Mr. Robert Watt:

There are different aspects to it. The cash outlay on pensions is going up every year, as set out in Vote 12. That reflects the significant change in the Civil Service during the 1970s, in particular, when there was massive recruitment. The modern Irish State expanded enormously during that period and redeveloped a more modern safety net, an education system and so on. That meant many more civil servants were taken into the system during the 1970s and those colleagues have been retiring in recent years and that will continue. The increase in costs in the A.1. part of the Vote reflects the increase in the number of people who are retiring and the longer life expectancy. When people get to 65, their life expectancy is around 20 years so they have a longer time to benefit from a pension.

On the overall sustainability of the scheme, there are two points on that. Mr. Pender will correct me on this if I am wrong but around 30% to 40% of public servants are now on the single public service pension scheme, which has costs that are about one third less than the previous scheme. Those colleagues accrue less benefit each year and they also pay higher contributions so the overall cost to the Exchequer of the new recruits since 2012 is a good deal less than for people who came in before 2012. Every few years, we do a report, which Mr. Pender is the main author of. This report looks at the actuarial liability of the accrued service of all the civil servants who have retired and the accrued service of all those civil servants who are active and who are still paying into the scheme in employment. From that, we work out what we can. Based on various assumptions around inflation, wages and the discount rate we use, we work out the net present value of the pensions of those people who are retired and of those people who are in the system. That is based on their service up to a certain date, namely, the year in which we do the review.