Dáil Éireann - Volume 658 - 03 July, 2008
Written Answers. - Pension Provisions.
Deputy Joan Burton Deputy Joan Burton
Deputy Joan Burton asked the Minister for Finance the actuarial value of the pension benefits of civil service grades (details supplied), retiring on 1 July 2008, aged 60 with 40 years service completed; if he will provide a separate value for men and women and assume all are pre 1995 appointments including the basis for the calculations, including mortality, discount rate and future salary increases. [26402/08]
Deputy Brian Lenihan Deputy Brian Lenihan
Deputy Brian Lenihan: The information requested is set out below. The values provided are for a married person retiring on 1 July 2008 at age 60 with pensionable service of 40 years. The pension benefits are those applying to a pre-1995 recruit to an established post in the civil service i.e. a person not subject to integration. The benefits taken into account are therefore a retirement lump sum of 1.5 times pay, a main scheme pension of 50% of pay and a spouse’s pension of 25% of pay.
In order to value these benefits a number of technical assumptions must be made and the actuarial value of the benefits depends greatly on the assumptions used. The main assumptions used were:
A mortality table considered appropriate for valuing pension benefits for public servants; under this table the life expectancy at age 60 is 27 years for a male and 30 years for a female;
Annual discount rate of 6%;
Long term rate of inflation of 2% p.a. with pay increasing in line with inflation.
In the cases of all the grades mentioned and on the basis of the assumptions quoted above the actuarial value of the pension benefits works out at about 10 times current annual salaries.
It might be noted the calculations are on the basis of maximum pension benefits in each case. On average, the value of pension benefits for a civil servant retiring from the relevant grades will be substantially less as many civil servants will retire with less than the maximum of 40 year’s service, many others will retire after the minimum retirement age of 60 and some will not be married.
Females are expected, on average, to live for longer than males so that the value of a main scheme pension is estimated to be greater for a female than for a male. However, this is balanced by the value of a spouses benefit being greater for a male member since a female spouse is likely to be younger and have a greater life expectancy than a male spouse. Therefore the figures apply equally to both males and to females.
Dáil Éireann 658 Written Answers. Pension Provisions.