Proposal to make public servants pay more for their pensions

Minster says pensions will be on table in planned pay talks with trade unions

 

Plans to get staff in the public service to pay more towards their pensions are being examined by the Government.

Informed sources said it would be likely the Government would look for a greater financial contribution from staff towards their pensions in tandem with the unwinding of the existing public service pension levy and any pay increases that came about as part of a successor to the existing Lansdowne Road agreement.

A number of informed sources said trade unions were aware of plans by the Department of Public Expenditure and Reform to press for greater “burden-sharing” on pensions in forthcoming talks, but that there has been absolutely no agreement on such a move.

Some sources have suggested the Government could look for greater contributions towards pensions from staff earning more than €50,000. Other sources suggested that any increased contribution could be applied to those earning more than €65,000 – which was the threshold for pay cuts under the 2013 Haddington Road public service deal.

However, others still have suggested that if the Government wanted to maximise the level of revenue it would generate from any such measure – with a target of €300 million or so being speculated in some quarters – the increase would have to be applied to those on lower earnings also.

Pay cut

The 2009 pension levy or pension-related deduction, as it was technically known, was in reality the first pay cut imposed on the country’s 300,000 public service staff following the collapse in the public finances.

Any increase in contributions towards pensions would offset the benefits arising to staff from a successor to the Lansdowne Road accord. Talks on a new deal are scheduled to get under way next summer following the publication of the report of the new Public Service Pay Commission.

The Minister for Public Expenditure Paschal Donohoe said in a speech earlier this month that the value of public service pensions had increased in recent years and that fact should be taken into account in determining future pay rates.

In an interview with the Sunday Business Post over the weekend he effectively repeated this message and said public service pensions would be on the table as part of planned talks with trade unions on pay to take place next year.

The value of public service pensions has been highlighted in recent times, given the sharp decline in the number of defined-benefit pension schemes – where the level of retirement payments for staff are guaranteed – available to those working in the private sector.

Last week a report on pay in An Garda Síochána suggested that pension arrangements could be worth about €40,000 per year in addition to a garda’s salary. The average garda salary is in excess of €60,000 a year, including overtime and allowances, though the Garda pension is significantly more generous than the norm in the public service, becoming available to gardaí after 30 years, rather than 40 years for others.

Greater value

In its confidential submission to the pay commission – revealed in The Irish Times last Tuesday – the Department of Public Expenditure argued that the relative value of public service pensions represented “a significant component of pay remuneration and that the value of this element is greater now than it has been historically”.

It urged that the pay commission should ensure “that appropriate account is taken of the full value of public service pension terms when considering remuneration terms of public servants”.

Any move by the Government to seek higher pension contributions by public service staff is expected to be strongly resisted by unions.

In its submission to the new commission, the public service committee of the Irish Congress of Trade Unions said almost 50 per cent of public service pensioners were in receipt of pensions of less than €20,000 a year.

Unions highlighted that about 10 per cent of staff had a less generous career-average pension scheme introduced in 2013. Unions said that a 12 per cent discount applied to pay rises by the 2007 benchmarking body was excessive and that a lower figure should be used by the new pay commission.