PUBLIC SECTOR PENSIONS

Civil service pensions may be brought in to line with private sector pensions if a proposed Fianna Fail reform goes ahead. The Government party is exploring the abolition of defined benefit pensions (DB) in favour of defined contribution (DC) schemes in an effort to remove the €87 billion liability for public service pensions from the exchequer. Over the last decade, most new private sector workers have been offered DC only or hybrid pension schemes.

The value of a DC scheme depends on the individual’s contributions and the investment performance. Defined benefit schemes guarantee a set amount based on the person’s income – regardless of how the underlying pension investment has performed. A massive shortfall in DB schemes means that employer such as the state have to make up for the shortfall.