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Estimates of Irish Pension Liabilities

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Key Highlights

- Total accrued-to-date liabilities of all pension schemes defined in Table 2.1 were estimated at €436.3bn, 167% of GDP, at the end of 2015 

- Unfunded (pay-as-you-go) government managed schemes, which do not appear in the core national accounts, were estimated at €345.5bn or 79% of the total liability

- Estimates of funded non-government managed schemes, which do appear in the core national accounts, stood at €90.8bn or 21% of the total liability 

2.1 Headline table

Total accrued-to-date liabilities of Irish pension providers amounted to €436.3bn, 167% of GDP or 252% of modified GNI (GNI*),at the end of 2015. 

Table 2.1 Estimates of Irish Pension Liabilities, 2015 € million
 RecordingRecorded in Standard National AccountsNot in Standard National Accounts 
  Funded pension schemesUnfunded (pay-as-you-go) schemes 
 Pension managerNon-government managed (private)Government managed 
  Occupational defined contribution schemesOccupational defined benefit schemesTotalDefined benefit schemes for government employeesSocial security pension schemesTotalTotal Pension Schemes
Eurostat Row No. ↓Eurostat Column Reference No. →ABCGH I
Opening balance sheet
1Pension entitlements/Accrued-to-date liability at end-201428,67959,08387,762109,800226,000335,800423,562
Changes in pension entitlements due to transactions
2Increase in pension entitlements due to social contributions12,5542,2744,8288,00017,20025,20030,028
     2.1     Employer actual social contributions1,5971,6643,26004,7004,7007,960
     2.2     Employer imputed social contributions..-1,094-1,094800..800-294
     2.3     Household actual social contributions9082581,1661,7001,4003,1004,266
     2.4     Household social contribution supplements3682,1352,5035,50011,30016,80019,303
     2.5     Less: pension scheme service charges3196881,00802002001,208
3Other (actuarial) change of pension entitlements in social security pension schemes........-5,700-5,700-5,700
4Reduction in pension entitlements due to payment of pension benefits1,0552,0423,0983,3006,5009,80012,898
5Changes in pension entitlements due to social contributions and pension benefits21,4982321,7304,7005,0009,70011,430
6Transfers of pension entitlements between schemes427-523-96000-96
7Change in entitlements due to negotiated changes in scheme structure0-148-148000-148
Changes in pension entitlements due to other flows
8Changes in entitlements due to revaluations1,55201,5520001,552
9Changes in entitlements due to other changes in volume0000000
Closing balance sheet
10Pension entitlements/Accrued-to-date liability at end-2015332,15758,64390,800114,500231,000345,500436,300
Note: Columns D,E and F of the Eurostat Table (also known as Table 29) which refer to funded government managed schemes do not appear here as they are not relevant to the Irish pension system.
1Sum (Row 2.1 to Row 2.4) - Row 2.5
2Row 2 + Row 3 - Row 4
3Row 1 + Sum (Row 5 to Row 9)
.. These cells are not applicable.

Figure 2.1 shows the significance of each component of the total liability. In Ireland, social security or state pension schemes, defined as the State Pension (Contributory); the Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension; and the Invalidity Pension make up 53% of the overall total. This is the largest component with a value of €231bn in 2015. Approximately 90% of new entrants to the state pension scheme are paid the State Pension Contributory (SPC) on retirement2; the current value of which is approximately €12,400 per annum.3 

Get the data: StatBank

The liabilities of public service defined benefit schemes were estimated at €114.5bn in 2015, making up 26% of the total. The number of active employees across all sectors of the public service at end-2015 was approximately 298,000 with an average age of 43.8 years. The number of pensioners in receipt of a pension for the same period was 154,680 with an average pension payment of €19,908 per annum.4

Non-government workplace pension scheme liabilities totalled €90.8bn in 2015, making up 21% of the overall liability. These are mainly funded schemes of private sector workers and are broken down into defined contribution (Column A) and defined benefit (Column B) schemes, the liabilities of which were €32.2bn and €58.6bn respectively. The number of occupational schemes at the end of 2015 was 67,840 with 407,584 active members.5 These are occupational schemes and do not include private pension plans such as Personal Retirement Savings Accounts (PRSAs)6 and Retirement Annuity Contracts (RACs).

