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News : Irish Economy Last Updated: Aug 23, 2010 - 8:24:15 PM

Irish public sector pay/pensions to rise 16% in period 2005-2010; Pay up 11%: Pensions up 66%; Pensioner numbers rise 43% to 103,400
By Finfacts Team
Jul 14, 2010 - 6:20:40 AM

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The Department of Finance said in its Analysis of Exchequer Pay and Pensions Bill 2005 - 2010 report, published this week, that the net Irish public sector Pay and Pensions bill is projected to increase by 16% in 2010 to €15.09bn - - a decrease of 8.4% over the 2009 figure of €16.47bn. While pay increased 11% in the period 20015-2010, the pensions bill has risen by 66% since 2005 while pensioner numbers have increased by 31,000 or 43% to 103,400.

Pensions now account for 12.9% of the total Pay and Pension Pay bill, up from 9% in 2005. Overall, the pensions bill has increased from €1.35bn in 2005 to €2.23bn in 2010 representing a 65.6% increase over the period (pay in contrast rose by 10.8%). The pensions bill has increased by 35% since 2008. This is mainly attributable to an increase in retirements in 2009 including those under the Incentivised Scheme for Early Retirement.

The Department said the proportion of the pay bill accounted for by the different sectors has remained broadly similar over the period. The exception is the education sector pay bill, which increased over the period by 20.4% (compared to a 13.6% rise in the rest of the Pay and Pensions bill), and is expected to account for 32.6% of the total pay bill in 2010 as opposed to 31.4% in 2005. The proportion of the pay bill accounted for by the health sector has reduced from 41.7% to 40.2% over the period notwithstanding an increase in numbers employed in that sector.

The number of Exchequer-funded public service employees (excluding local authorities) estimated for 2010 is 277,604 (whole-time equivalents), an increase of 26,210 or 10.4% over 2005, mainly in Health and Education (Table IX). This reflects a 10.5% increase in staff in the Health sector and a 17.3% increase in staff in the Education sector over the period;

Public service numbers and pensioners, based on whole time equivalent measurement increased to 380,953 in 2010 from 373,228 in 2009. While serving numbers are estimated to further decrease from a 2009 outturn of 278,106 to 277,540 in 2010 pension numbers are estimated to increase from 95,122 to 103,413 over the same period. Figures are based on end 2009 outturn and an 2010 estimate.

There is 1 pensioner for less than 3 workers.

The Department said for the first time since 1933, legislative measures were brought forward by the Government to reduce the salaries of public servants through the enactment of the Financial Emergency Measures in the Public Interest (No. 2) Act, 2009 with effect from January 1, 2010.

The scale of reductions provided for in the Act resulted in overall reductions in salaries for public servants in general ranging from 5% to 15%. The average reduction being 6.2%.

There was no reduction in pensions even though increases in pay are passed on to pensioners, including the sham benchmarking increase of 9%. So retirees now can get 70% of their last salary   --  a rise during the worst recession in 80 years.

The Department says that consultations on a new single pension scheme for all new entrants to the public service will be concluded in time for legislation to be enacted to allow for the introduction of the scheme on January 1, 2011. Discussions will take place on the method of determining pension increases for existing public service pensioners and current public servants in the context of the review of pay policy in Spring 2011

The majority of Irish private sector workers do not have an occupational pension scheme; many of those who do face fund deficits and expected low returns over the coming decade.

In the past 10 years, Irish managed pension funds have had negative returns in real (allowing for inflation) terms. 

Analysis of Exchequer Pay and Pensions Bill 2005 - 2010

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