The cost of public sector pensions will quadruple by 2027, a Government commission said yesterday.
The Commission on Public Service Pensions had "serious concern" about the increase and said the Government should consider part-funding pensions.
Insufficient effort was made to inform employees during services of their benefit entitlements and options to improve their entitlements. "Scheme documentation is not kept up to date in some parts of the public service," it added.
The Minister for Finance, Mr McCreevy, also described the likely increase as a matter of "serious concern". He said such findings would be of "much greater concern" if claims by trade unions for benefit improvements, on early retirement particularly, were conceded.
The commission recommended a new 1 per cent contribution by public servants. This would consolidate the long-term financial basis of public service schemes and foster the establishment of a guaranteed pay related pension increase system based on the rate of inflation.
Civil servants appointed before 1995 pay only 1.5 per cent of their gross increase for benefits to their spouse and children. Those appointed after 1995 pay that sum, in addition to another 1.5 per cent of gross income for personal benefits.
They also pay 3.5 per cent of net income.
Chaired by Prof Dermot McAleese of Trinity College Dublin, the commission's members included IBEC's industrial affairs director and FAS chairman, Mr Brian Geoghegan, and Mr Eamonn Heffernan, president of the Society of Actuaries in Ireland.
The commission said the gross expenditure on pensions would rise to €1.74 billion (£1.37 billion) in 2012 from €807 million in 1997. This expenditure would rise to €3.06 billion in 2027.
Citing these figures, it said: "The commission considered the evolving cost of public service pensions to be a matter of serious concern. The growth in pensions will occur at a time when the effects of demographic ageing generally will begin to impact upon the cost of social welfare and healthcare provision. Against this backdrop, it is essential to evaluate carefully any further commitments that would add to the growth in future pension costs."
In addition: "The funding of public service pensions would not, of itself, reduce the cost of pension schemes, except to the extent that the returns on the monies lodged to the fund would be greater than the returns which the Government would otherwise have obtained . . . However, it is clear that part-funding future pension costs could play a valuable role in smoothing the cost profile and thereby stabilising the fiscal and tax environment in future years."
Measures recommended by the commission included: flexibility in the lead-in to retirement; early retirement at 50, at full cost to the worker; and a new early retirement provision allowing early retirement without actuarial reduction of benefits in "limited circumstances".
Three trade unionists on the commission expressed "reservation" about certain recommendations. Senator Joe O'Toole of the Irish National Teachers' Organisation, Ms Rosheen Callender of SIPTU, and Mr Dan Murphy of the Public Service Executive Union said they could not support recommendations to increase the standard retirement ages of 60-65 to a single retirement age of 65.
The commission said this was consistent with improvements in life expectancy.
