Estimates of Irish Pension Liabilities 2018

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The liabilities of public service defined benefit schemes were estimated at €149.6bn at the end of 2018, making up 25% of the total. The number of active public service employees at end-2018 was approximately 330,500 with an average age of 44.0 years. The number of pensioners in receipt of a pension for the same period was 173,405 with an average pension payment of €20,310 per annum.³

Non-government workplace pension scheme liabilities totalled €99.1bn in 2018, making up 16% of the overall liability. These are mainly funded schemes of private sector workers and are broken down into defined contribution (Column A) and defined benefit (Column B) schemes, the liabilities of which were €40.4bn and €58.7bn respectively. The number of occupational schemes at the end of 2018 was 72,710 with 454,340 active members.⁴ These are occupational schemes and do not include private pension plans such as Personal Retirement Savings Accounts (PRSA)⁵ and Retirement Annuity Contracts (RAC).

2.2 Categories of pension liabilities

Table 2.1 categorises the pension liabilities in a number of ways:

• included/not included in the core national accounts 
• funded/unfunded pension schemes
• non-government managed/government managed

State pensions and pension schemes for government employees are unfunded in that they operate on a pay-as-you-go (PAYG) basis whereby current workers' contributions are financing current pensioners’ benefits. These schemes, appearing in Columns G and H of Table 2.1, are managed by government and are not included in the core national accounts. In contrast, funded non-government workplace pensions are recorded in the national accounts and appear in Columns A and B of Table 2.1. For Ireland the percentage breakdown is the same for all three categorisations listed above:

• €508.8bn or 84% of the total liability

- are not included in the core national accounts
- are unfunded
- are government managed

• €99.1bn or 16% of the total liability

- are included in the core national accounts
- are funded
- are non-government managed

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2.3 International comparison

The inclusion of the unfunded pension liabilities in the pensions table aims to increase comparability across EU countries. This comparison has also been facilitated by the use of common assumptions in each country. The size of the pension liabilities greatly depends on these assumptions, particularly the choice of discount rate. In order to ensure comparability and smooth the fluctuations of the estimates over time, Eurostat recommends setting the discount rate at 2% in real terms (after adjusting for price inflation), and 4% in nominal terms, for the estimation of government managed pension schemes.

Ireland’s total liability in 2018 equates to 186% of GDP (or 306% of GNI*). Figure 2.3 shows Ireland in comparison to other countries for which comparable data is available.⁶ 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. It is clear from the graph that Ireland’s pension liability is low in comparison to some European countries, illustrating the relatively young population. As demographic developments take effect and the number of people aged 65 and over continues to increase in Ireland, the pension liability will increase to take account of the growing numbers accruing rights to and in receipt of a pension. In contrast, those EU countries with a more mature population should experience a more gradual growth in their liabilities.