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Civil servants’ annual pension payouts ‘constantly underestimated’ over department ‘miscalculations’

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Fine Gael TD Jennifer Carroll MacNeill asked why there was a “trend” in pension estimates being much lower than the actual figure paid out. Photo: Collins

Fine Gael TD Jennifer Carroll MacNeill asked why there was a “trend” in pension estimates being much lower than the actual figure paid out. Photo: Collins

Some 190,000 people receive their pension from the Single Public Service Pension Scheme. Stock image

Some 190,000 people receive their pension from the Single Public Service Pension Scheme. Stock image

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Fine Gael TD Jennifer Carroll MacNeill asked why there was a “trend” in pension estimates being much lower than the actual figure paid out. Photo: Collins

Estimates of civil servants’ pension payouts are “constantly underestimated”, officials from the Department of Public Expenditure and Reform have been told.

James Pender, an actuary at the department’s Public Service Pay and Pensions Division, told the Public Accounts Committee (PAC) yesterday that the department was “miscalculating” how much was paid in pensions each year.

Fine Gael TD Jennifer Carroll MacNeill asked why there was a “trend” in pension estimates each year being much lower than the actual figure paid out under the Single Public Service Pension Scheme.

In 2020, the estimate was €180m but, in reality, €279m was paid out in pensions, an underestimate of 55pc.

In 2019, the difference in the figures was 58pc, with €160m initially targeted but €252m paid out.

The figures were more accurate in 2015, when the estimate was €45m and the figure paid out was €51m, a difference of 12pc.

Ms Carroll MacNeill asked why there was no “foresight” regarding how many people would begin claiming their pension. “It appears to be consistently underestimated every year. I find that interesting and a bit worrying,” she told the committee.

Mr Pender said the scheme was “young” and that the numbers would be wrong at the start as they were “difficult to estimate”. “We are miscalculating it,” he added. 

He said estimates for each year were based on a number of months from the previous year. “You base your estimate for the following year on the
data to August in that year, he said.

“You take on extra people, for example, and that creates extra contribution income that then feeds into the vote [the funding figure approved by the Dáil for that Government department].”

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The department’s top civil servant, David Moloney, told the committee the main problem was that workers can choose to retire with two weeks’ notice.

“In general terms, the key challenge in estimating the superannuation vote is that a civil servant can decide to retire in two weeks’ time and therefore become eligible for a lump sum based on their service and that triggers quite significant amounts in terms of values to be paid out every year,” Mr Moloney said.

“The key change last year was that the number of people that retired was less than the number anticipated.”

Dún Laoghaire TD Ms Carroll MacNeill said: “Every year it’s underestimated, every year it’s wrong.”

The committee was told that 190,000 people get their pension from the scheme.

Pensions are based on a career average, with the benefits related to a percentage of earnings throughout a career.

While members of the scheme can retire at 66, they must do so at 70.

A spokeswoman for the Department later clarified: “The topic raised in the PAC was in respect of the pension contributions (receipts) into Vote 12 from the Single Scheme. The 2020 Estimate for this was €180m compared to the Outturn of €279m, an increase of €99m in contributions in.”

This article was updated on May 21, 2022


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