Value of state's unfunded social welfare pensions: €359 billion

The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe, T.D. briefed Government on the findings of an Actuarial Review of the State’s Accrued Liability in respect of Public Service Occupational Pensions in Ireland. This process occurs every 3 years as required under EU rules.

The value of the State’s Accrued Liability in respect of retirement benefits for current and former public service employees is estimated as €175.7bn as at 31st December 2021. This figure represents the value, in “today’s money” terms, of all expected future superannuation benefit payments arising from accrued service to 31st December 2021.

The increase in the reported obligation since the last review can be attributed to a number of factors including a technical revaluation of the obligations due to a change in prescribed assumptions by Eurostat.

The natural ageing of current and former employees as well as the accrual of additional benefits by current employees, including new staff, also increases the accrued liability. The growth in the size of the public service also has implications for the evolution of the State’s long-term pension liabilities. In this regard, it is noted that the public service has grown from 330,576 in Q4 2018 to 365,858 by Q4 2021. Public Service numbers have since further grown to 389,070.

The cost of public service occupational pensions is expected to increase from 1.0% of GDP in 2022 to 1.1% of GDP by 2040. However, the cost is expected to reduce thereafter with a cost of 0.7% of GDP expected by 2070 reflecting measures taken to mitigate costs.
Does anyone know by how much the annualised liability is increasing? That would be a more useful figure.
Public sector pension bill was 4.5 billion in 2022 or 1% of GDP. I have a big problem with government interchanging GDP and GNI * statistics when it suits them. We all know that GDP is grossly inflated by multinational money flows and is not a reflection of real irish income.


It is quite frankly misleading to be describing state pension schemes as being “owed” to the household sector by the state. The CSO should know better. It is utterly different from a private DB scheme where individual funds are hypothecated and must be paid in full to the individual.

Most of the taxes raised to pay for state pension schemes comes from the very same household sector, so it is circular. The state sets both the rate and the eligibility for such pensions by legislation in line with the fiscal capacity at the time. The state can only pay what it can afford.
Does anyone know by how much the annualised liability is increasing? That would be a more useful figure.

I thought this factoid was interesting

This review has not considered the long term sustainability of public service pension schemes. However, it is worth noting that a number of reforms to public service pension have been implemented in recent times. For example, the integration of public service pensions with the State Pension (Contributory) for employees who joined the public service from 6th April 1995, the subsequent increase in the minimum retirement age for new entrants from 1st April 2004, as well as the Single Public Service Pension Scheme introduced from 1st January 2013 which will, in time, reduce liabilities by around 25% from what would otherwise have been the case. Additionally, a Pension Related Deduction (PRD) was introduced in 2009 and subsequently converted to the Additional Superannuation Contribution (ASC) in 2019, and the maximum retirement age was also increased to 70 for employees who joined service before 1st April 2004.
I think one of the key factors to watch is the Dependency Ratio which is the percentage of people aged 65+ relative to the working adult population (aged 15 to 64). At pension age 65, a ratio of 20% equates to 5 workers per retiree but a ratio of 50%, which is projected for at least 20 countries on the Index by 2050, means just one worker per retiree, which is clearly not sustainable.

Ireland is ranked number 10 by the ILCs Healthy Aging Index (which is good as we are living longer) but it means the dependency ratio will increase to 46.7% by 2050, an increase of 27% and close to one worker per one retiree point of collaspe.

The Irish multi-national sector has surely already peaked. Even if the key players remain in Ireland automation, AI and outsourcing will lower the number of people employed.

Meanwhile family homes are sold to provide retirement funds or end of life care for an aging population thereby reducing or eliminating inheritence while a signifcant number of people will face retirement renting or repaying a large mortgage.

It is really hard to feel optimistic about state pension in Ireland.