Irish pension liabilities top €430bn

Irish pension schemes had liabilities to €436.3 billion at the end of 2015, according to new figures published by the Central Statistics Office.

The figure comprises data on occupational pension schemes and shows the amount owing to households by private employers and government at the end of 2015 based on the pension benefits they had built up to that date. It is the first time such data has been brought together.

The liabilities equate to 167 per cent of Irish GDP at that time, or 252 per cent of the GNI* measure considered a more accurate indicator of the size of the Irish economy.

State pension commitments accounted for the majority of the future liabilities at that time. Existing and future pensioners had built up an entitlement to €231 billion, according to the figures – 53 per cent of the total liability.

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Public service pensions made up 26 per cent of the bill, or €114.5 billion. These are defined-benefit, or final salary, schemes where workers a guaranteed a certain level of pension based on their salary and length of service.

Together, this €345.5 billion of liabilities is unfunded and will be met on a pay-as-you-go basis from Government tax revenue and the Social Insurance Fund.

Private-sector schemes accounted for just 21 per cent of the total – €90.8 billion – according to the figures.

“This new table on pensions has been compiled by all EU member states for the end of 2015,” said CSO statistician Claire Hanley. “It is designed to supplement the national accounts and improve the comparability of pension schemes throughout the EU.”

Liabilities jumped 3 per cent over the previous year. The fastest growing sector was defined contribution private sector pension liabilities which, driven by a sharp rise in contributions, were 12 per cent ahead of the previous year.

Ireland’s liability as a percentage of GDP is low relative to other countries, reflecting Ireland’s comparatively young population.

In comparison, the UK results published in March 2018 show the total accrued-to-date liability of UK pension providers was £7.6 trillion or 400 per cent of UK GDP at the end of 2015, the CSO said.

Liabilities of government-run pension schemes in the UK amounted to 279 per cent of UK GDP in the same period.