Ireland’s Department of Public Expenditure has announced that the state’s accrued liability for the retirement benefits of current and former public service employees rose to an estimated €175.7 billion as at December 31, 2021.

Total actual expenditure on public service pensions amounted to €4.5 billion in 2022, while member contributions and the Additional Superannuation Contribution (ASC) amounted to approximately €1.7 billion over the year.

Minister for Public Expenditure Paschal Donohoe said that while the €175.7 billion liability is “undoubtedly large” the amount will be paid over the next 70 years or so.

“The increase in the state’s liability from €149.6bn in 2018 to €175.7bn in 2021 can be attributed to a number of factors including a change in the assumptions (€15.8bn), notably an increase in the future inflation and salary inflation assumptions,” said the Department of Public Expenditure.

“Significant other drivers of the increase include the natural ageing of current and former employees and the additional accrual of service by employees over the period.

“Importantly, benefit terms for public service employees have not been improved over the period.”

Donohoe, Minister for Public Expenditure, NDP Delivery and Reform, briefed the Irish Government on the findings of an actuarial review of the state’s accrued liability for public service occupational pensions in Ireland. This process occurs every three years as required under EU rules.

“The growth in the size of the public service also has implications for the evolution of the state’s long-term pension liabilities,” said the department.

“In this regard, it is noted that the public service has grown from 330,576 in Q4 2018 to 365,858 by Q4 2021. Public Service numbers have since further grown to 389,070.”

Donohoe said: “The public service undoubtedly plays a significant role to the overall well-being of the country.

“Pension benefits are an important part of the remuneration of public servants and the overall process of the recruitment and retention of staff.

“It is imperative that we have a clear picture of the value of these benefits and that is provided by this report which covers the future entitlements of employees across vital areas such the Health and Education sectors, An Garda Síochána, Civil Service, Defence Forces, Local Authorities and Non-Commercial State Sponsored Bodies.

“While the overall figure is undoubtedly large, it is important to bear in mind that the accrued liability will be paid over the next 70 years or so.

“It is also important to highlight that a number of significant steps have been taken to improve the long-term sustainability of public service pensions, including the Single Public Service Pension Scheme introduced for new entrants from 2013, which will in time, reduce liabilities by around 25% from what would otherwise have been the case.

“Current public sector employees make a significant contribution to funding the overall cost of benefits provided amounting to €1.7 billion in 2022, including the Additional Superannuation Contribution by public servants introduced under the Public Service Pay and Pensions Act 2017.

“This figure is up from €1bn per annum prior to the introduction of the Act. This provides substantial additional ongoing funding support towards the cost of public service pensions from those that benefit from such pensions.

“Importantly, it is worth noting that benefit terms for public service employees have not been improved over the period.

“In addition, there has been an increase in the compulsory retirement age from 65 to 70 for public servants recruited before 1st April 2004.

“This will also assist in reducing the time period over which pension payments will be paid to those public service employees who opt to remain in work longer.”