2.2 Categories of pension liabilities

Table 2.1 categorises the pension liabilities in a number of ways:

• included/not included in the core national accounts 
• funded/unfunded pension schemes
• non-government managed/government managed

State pensions and pension schemes for government employees are unfunded in that they operate on a pay-as-you-go (PAYG) basis whereby current workers' contributions are financing current pensioners’ benefits. These schemes, appearing in Columns G and H of Table 2.1, are managed by government and are not included in the core national accounts. In contrast, funded non-government workplace pensions are recorded in the national accounts and appear in Columns A and B of Table 2.1. For Ireland the percentage breakdown is the same for all three categorisations listed above:

• €345.5bn or 79% of the total liability

- are not included in the core national accounts
- are unfunded
- are government managed

• €90.8bn or 21% of the total liability

- are included in the core national accounts
- are funded
- are non-government managed

Breakdown of pension liability, 2015
schemes for

Get the data: StatBank

2.3 International comparison

The inclusion of the unfunded pension liabilities in the pensions table aims to increase comparability across EU countries. This comparison has also been facilitated by the use of common assumptions in each country. The size of the pension liabilities greatly depends on these assumptions, particularly the choice of discount rate. In order to ensure comparability and smooth the fluctuations of the estimates over time, Eurostat recommends setting the discount rate at 3% in real terms (after adjusting for price inflation), and 5% in nominal terms, for the estimation of government managed pension schemes.

Ireland’s total liability in 2015 equates to 167% of GDP (or 252% of GNI*). Figure 2.3 shows Ireland in comparison to other countries for which comparable data is available.7 The total accrued-to-date liability of UK pension providers was £7,600bn (€8,580bn) at the end of 2015, equating to 400% of UK GDP. In the Netherlands, the liability was €2,500bn or 384% of GDP in 2012.8 It is clear from the graph that Ireland’s pension liability is low in comparison to other EU countries, illustrating the relatively young population. As demographic developments take effect and the number of people aged 65 and over continues to increase in Ireland, the pension liability will increase to take account of the growing numbers accruing rights to and in receipt of a pension. In contrast, those EU countries with a more mature population should experience a more gradual growth in their liabilities.

Government PAYG schemes versus non-government funded schemes, 2015
% of GDP
Ireland (% GNI*)252
Netherlands 2012384

Get the data: Eurostat

Figure 2.4 shows the relative importance of the liability for private and public sector schemes in the pension systems of selected countries. In Ireland, the unfunded state pension contributory scheme (including invalidity and widow’s pension) is €231bn, or 53% of the total liability. This proportion of the liability is similar to the UK where the obligation of the state pension scheme is estimated at £4,000bn (€4,500bn), also equivalent to 53% of the total. In the Netherlands, the state pension obligation is €1,429bn, or 57% of the total liability in 2012.

The defined benefit pension liability for public service workers makes up 26% of the liability for Ireland. This compares to 17% in the UK and 12% in the Netherlands. The funded workplace pensions found in the private sector make up 21% of the Irish total. In the UK and the Netherlands these make up 30% and 31% respectively.

Non-government managed schemesSchemes for government employeesState Pension schemes

Get the data:  Eurostat


1Modified GNI (GNI*) is a new indicator that was recommended by the Economic Statistics Review Group and is designed to exclude globalisation effects that are disproportionately impacting the measurement of the size of the Irish economy.

2State Pension Age, currently 66, increasing to 67 in 2021 and 68 in 2028.

3State Pension (Contributory) rate from 10 March 2017 for a person with 48+ yearly average contributions.

4Department of Public Expenditure and Reform (2017). Actuarial Review of Public Service Occupational Pensions in Ireland. (PDF)

5Pensions Authority Annual Report 2015. (PDF) Defined contribution schemes and defined benefit schemes subject to the funding standard.

6The value of PRSAs was €5.2bn at end 2015. Pensions Authority Annual Report 2015. (PDF)

7Data sourced from Eurostat website.

82015 data unavailable for the Netherlands at time of publishing.

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