Gilmore defends pension reform

 

Tánaiste and Labour leader Eamon Gilmore today moved to play down any possible confrontation with public sector unions after teacher unions strongly criticised Government proposals to reform the pension system.

The INTO and ASTI teacher unions condemned the changes proposed by Minister for Public Expenditure and Reform Brendan Howlin as "larcenous" and "probably illegal", but Mr Gilmore moved to assuage the unions, saying such changes were necessary.

Secondary school teachers' union, the ASTI, said it was considering challenging the measures in the courts. The national teachers' INTO said it believed the new scheme was "unjust and potentially unlawful" and also signalled it would challenge the plan.

However, Mr Gilmore said: "If we, as a country, are going to be able to pay pensions into the future, then we have to reform the way that pensions are calculated. What is proposed in the bill that Minister Howlin has published is a new approach to pensions for new entrants into the public sector."

"I think that is prudent, and he has made it clear that for employees who are on low incomes or on flat incomes, it won't make any significant change to their pension entitlement, and it is a measure that will be introduced over a period of time," he said.

Mr Gilmore said although the trade union movement was entitled to go down the legal route to challenge what is being proposed, Mr Howlin had made it clear he was willing to talk to unions and listen to their concerns.

He pointed out Ireland, like many countries, had a growing problem in terms of its demography and dependency and how it was going to pay pensions in 30 or 40 years' time. Mr Gilmore said what the Government was seeking to do was address the issue now rather than allowing it to worsen.

"It is in the interest of people who are now entering the workforce that the Government reforms the pension system so that by the time the new entrants into the public sector now come to pension age, the country will be able to pay their pension entitlements," Mr Gilmore said.

"I think there has to be an understanding that if there isn't reform of the way pensions are calculated there will be a problem down the line, and we are better to address it now rather than let it fester and have a crisis by the time these people come to pension age."

Mr Gilmore stressed what the Government was doing was "very prudent", but he rejected suggestions by the INTO that the reform measures will mean teachers contributing more to their pension schemes that what they will get out of them.

"I don't see how that could be given the level of contributions there are to pension schemes and given the benefits that the pension schemes, including the reformed pension schemes, [provide], I don't see how that calculation stands up," the Tánaiste said.

Speaking on RTÉ's Morning Ireland earlier today, INTO general secretary Sheila Nunan said the changes proposed by Mr Howlin would make "no difference to the current economic circumstances because it will not be for another 40 years that any benefit will be returned to the State in relation to any reduction".

"On the evidence that we have, we're very clear that teachers are paying completely appropriate amounts into their pension schemes, " she said.

"We are very willing to sit down and discuss aspects of this but the current model is unjust, unfair, and as our colleagues in ASTI said themselves yesterday, is potentially unlawful," Ms Nunan added.

The legislation published by Mr Howlin fulfils a commitment made by the last government as part of Ireland’s bailout to put the public pensions system on a more sustainable basis.

However, it leaves intact many of the benefits provided for high-earners such politicians and judges, who will continue to enjoy accelerated accrual of pension rights, though new entrants will have to pay increased contributions.

The burden of reducing pension costs will also fall mainly on future generations of public servants, as the changes do not apply to current staff.

Savings will be small in the early years but the measures are expected to cut the cost of the public sector pension bill by €1,800 million in 2050.

Mr Howlin said his proposals provide for a single defined benefit pension scheme for all new entrants to the public service with no special terms for senior grades.

Under the Public Service Pensions (Single Scheme) and Remuneration Bill 2011, new entrants’ pensions will be based on an average of career earnings rather than their final salary at retirement, as at present.

Mr Howlin said this was a fairer approach to pensions of most benefit to lower grades in the public service. The current scheme favours those who have high earnings late in their careers.

Further savings will be made from raising the minimum public service retirement age from 65 to 68.