illnesses determined by the insurer, says Mr Gordon.

Permanent health insurance cover may replace income if the insured person is not able to work as a result of illness or disability. This is an expensive product but it replaces a percentage of income up to normal retirement, giving reassurance of a long-term payout, he said.

Both types of cover have their drawbacks as old age is not considered a serious illness and most permanent health policies are designed to pay out until, but not after, retirement.

A covenant between an elderly person and the individual paying for their care is a practical way to offset long-term costs. "The advantage of the covenant is that those who pay tax at 48 per cent may use it to reduce their liability to tax while increasing the disposable income of another person," says Mr Costello. If an elderly parent is defined as a dependant relative, then the Revenue Commissioners may allow tax relief on nursing home fees and other medical expenses. However, the benefit is only available when the parent's income is below a certain level.

Several options that allow an individual to finance their long-term care are not yet formally available in the Republic. Equity Release Plans such as mortgage annuities, home reversion and health insurance to cover long-term nursing home care have been launched in Britain with varying degrees of success, says Mr Costello. These strategies or products allow older people to gain access to the equity in their homes through differing arrangements with either an insurer, relation or friend.

"Some financial institutions and banks are looking at these products," says Ms Aisling Kennedy of Mercer. It is likely that the Government will take a partnership approach with employers and individuals in terms of responsibility for the long-term needs of the Republic's ageing population.

However, "the State needs to clarify its role because until then, individuals are not going to decide and insurers will be reluctant to get into this market", said Ms Kennedy.