Actuarial Review of Public Service Pension Liabilities

In a review conducted by DPER dated 30th November 2017, the value of the State’s Accrued-to-Date pension liability (“the ADL”) in respect of current and former public service employees was estimated as €114.5 billion as at 31st December 2015.

The ADL represents the present value of all future expected superannuation benefit payments arising from accrued service to 31st December 2015, including contingent benefits payable to spouses and children of current and former public service employees.

The €114.5 billion figure was calculated under the assumption that future pension increases will continue to be in line with pay parity, as has been the case historically. The value of the ADL was also estimated assuming pensions in payment increase in line with increases in the Consumer Price Index (CPI). In this scenario, the ADL figure falls to €97.2 billion as at 31st December 2015.

Additionally, the cost of public service occupational pensions was estimated to increase from 1.2% of GDP in 2016 to 1.5% of GDP by 2040, and 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 from 6th April 1995 onward, the increase in the minimum retirement age for new entrants from 2004, as well as the introduction of the Single Public Service Pension Scheme in 2013.

The present review of the State’s public sector pension obligation was carried out on behalf of the Central Statistics Office who are required to compile a supplementary table showing the accrued liabilities of all funded and unfunded Irish pension schemes as part of the National Accounts, under EU Regulation 549 / 2013. The review may be read here.