Commission suggests 250,000 State staff pay more into pensions

More than 250,000 State employees should contribute more towards their pension arrangements, the Public Service Pay Commission has said.

In its report published on Tuesday, the commission suggests public service staff appointed before 2013 and who are covered by the standard or “legacy” pension schemes, as well as those groups who can accrue retirement benefits at a faster rate, should contribute more.

This should be achieved by effectively converting the existing public service pension levy into a new permanent higher contribution to their superannuation arrangements, the report argues.

The pension levy was established in 2009 under financial emergency legislation aimed at dealing with the crisis in the State’s finances at the time and currently averages about 5 per cent.

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The report suggests the pension arrangements for the 243,000 staff covered by the pre-2013 legacy pension schemes are between 12 and 18 per cent more valuable than those available in the private sector. It says the fast accrual schemes – where public service employees, such as gardaí, can accrue full benefits faster than 40 years – are more valuable again.

The commission also urges that future pay rises for State employees should be linked to workplace reforms and continuous improvements in productivity, in addition to other relevant criteria.

The report says there is a basis for public service staff representatives and employers to enter into negotiations for a further collective pay agreement to extend the Lansdowne Road agreement.

National finances

As control of the public service pay bill is a central determinant of Government policy, it would be up to the parties “to negotiate a timeframe that will provide for the orderly unwinding of the financial emergency legislation” having regard to four factors. These are: maintaining sustainable national finances and competitiveness; other Government spending priorities; the public service reform agenda; and equality considerations on public service pay.

The commission was not asked to make recommendations on pay for specific public service grades. However it did examine pay trends in the public service and looked at comparisons with the private sector in Ireland and internationally, where possible.

The report says earnings of higher-level public service staff are “in some cases significantly below private sector levels”. As of 2014, pay for public service employees at lower levels appear still to be higher than private sector pay levels for people with similar characteristics.

Data suggests that, on average, public servants receive significantly lower gains in earnings for each additional year of experience than do their counterparts with similar backgrounds in the private sector, the report continues.

“This pattern seems to have persisted for a considerable time. One interpretation would be that public service employment offers better earnings for those in low-paid occupations or at the start of their careers, in exchange for slower earnings progression and thus lower pay for those with more experience and seniority.”

International comparison

The report says that, internationally, earnings in the Irish public administration and defence, education and human health and social work sectors rank among the highest in similar EU and European Free Trade Association countries in 2014.

However, it says "the methodological differences in international data outside of the EU and data limitations in EU data, specifically the difference in what was estimated for Eurostat in 2014 and the Census 2016 results, make it difficult to draw definitive conclusions on international earnings comparisons".

The report also says that job security for public service staff has a value but that no satisfactory scientific evidence has been identified that could be reasonably used for assigning to it a monetary value.

In general there are no significant difficulties in recruiting staff to the public service although there are problems in some specific and specialist areas, particularly in the health service, the defence forces and senior executive level in the civil and public service, the commission adds.

“In the past, various pay devices were used to address specific recruitment and retention difficulties in particular specialist areas. These included entry above the scale minimum, accelerated incremental progression, allowances in the nature of pay, etc. It may be worthwhile for the parties to examine the use of such devices as part of the response to areas where real recruitment/retention challenges exist rather than attempt to rely solely on ‘a one size fits all’ solution.”