GOVERNMENT quangos such as the Personal Injuries Assessment Board and the Pensions Authority have to pay 25%-30% of salaries to the exchequer to secure civil service-style pensions for their employees.
The massive contributions, up to five times the average in the private sector, reveal the staggering cost of providing pensions to state employees.
The Department of Public Expenditure and Reform has confirmed that the quangos’ contributions are calculated actuarially to ensure that they cover the full cost of employees’ pensions, leaving no shortfall for the exchequer.
Contributions in the private sector average about 6% of payroll, according to the Irish Association of Pension Funds (IAPF).
The Injuries Board paid more than €1m to the exchequer last year to provide pensions for its 67 employees — an average of more than €15,000 each — while the Financial Services Ombudsman paid €440,000 for a staff of 34. The bill for the Pensions Authority was €650,000 in 2013 for its staff of 50.
Advertisement
“The most economical and transparent way to manage the pension liabilities accruing for such bodies is by way of an employer pension contribution set at a level that would, on an actuarial basis, fully cover pension costs, usually 25%-30% subject to revision,” a Department of Public Expenditure and Reform spokesman said.
“Where such pension contributions are paid to the exchequer, it will cover the cost of pensions for the staff of such bodies as they arise.”
Reforms for those recruited after 2012 mean the civil service pays an inflation-linked pension based on average earnings during a career. This compares with a projected pension of just 20% of final salary for somebody joining a private-sector employer at age 30, according to the IAPF.
Typically, in the private sector, a company makes the average 6% pension contribution to a defined contribution scheme and the employee pays 5%.