ABOUT 350,000 staff in the public sector face paying additional pension contributions of between 2 per cent and 10 per cent of salary as part of Government plans to cut €2 billion in exchequer spending this year.
Under the proposals, existing travel and subsistence arrangements are also expected to be reviewed and sharp cuts in overtime hours introduced. Speaking last night on RTÉ, the Minister for Defence Willie O’Dea said “there was no difference” between cutting public servants’ pay and asking them to pay more for their pension.
The proposals emerged as part of talks between the Government and the social partners on a new economic recovery programme which were continuing early today.
Highly placed sources said the pension “levy” would be introduced on a graduated basis with those earning the most paying the highest levels. However, it is likely that all staff will have to make some contribution.
It is understood the levy, which would average around 7 per cent, would generate around €1.4 billion in gross savings for the exchequer. However, the net after tax figure would be closer to €1 billion.
The full details of the Government proposals for the application of the new pensions contributions had not been spelled out to trade union leaders by late last night.
Some sources suggested the pension contribution thresholds under consideration were substantially lower than had been previously believed and could see workers paying 2 per cent on their first €20,000, 5 per cent on the next €30,000-€40,000 and 10 per cent on figures above this level.
Earlier senior Department of Finance officials told union leaders that “the lion’s share” of the €2 billion in spending cuts sought by the Government this year would have to come from the public sector pay bill.
The department officials also said the 4 per cent reduction in payroll costs announced in the Budget last October was considered to be separate from this €2 billion saving on expenditure. Offering evidence that the talks still face major hurdles, a Cabinet meeting scheduled for 10.30am is to be delayed by up to the three hours to allow time for negotiators at Government Buildings to reach agreement. However, the crisis facing Waterford Glass, and, in particular, the threat posed to the company’s seriously indebted pension scheme, is proving to be “a very significant issue”, Cabinet sources said last night.
The general secretary of the Irish Congress of Trade Unions, David Begg, said yesterday the talks on generating the €2 billion in spending cuts would “inexorably focus” on public sector staff paying more for their State-guaranteed pensions.
He said that there were not too many instruments available to generate the savings.
He said the trade union movement had ruled out pay cuts for principled and practical reasons, that scaling back on allowances could hit some sectors disproportionately and that curbing increments could be difficult as some people at the top of the scale would not be affected.
Trade unions were last night also awaiting a firm response from the Government to their calls for additional taxation measure to be introduced this year to ensure that all sectors of society, and not just the public service, shared the pain equally.
Union sources said last night that no proposal on taxation had been put forward by the Government at that stage. Taoiseach Brian Cowen intends to outline the terms of a social partnership deal, if one is agreed, to the Dáil this evening by way of a special statement. A memorandum on some elements of the deal – including pension levies, redundancies and other issues – will have to be submitted to ministers for approval.