State pension liabilities rising 10% a year, CSO study finds

Figures published as Pensions Commission examines viability of current system

The CSO said the State pension accounts for almost 60 per cent of all liabilities, with public-sector pensions accounting for a further quarter.

State pension liabilities are rising at a rate of 10 per cent a year, according to the latest study of Ireland's pensions, which says pension schemes across the State have total liabilities of €607.9 billion.

The study published by the Central Statistics Office (CSO) on Wednesday examines how much Irish households were owed by private employers and government at the end of 2018 based on the pension benefits they had accumulated by that date.

The State pension accounts for almost 60 per cent of all liabilities, with public-sector pensions accounting for a further quarter. Private-sector pensions account for just over 16 per cent.

The figure for State pensions includes the contributory State pension, the widow’s, widower’s or surviving civil partner’s contributory pension, and the invalidity pension. It does not include money that will have to be paid out under means-tested non-contributory State pensions.


Overall, pension liabilities in the Republic jumped 7 per cent. However, there are big differences in the position across different pension schemes.

The liabilities of funded private-sector pension schemes, which had 454,340 members at the end of 2018, edged just 1 per cent higher in that year. That compared with more than 4 per cent for the public-sector pension schemes’ 330,500 members and to almost 10 per cent for State pension liabilities.


The figures are relevant in the context of the Pensions Commission which the Government has charged with examining options for the State pension and retirement age.

One of the big issues it faces is the sustainability of the current State pension scheme and whether the State pension age should rise to 67 as previously planned – and to 68 in 2028.

The 2018 figures put the Republic’s total pension liability at that time at 186 per cent of GDP, the standard measure of an economy. However, it represented 306 per cent of GNI*, which is seen as a more accurate measure of the Irish economy as it factors out distortions caused by the strong impact here of multinationals.

CSO statistician Ciara O’Shea noted that Ireland’s pension liability is low in comparison with some European countries, a position attributable to the State’s relatively young population.

She referred to figures showing that pension providers in Switzerland had accrued liabilities of €1.97 trillion at the end of 2017, equating to 316 per cent of Swiss GDP. In Latvia, the lower headline liability of €59 billion equated to 218 per cent of GDP.

Data in respect of all European Union member states for 2018 will be available on the Eurostat website next week.

The CSO also estimates that private-sector pension schemes are paying more than €1.1 billion in charges annually – or close to €2,500 per person.

Scale of challenge

Commenting on the figures, Chartered Accountants Ireland said they offered further evidence of the scale of the pensions challenge facing the State.

It noted that the data comes in the same week the Government announced it would delay the introduction of auto-enrolment until at least 2023.

"While it isn't surprising that auto-enrolment has been put on hold, the lack of private pension funding isn't going to be solved without significant action by the Government," Cróna Clohisey, its public policy lead, said.

"The lack of private pension provision has been on the agenda of various governments in Ireland over the past 20 years and the only solution the State has given serious consideration is to make people work longer. This approach is simply unsustainable."

She acknowledged the establishment of the Pensions Commission but noted that the OECD had said as far back as 2014 that urgent reform of the pension system was needed. “2021 needs to be a year where Ireland moves forward on this issue with a clear and sustainable Government policy,” Ms Clohisey said.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times