Pension cut for top State retirees likely to yield maximum of €20m
The projected saving from cutting the pensions of the State’s highest-paid retirees has been estimated at a maximum of €20 million per year, a tiny sum compared with the projected yield of €1 billion from the new Croke Park agreement.
With large numbers of public servants facing big cuts in their pay, the move to target pensions is designed to be symbolically important. But would a 5 per cent cut from the retirement benefits of those who were in power when the State went into economic meltdown do anything to appease those on the sharp end of a pay cut?
As with the pay deal, those with the biggest pensions will lose the most. But the pension cut will be half the cut imposed on pay. This is in keeping with the Government’s aim is to ensure the pension cuts are commensurate with the pay cuts.
The proposal as its stands, which has yet to be brought to Cabinet, would see general pension reduction starting on a sliding scale of some 2 per cent from pensions greater than €32,500, rising progressively to a cut of some 5 per cent on annual benefits greater than €92,500. The entry point is half the level at which pay cuts apply, and so forth.
This is “commensurate” alright, but political acceptability is another thing. After all, former taoisigh Bertie Ahern and Brian Cowen would still receive pensions greater than €142,000. Charlie McCreevy, finance minister of the boom times and a former EU commissioner, would still receive more than €113,000. The same amount would go to other luminaries of that era: Noel Dempsey, Martin Cullen and John O’Donoghue.
It seems unlikely that the challenge of securing support for the pay deal would be any easier as a result of this particular pension cut. After all, the initiative does little in real terms to sweeten the pill for those facing deep pay cuts at a time when new taxes loom on property and water consumption.
Would it be any different for private sector workers, faced as they are with a similar cascade of pressures? Although attention focuses inevitably on the former holders of high political office, a swathe of lesser-known retirees from the worlds of the courts, education and health also stand to lose some 5 per cent of their annual benefits.
All told, this is a relatively small number of people – comprising no more than a few hundred – but includes many senior figures those who once held some of the most powerful positions in the land.
This is an elite within an elite. Figures from the Department of Public Expenditure show that former public servants who receive pensions greater than €60,000 make up only 0.8 per cent of the total.
Only a few hundred people have benefits greater than €100,000.
That such pensions are exceptionally large is not in doubt. Some 39.7 per cent of retired public servants receive pensions between €24,000 and €60,000, 31.7 per cent receive between €12,000 and €24,000, and 27.8 per cent receive less than €12,000.