Terence Flanagan (Dublin North East, Fine Gael)
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Question 176: To ask the Minister for Finance the reason semi-State employees are paying less for their pension than public sector workers; the reason there is no funding problem with their pension schemes; and if he will make a statement on the matter. [41850/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The term public sector is usually taken to comprise all those who are employed, both directly and indirectly, by a public body. The public service is, broadly speaking, the public sector less the commercial semi-state bodies. Public service pension schemes are mainly statutory, set up by or under Acts of the Oireachtas, and virtually all are financed on a pay-as-you-go basis, that is, as part of current expenditure, voted in the annual estimates. Thus, pension liabilities are secured by the Government. While pension schemes for commercial state companies are also mainly statutory they differ in that they normally operate a pre-funding system, setting aside funds and investing them to meet future liabilities as and when they arise.

Most public service occupational pension schemes are contributory. A main scheme contribution of 5% applies to a number of groups, including teachers and local authority and health service personnel. The contribution rate for spouses and children's benefits is, generally, 1.5%. Thus, the combined pension contribution made by many public servants is 6.5%. There is a wide range of pension scheme contribution arrangements in the commercial semi-state sector. The contribution rates reflect the circumstances within the organisation and the assets and liabilities of the pension fund; the rates are set by trustees, the employers and in many cases are discussed with union representatives.