Over 40% of the government’s 345,000 employees now belong to the less generous pension scheme introduced for new entrants in 2013, according to an expenditure review issued by the Department of Public Expenditure and Reform today.
The review describes the introduction of the state’s Single Scheme for public servants’ pensions as “arguably the most fundamental reform to date” which is set to put the state pension bill on a sustainable footing.
Before its introduction, there were fears about the scale of the pension bill facing the exchequer for its workforce – with total liabilities in 2009 estimated at around €116 billion.
The Single Scheme was projected to reduce long term expenditure on public service pensions by 35% – over a third – through later normal retirement ages, the “career-averaging” method of calculating benefits, and CPI indexation of pensions.
However, the benefits will not materialise until after 2050 when those recruited since 2013 become eligible for retirement. At the end of 2019, there were 140,000 active members of the Single Scheme, with an average increase of 20,000 per year since 2013. It is anticipated that membership could range reach 200,000 by 2025.
Last year, they Single Scheme members paid pension contributions totaling €201 million, plus a further €69 million in Additional Superannuation Contributions.
The review outlines the demographic challenges facing pension provision, noting that between 1926 and 2016, life expectancy for men rose by 22.2 years, and by 25.5 years for women, while the proportion of older people in the population has also increased.