Brendan Howlin (Wexford, Labour) | Oireachtas source

As part of the ongoing public service pension analysis, an actuarial valuation was carried out last year by the Department of Public Expenditure and Reform to estimate the accrued liability in respect of public service occupational pensions. The key result of the exercise is that the total accrued liability in respect of public service occupational pensions is now estimated at €98 billion, as at December 2012. This compares with the previous estimate of €116 billion for 2009 which was arrived at by the Comptroller and Auditor General. Therefore, in the three years 2009 to 2012 the liability fell by €18 billion or 16%. The main reasons for the reduction in the total accrued liability were the pay and pension cuts under the Haddington Road agreement and the financial emergency measures in the public interest, FEMPI, legislation. The figure of €98 billion represents the current value of all expected future superannuation payments to current staff and their spouses for service up to December 2012, plus the liability for all future payments to current and preserved pensioners and their spouses. The pension payments to discharge this liability will, therefore, be spread over the next 70 years or so. In particular, it should be noted that both the €98 billion and the €116 billion figures assume that future pension increases will be in line with pay parity. The Public Service Pensions (Single Scheme and Other Provisions) Act 2012 permits the Minister for Public Expenditure and Reform, with the approval of the Houses of the Oireachtas, to link future pension increases with the consumer price index. Were this to be done, the accrued liability would reduce by a further €16 billion to €82 billion.

The introduction of the single public service pensions scheme on 1 January 2013 is also of relevance when considering pension liabilities. While the new scheme does not have an immediate effect on the liability figure, it is expected over time to generate substantial long-term reductions in the annual cost of pensions for former public service workers.

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