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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 €607.9bn, 186% of GDP, at the end of 2018 

- Unfunded (pay-as-you-go) government managed schemes, which do not appear in the core national accounts, were estimated at €508.8bn or 84% of the total liability

- Estimates of funded non-government managed schemes, which do appear in the core national accounts, stood at €90.1bn or 16% of the total liability 

- The discount rate used in Table 2.1 is 4% (nominal) down from 5% in the previous publication.

2.1 Headline table

Total accrued-to-date liabilities of Irish pension providers amounted to €607.9bn, 186% of GDP or 306% of modified GNI (GNI*),at the end of 2018. 

Table 2.1 Estimates of Irish Pension Liabilities, 2018€ 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 →ABCGH I
Opening balance sheet
1Pension entitlements/Accrued-to-date liability at end-201738,27059,71697,986143,700326,700470,400568,386
Changes in pension entitlements due to transactions
2Increase in pension entitlements due to social contributions13,5951,7055,3009,50021,20030,70036,000
     2.1     Employer actual social contributions2,3231,4383,76106,5006,50010,261
     2.2     Employer imputed social contributions..-1,083-1,0832,40002,4001,317
     2.3     Household actual social contributions1,3202411,5611,4001,8003,2004,761
     2.4     Household social contribution supplements3501,8222,1735,70013,10018,80020,973
     2.5     Less: pension scheme service charges3987131,11102002001,311
3Other (actuarial) change of pension entitlements in social security pension schemes........-100-100-100
4Reduction in pension entitlements due to payment of pension benefits1,2732,0713,3443,6007,40011,00014,344
5Changes in pension entitlements due to social contributions and pension benefits22,322-3661,9565,90013,70019,60021,556
6Transfers of pension entitlements between schemes542-604-62000-62
7Change in entitlements due to negotiated changes in scheme structure0-50-50012,90012,90012,850
Changes in pension entitlements due to other flows
8Changes in entitlements due to revaluations-7700-770000-770
9Changes in entitlements due to other changes in volume00005,9005,9005,900
Closing balance sheet
10Pension entitlements/Accrued-to-date liability at end-2018340,36358,69799,060149,600359,200508,800607,860
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.
Totals may not sum due to rounding.

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 59% of the overall total. This is the largest component with a value of €359.2bn in 2018. Approximately 90% of new entrants to the state pension scheme are paid the State Pension Contributory (SPC) on retirement; the current value of which is approximately €12,900 per annum.2 

Get the data: PxStat

The liabilities of public service defined benefit schemes were estimated at €149.6bn at the end of 2018, making up 25% of the total. The number of active public service employees at end-2018 was approximately 330,500 with an average age of 44.0 years. The number of pensioners in receipt of a pension for the same period was 173,405 with an average pension payment of €20,310 per annum.3

Non-government workplace pension scheme liabilities totalled €99.1bn in 2018, making up 16% 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 €40.4bn and €58.7bn respectively. The number of occupational schemes at the end of 2018 was 72,710 with 454,340 active members.4 These are occupational schemes and do not include private pension plans such as Personal Retirement Savings Accounts (PRSA)5 and Retirement Annuity Contracts (RAC).

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:

• €508.8bn or 84% of the total liability

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

• €99.1bn or 16% of the total liability

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

Breakdown of pension liability 2018
schemes for government

Get the data: PxStat

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 2% in real terms (after adjusting for price inflation), and 4% in nominal terms, for the estimation of government managed pension schemes.

Ireland’s total liability in 2018 equates to 186% of GDP (or 306% of GNI*). Figure 2.3 shows Ireland in comparison to other countries for which comparable data is available.The total accrued-to-date liability of pension providers in Switzerland was €1,973bn at the end of 2017, equating to 316% of Swiss GDP. In Latvia, the liability was €59bn or 218% of GDP. It is clear from the graph that Ireland’s pension liability is low in comparison to some European 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, 2018
Government PAYG schemes83.7
Non-government schemes16.29
% of GDP
Ireland (2018)96
Ireland (GNI*, 2018)231

Get the data: Eurostat

Figure 2.4 shows the relative importance of the liability for private and public sector schemes in the pension systems across a selection of European countries for which data was available. In Ireland, the social security schemes (i.e. the State Pension (Contributory), Invalidity Pension and Widow’s, Widower's or Surviving Partner's (Contributory) Pension) is 59% of the total liability. Sweden and Switzerland show a similar share; while Latvia, Lithuania and Finland the proportion increases to over 90%.

Non-Government Managed SchemesSchemes for government employeesSocial Security Schemes
Ireland (2018)162459

Get the data:  Eurostat


1Modified GNI (GNI*) is an indicator designed to exclude globalisation effects that are disproportionately impacting the measurement of the size of the Irish economy.

2State Pension (Contributory) equivalent value in 2018 was €12,400 per annum

3Department of Public Expenditure and Reform (2020). Actuarial Review of Public Service Occupational Pensions in Ireland. (PDF)

4Pensions Authority Annual Report 2018. (PDF) Defined contribution schemes and defined benefit schemes subject to the funding standard.

5The value of PRSAs was €6.3bn at end 2018. Pensions Authority Annual Report 2018. (PDF)

6Data sourced from Eurostat website.  The transmission of ESA Table 29 is only mandatory every three years.  Some countries provide data for intervening years on a voluntary basis.  At the time of publication, data for 2018 has not yet been published by Eurostat.

Go to next chapter >> Funded Occupational Schemes