Dáil Éireann Debate, Thursday - 21 March 2024
188. Deputy Richard Bruton asked the Minister for Public Expenditure, National Development Plan Delivery and Reform the estimated proportion of income which would be necessary to set aside during each working year of a typical public servant in order to create an adequate actuarial fund to pay the prospective public service pension. [13522/24]
View answer189. Deputy Richard Bruton asked the Minister for Public Expenditure, National Development Plan Delivery and Reform the size of the fund that would be needed at retirement age to pay a prospective public service pension of €20,000 per year. [13523/24]
View answerI propose to take Questions Nos. 188 and 189 together.
The Department of Public Expenditure, NDP Delivery and Reform made a technical submission on the value of public service pensions to the Public Service Pay Commission in 2017. Following analysis of all submissions, the Commission set out findings in relation to the relative value of the various categories of public service pension schemes, as well as their relative value compared to private sector occupational pensions.
The Commission proposed a costing estimated in the range of 23-25% for pre-2013 public service employees with standard accrual terms. This reflects the notional contribution, as a percentage of salary, which would be required to be paid throughout the working life of an average employee in order to generate the pension and gratuity accrued by the member at retirement.
In respect of new entrants to the public service since January 2013, the Commission concluded an estimated costing in the range of 6-7% for post-2013 public service employees (Single Scheme) with standard accrual terms and 7% for post 2013 private sector employees. This implies a differential between the estimated costs for post-2013 public service employees and private sector comparators in the range of -1 to 0%.
Further detail in relation to the Commission’s findings can be found at:
PSPC-report-2017-WEB.pdf (paycommission.gov.ie)
It's important to note that following the publication of the Commission's findings, an Additional Superannuation Contribution (ASC) was brought in for all public servants under the Public Service Pay and Pensions Act 2017. This effectively reduced the notional employer cost of public service service pensions with different ASC rates applying to those in the pre-2013 pension schemes and post-2013 pension scheme (Single Scheme). See rates set out below.
|
Salary Band |
Pre-2013 - Standard accrual Rate |
Post-2013 - Single Scheme rate |
|
€0 to €34,500 |
Exempt |
Exempt |
|
Over €34,500 to €60,000 |
10% |
3.33% |
|
Over €60,000 |
10.5% |
3.5% |
Public service employees make a significant contribution to the overall cost of benefits with €1.7 billion paid in employee contributions and ASC in 2022. This provides substantial ongoing support towards the cost of public service pensions.
In terms of funding, public service retirement benefits are in the main unfunded or paid out of general taxation as and when the cost arises, i.e. ‘Pay-As-You-Go’. Contributions and ASC paid by employees are treated as appropriations-in-aid. Consequently, the concept of a ring fenced fund does not arise in the context of public service occupational pensions.
