Public sector payouts now 25pc of State’s total liability on pensions
PUBLIC sector pensions make up a quarter of the pension money owed to households in the State.
New figures show the total liability of public sector, defined benefit schemes amounted to just short of €150bn in 2018.
This is 25pc of the total pensions liability in the State, according to the Central Statistics Office (CSO).
Defined benefit pensions still exist in the public sector, but are disappearing from the private sector as they are so expensive to fund.
Often regarded as the Rolls
Royce of pensions, defined benefit pension payments are based on salary and offer a guaranteed amount.
A public servant with a full 40 years of service will retire on an annual pension equivalent to half of their salary and a tax-free lump sum of one-anda-half times their annual pay.
The statisticians have calculated the amount of money owed to households by private employers and the government on all occupational pension schemes – the so-called liabilities of these schemes.
The CSO said the total liabilities of occupational pension schemes in Ireland were estimated at 186pc of Gross Domestic Product (GDP).
The total liability equated to a staggering €607.9bn, when the State pension, private sector pensions and public sector pensions are added together.
State pension schemes liabilities amounted to €359.2bn.
Private pension schemes equated to 21pc of the total liability at €99bn.
“As in many countries, a significant portion of the liability relates to government-managed schemes which totalled €508.8bn, or 156pc of GDP at the end of 2018,” CSO statistician Ciara O’Shea said.
“Just over two-thirds (€359.2bn) of the government-managed schemes’ liabilities relate to the State pensions.”
She said the remainder, at €149.6bn, relates to public service defined benefit occupational pension schemes.
Private occupational pension schemes liabilities were estimated to be €99.1bn at the end of 2018 and equate to 21pc of the total.
Ms O’Shea said Ireland’s pension liability is low in comparison to some European countries, illustrating the relatively young population.
Jerry Moriarty of the Irish Association of Pension Funds said it was important to remember that private sector pensions schemes have assets as well as liabilities.
“According to the Central Bank’s latest statistics in June 2020, these assets totalled €118bn. It seems strange to classify the liabilities as money owed to households without acknowledging that these liabilities are backed up by the pension savings of those households,” he said.