Pat Breen (Clare, Fine Gael)
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Question 77: To ask the Tánaiste and Minister for Finance his estimate of the deferred liability of pension commitments under social welfare provisions, assuming the maintenance of existing ratios to average earnings and the achievement of targets suggested as desirable; and the way this impacts on the adequacy of the National Pension Reserve Fund provision. [29642/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy will recall that my Department's projections of future pension liabilities were published in the Stability Programme Update of last December and presented to the Dáil on Budget Day. The Government's Green Paper on Pensions, which was launched in October of this year, updates these projections to take account of more recent developments. The projections presented in the Green Paper indicate that the cost of Social Welfare pension provision will increase from around 31⁄2% of GDP today to over 10% by 2050. This follows from the ageing of our population.

The National Pensions Reserve Fund (NPRF) was established under the National Pensions Reserve Fund Act 2000. The purpose of establishing the Fund was to meet as much of the Exchequer cost of Social Welfare and Public Service pensions as possible from 2025 to at least 2055. These costs are expected to increase significantly due to increased life expectancy and declining birth rates, and will give rise to serious budgetary issues, in particular the capacity to continue to fund Social Welfare and Public Service pension liabilities on a pay-as-you-go basis. The legislation requires that 1% of GNP be paid every year from the Exchequer into the Fund. The amount being paid into the Fund this year is €1.616 billion. According to the National Pensions Reserve Fund Commission, the market value of the Fund at end-September 2007 was €21.26 billion.

As the Deputy will appreciate, it was never the intention that the Fund would cover the full cost of Social Welfare and Public Service pensions. As envisaged from the outset, the assets accumulated in the NPRF will go some way towards easing future funding concerns, but will fall short of projected pension liabilities.

A range of measures that could help address the challenges we face in meeting pension commitments are discussed in the Green Paper. The consultation process currently underway provides an opportunity to consider these in detail.

I might add that the National Pensions Reserve Fund Act 2000 provides that the National Pensions Reserve Fund Commission is to commission, from time to time, assessments of the projected profile of Exchequer outlays on Social Welfare and Public Service pensions, after consultation with the relevant Ministers.