Bernard Allen (Cork North Central, Fine Gael)
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Question 69: To ask the Minister for Finance his estimate of the accrued liability of public sector pensions at the end of 2009 and 2010; his views on policy developments in the area of public sector pensions; and if he will make a statement on the matter. [33915/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The latest estimate for the gross accrued liability for public service occupational pensions is €116bn as of December 2009. This estimate is set out in the recent annual report of the Comptroller and Auditor General. This figure was arrived at on the basis of a detailed actuarial valuation of public service schemes in the light of present terms and conditions. The valuation followed the approach set out in the new accounting standard issued by the International Public Sector Accounting Standards Board, IPSAS 25.

This accrued liability figure of €116bn is a single monetary amount representing the present value of all expected future superannuation payments to current staff and their spouses in respect of service to date, plus the full liability for all future payments to current pensioners and to their spouses. The large size of the figure is due to the fact that it represents a projection of aggregate pension payments that will be spread over perhaps 70 years into the future.

The estimate of the accrued liability should not be confused with the actual cash funding that will be required in the future. The more meaningful measure of public service pension costs is the actual annual gross outgo on pensions which amounted to 1.6% of GNP in 2009. Based on the C&AG Report in 2008 this outgo is projected to rise to 3.9% of GNP by 2058. The projected increase arises from the growth in public service employment in the past and from increasing longevity.

In Budget 2010, the Minister for Finance announced the introduction of a new single pension scheme for all new entrants to the public service - the new scheme will [a] raise the minimum pension age to 66 years initially and then link it to the changes in the state pension outlined in the National Pension Framework, set a maximum retirement age of 70 years, and [c] provide for pensions on a 'career average' rather than a final salary basis as at present. The new scheme will provide reasonable pensions for staff in their retirement, while at the same time ensuring substantial longer-term expenditure savings.