Annual pay bill will fall €3.3 billion after allowing for extra pension costs
Updated Wednesday 13th June 2012
By 2015, the total annual cost of public service pay and pensions will have fallen by approximately €3.3 billion (or almost 19%) from its 2009 peak if the Croke Park agreement remains in place, according to figures provided to the Croke Park implementation body by the Department of Public Expenditure and Reform.
The figures, outlined in the implementation body’s second annual report today, take account of pay cuts, the pension levy, reductions in pension payments, and savings delivered through staff reductions and reforms under the Croke Park agreement.
The gross pay bill, which peaked at €17.5 billion in 2009, is expected to fall to €13.7 billion in 2015; a reduction of €3.8 billion. (See table 3 below, which is taken from the implementation body’s report).
The pension bill will increase from almost €2.6 billion to just under €3.1 billion over the same period; an increase of €0.5 billion. (See table 4 below, which is taken from the implementation body’s report).
That means the exchequer will save €3.3 billion a year, after allowing for its additional pension commitments.
The implementation body report also points out that the expected increase in pension costs is not due to Croke Park measures. There have been virtually no enhanced pensions under the agreement and the vast majority of early retirements have been cost neutral, with pension payments reduced to reflect any reduction in service.
The report says: “The relationship between movements in the pay bill and the pensions bill is not a direct one.” Changes in the pension bill between 2009 and 2015 will result from factors like increased survival rates of existing pensioners and the demographic profile of the public service, which sees increasing numbers approaching retirement now because of substantial public service recruitment in the 1970s.
Table 3: Exchequer Pay Bill costs 2009 to 20151
|2009||2010||2011||2012||2013||2014||2015||2009-2015 reduction net of PRD|
|Exchequer Pay Bill – Gross||17,514||15,935||15,645||15,375||15,000||14,700||14,600|
|Pension Related Deduction (PRD)||837||945||950||930||916||911||911|
|Exchequer Pay Bill Net of PRD||16,677||14,990||14,695||14,445||14,084||13,789||13,689||3,825|
Note: Figures provided by the Department of Public Expenditure and Reform
Table 4: Exchequer Pension Bill costs 2009 to 2015
|Exchequer Pension Bill – Gross||2,558||2,733||2,753||3,038||2,979||3,099||3,099|
|Increase over previous year||175||20||285||-59||120||0||541|