Written answers

Thursday, 18 January 2018

Department of Public Expenditure and Reform

Public Sector Pensions

Photo of Tommy BroughanTommy Broughan (Dublin Bay North, Independent)
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43. To ask the Minister for Public Expenditure and Reform if he will report on the actuarial review of public service pension liabilities; and if he will make a statement on the matter. [2125/18]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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On 19th December last, I published the report of the actuarial review of the State's accrued liability in respect of Public Service Occupational Pensions that was carried out by my Department. 

The review was undertaken on behalf of the Central Statistics Office who are required to show the accrued liabilities of all funded and unfunded Irish pension schemes as part of the National Accounts, under EU Regulation 549 / 2013.  Transmission of this data to the European Commission is mandatory from 2017, in respect of valuation year 2015, and at three yearly intervals from that date.

In summary, the actuarial review found that the value of the State’s accrued liability in respect of retirement benefits for current and former public service employees is estimated to be €114.5bn as at 31 December 2015.

While this is a large figure, it is important to bear in mind that the accrued liability will fall to be paid over the next 70 years or so – not in any single year. It is also important to stress that we have taken a number of significant steps to improve the long-term sustainability of public service pensions in recent times. 

For example, the Single Public Service Pension Scheme introduced from 2013 will, in time, reduce liabilities by around 35% from what would otherwise have been the case.

Additionally, under the Public Service Pay and Pensions Bill (Act) 2017 we are making provision for the introduction of an Additional Superannuation Contribution by public servants. This will increase current employee pension contributions from over €700m per annum to €1.25bn in 2019, thus providing substantial additional ongoing funding support towards the cost of public service pensions from those that benefit from such pensions. 

Furthermore, I recently announced an increase in the compulsory retirement age from 65 to 70 for public servants recruited before 1 April 2004. This will also assist in reducing the time period over which pension payments will be paid to those public service employees who opt to remain in work longer.

The cost of public service occupational pensions is expected to increase from 1.2% of GDP in 2016 to 1.5% of GDP by 2040. However, the cost is expected to reduce thereafter with a cost of 0.9% of GDP expected by 2060. The reductions in projected public service occupational pension expenditure over the long term arise largely as a result of the integration of public service pensions with the State Pension Contributory for employees who joined the public service after 6April 1995, the subsequent increase in the minimum retirement age for new entrants from 2004, as well as the introduction of the Single Public Service Pension Scheme as noted above.

The full report is published on my Department's website at the following link.

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