IBEC is the principal Irish employers' body.

Public sector pay rose by 8% in 2005 and pensions now account for 10% of the total pay bill, up from 8.6% in 2001. The pensions bill has increased from €876m in 2001 to €1,588m in 2006 representing an 81.3% increase over the period. The increase in the health sector has been 104%. Pensioners also received the special benchmarking increase of an average of 9%.

Last August, a report prepared by the Pension Board stated that at present over 900,000 people, almost half the country's workforce, have not made provision for any private pensions and, as of now, are moving towards a retirement in which their main source of income will be the State pension.

In May 2006, Danny McCoy, Director of Economic Policy at IBEC, the principal Irish employers' group, said that we spend 3% of our GNP annually providing pensions for our pensioner population of approximately 300,000.

Company cost for typical 40-year-old worker in UK Defined Benefit Pension Scheme has risen from 9.2% of salary in 1995 to 23.8% in 2005

Private sector is adjusting

“The dramatic rise in the cost of pensions over the last five years is forcing private sector employers to seek higher contributions from employees and to close membership of defined benefit schemes for new staff members. In the economy generally in the past five years, the numbers of members in funded defined benefit schemes has increased by 13% (about 30,000) while the numbers covered by defined contribution schemes has increased by 57% (or about 75,000). Pension costs have risen because of stricter funding standards, higher pay, low long term interest rates, poorly performing equity markets and longer life-expectancy. A recent study by Mercer suggests that in the next two years about one-third of defined benefit schemes will be closed to new entrants.

“Additional pension costs would further erode our competitiveness and we would inevitably lose jobs. Employer contributions have risen significantly in many companies in recent years simply to meet our draconian discontinuance funding standard, which imposes an overly restrictive solvency requirement on companies providing defined benefit schemes. We can’t afford anymore cost hits like this.

“Resistance by some trade unions to this inevitable change is short-sighted. Employers have a responsibility to act: if they increase payments beyond what can be afforded, this threatens the viability of employment and of the business. Following reasonable consultation, if corrective action is not taken, the ability of a pension scheme to fund employees’ life in retirement may be put at risk.

Public sector pensions

“The CSO has said that the average public sector worker has an earnings premium above the private sector worker of 40% in 2003: this has since risen to about 45%. The public service pension bill of €1.7bn is projected to treble (in 2004 terms) by 2040-2050 and from 1.3% of GNP to 4% of GNP. While private sector businesses and their staff are adjusting to harsh realities, the public sector continues to provide old fashioned expensive pension schemes. The coverage is higher in the public sector, the schemes are mainly non-contributory unfunded defined benefit schemes and public sector pensions are indexed to existing pay scales not just to inflation. This cannot continue indefinitely.

“If the second benchmarking process is to have any credibility in the eyes of the public it is essential that the benchmarking body undertakes a detailed actuarial assessment of the real value of public sector pensions along with annual leave, security of tenure, working hours and conditions of employment. Nothing less will do.”