Public Sector Pensions Worth €115 Billion

19 Dec 2017 | 05.19 pm

Public Sector Pensions Worth €115 Billion

Massive burden on generations of future taxpayers

19 Dec 2017 | 05.19 pm

An actuarial review of the state’s liability for retirement benefits for public service employees has found that the quantum involved is estimated at €115 billion up to the end of 2015, if future pension increases continue to be in line with pay.

The €115 billion is not the amount to be paid in pensions and benefits in any given year, but will be paid out over the next 70 years or so, which would average €1.4 billion annually.

The actuaries also calculated the liability at €97 billion, using the assumption that pensions will increase in line with the Consumer Price Index (CPI).

The Public Service Pay and Pensions Bill 2017 includes provision for an ‘Additional Superannuation Contribution’ by public servants which will increase the current employee pension contributions from over €700m per annum to €1.25 billion in 2019, thus providing some funding support towards the cost of the pensions. 

Minister Paschal Donohoe (pictured) said the introduction of the later compulsory retirement age of 70 will cut the pensions bill by keeping many public servants in work for five years longer. However, when they do retire their pensions will be higher than at age 65, as most civil service salaries are linked to final salary.

The burden of public sector pension payments nets on the Irish economy is expected to increase from 1.2% of GDP in 2016 to 1.5% of GDP by 2040. The full report is available from the Department of Public Expenditure and Reform.

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