DEPARTMENT of Finance officials are bracing themselves for an avalanche of applications next month when public servants will be able to take advantage of measures announced in the budget to retire at 50 without any reduction in pension.

While finance officials are reluctant to estimate how many civil servants it expects to take up the offer, finance minister Brian Lenihan said it was "necessary to control public sector numbers which have grown by 11% (or 34,000) in the last five years alone."

If even half that number take up the offer, it would immediately save the exchequer over €500m a year.

If the full 34,000 take up the offer, the savings would double to over €1bn a year.

Such a response is possible given that the civil service has aged considerably over the past 20 years due largely to the recruitment drive in the 1970s. Many recruited then are now nearing retirement.

According to the most recent statistics, over 20%, or around 65,000 public servants, are aged over 50 – an age bracket that has quadrupled in the last 20 years.

John Kelleher of the public sector union, Ahcps, which represents senior public servants who stand to benefit most from the scheme, said the union had already received a large number of queries.

While the scheme will open from 1 May, Kelleher said he expected interest to peak after summer and before next year's budget, when Lenihan is expected to introduce a tax on retirement lump sums.

The standard public service pension is half your salary on completion of 40 years' service plus a tax-free lump sum of one-and-a-half years' pay.

In the budget, Lenihan said that those availing of the early retirement scheme will get just 10% of their retirement lump sum when leaving, with the balance being paid when they reach the normal retirement age of 60 or 65 and subject to "current tax law provisions".

Lenihan said that following the Commission on Taxation's report due in July, he expects to introduce a tax on these retirement lump sums in next year's budget.

With a 20% tax being mooted for a principal officer on around €100,000, the difference between going this year and next year would be around €30,000.

"The tax threat will serve to concentrate the minds," said Kelleher.