Brian Lenihan Jnr (Dublin West, Fianna Fail)

The Deputy is referring to the liability as a proportion of GNP while I am referring to the expenditure in proportion to GDP.

To address the issue, the State established the National Pensions Reserve Fund. Austria is the only other EU member state which has made such a provision. We also enacted legislation to extend the period of service for public servants, as the Deputy is aware. This Government and the previous Government have taken steps to address this issue. Strategic decisions will have to be taken if we wish to minimise this liability for the future.

The question raised by Deputy Bruton on the sustainability of public service pensions is a fair one. If pension rates are to grow in line with wages, total expenditure on social welfare and public sector pensions would, in the absence of policy changes, rise from 5% of GDP to 13% of GDP by 2050, as a result of the projected increases in the numbers qualifying for a pension. That would be an unsustainable position.

The sustainability, therefore, of the overall public pension system is a key policy question. It figured prominently in the Green Paper, published in October 2007. Options for addressing the sustainability issue are now being considered with the prospect of developing a framework for comprehensively addressing the pension agenda over the longer term.

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