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Wednesday 24 September 2014

State's pension bill rises as civil servants live longer than rest of us

Martin Frawley

Published 07/04/2014 | 02:30

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State's pension bill rises as civil servants live longer than rest of us

CIVIL servants live longer than the general population, increasing the financial pressure on the Exchequer to pay their pensions, according to a new report.

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The current liability for public service pensions is €98bn, the report from the Department of Public Expenditure and Reform estimates.

One of the assumptions upon which the estimate is based is that public servants have been found to have a lower mortality rate than the general population, according to the report.

The report estimates, for example, that a public service female aged 60 now will, on average, live to age 90.

The accrued liability or debt covers the estimated cost to the Exchequer of paying future pensions to all serving staff and their spouses as well as public servants who have left the service but have an entitlement to a pension when they reach 60 or 65 year of age.

Oonagh Buckley, assistant secretary in the department, said that while the scale of the debt can be "very disconcerting", she stressed that it will be paid out over the next 70 years or so.

By way of explanation of how long the Exchequer can be paying pensions, Ms Buckley said that as late as last year, there was still a pension in payment to the child of a Civil War veteran.

Ms Buckley also noted that the latest figure is €18bn less than the last time the liability was estimated at €116bn in 2009.

This is down to the various cuts in pay and pensions for public servants over the past five years, she said.

SENSITIVE

However, she said that assumptions upon which the estimate is based are "very sensitive" to changes in policy and any future increases in pay and pensions.

She said pressure on costs will remain due generally to older people living longer, and the large number of public servants now reaching retirement age.

The actual expenditure on public service pensions and lump-sum payments in 2013 was €3.5bn for the 140,000 public service pensioners.

While the public service pay bill has dropped since 2008 the pensions bill has risen more sharply.

Ms Buckley said that the 2013 spend on public service pensions accounts for around 2.1pc of GDP and is likely to remain at that level for the next few years.

However, if pensions are increased in line with wages, then that will rise to 2.6pc of GDP by 2025.

The estimate is based on there being no increases in public service wages or pensions until after the Haddington Road Agreement expires in 2016.

Irish Independent

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