10 February 2021
Go to release: Estimates of Irish Pension Liabilities 2018
The Central Statistics Office (CSO) today (10 February 2021) published Estimates of Irish Pension Liabilities 2018. The publication brings together data on occupational pension schemes and shows the amount owing to households by private employers and government at the end of 2018 based on the pension benefits they had accumulated by that date.
Commenting, Ciara O’Shea, Statistician said: “This publication is based on pensions’ data that has been compiled and reported by all EU Member States for the end of 2018. It is designed to supplement the National Accounts and improve the comparability of pension schemes throughout the EU.
This is the second time that this data has been published. Since the previous publication (in April 2018) changes have been made to key assumptions in the actuarial models used to calculate the liability of government managed schemes. The key change is a decrease in the discount rate from 5% used in 2015 estimates to 4% used in the 2018 estimates. This has a considerable impact on the estimates, the effects of which are detailed in Chapter 4 of the publication (see also editor’s note below).
Ireland’s total accrued-to-date pension liability was €607.9 billion or 186% of GDP (306% of GNI*) at the end of 2018. As in many countries, a significant portion of the liability relates to government managed schemes which totalled €508.8 billion or 156% of GDP at the end of 2018. Just over two-thirds (€359.2bn) of the government managed schemes’ liabilities relate to the State pensions, defined as the State Pension (Contributory), the Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension, and the Invalidity Pension which are pension schemes available within the Social Insurance Fund.
The remainder (€149.6bn) relates to public service defined benefit occupational pension schemes.
Private occupational pension schemes liabilities were estimated to be €99.1 billion at the end of 2018 and equate to 21% of the total. Three-fifths (€58.7bn) of this relates to private occupational defined benefit schemes and the remainder (€40.4bn) relates to private occupational defined contribution schemes.
Ireland’s pension liability is low in comparison to some European countries, illustrating the relatively young population.
The total accrued-to-date liability of pension providers in Switzerland was €1,973bn at the end of 2017, equating to 316% of Swiss GDP. In Latvia, the liability was €59bn or 218% of GDP. Data in respect of all EU Member States for 2018 will be available on the Eurostat website from 16th February 2021.”
[1] Modified GNI is a measurement of the size of the Irish economy that is designed to exclude the impact of globalisation.
The size of the pension liability greatly depends on the choice of discount rate. The discount rate is used to calculate future liabilities in present values. Eurostat sets the discount rate to be used for each transmission to ensure consistency and allow comparison across EU Member States. The reduction in the discount rate from 5% in 2015 to 4% in 2018 accounts for 57% of the increase in the liability. As a result of this technical change, the data in the 2015 publication is not directly comparable with the data in the current publication. The sensitivity analysis in Chapter 4 of the publication, Government Managed Schemes, also presents the impact of the choice of discount rate on the value of the liability. An increase of the discount rate by 1% decreases the liability of government managed schemes by €97.7bn (-19%) to €410.9bn at the end of 2018. A decrease of the discount rate by 1% increases the liability by €136bn (+27%) to €644.8bn at the end of 2018.
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