Madam, – Your Editorial (January 11th) seriously misrepresented the situation regarding public sector pensions. It stated that these were “paid for out of tax revenue”, and gave the impression that public servants make no contribution to their own pensions.
In fact, public servants contributed 6.5 per cent of their pay towards their pensions up to last year, and now contribute more than 13 per cent, courtesy of the pension levy, while the Government only contributes 3.5 per cent.
For many years the Government contributed even less to the scheme and will continue to make considerable savings from the fact that public servants recruited before 1995 will not receive a statutory old-age pension.
In most private-sector schemes, the pension contribution figures are reversed: the employer normally contributes two-thirds of the cost while employees contribute one-third.
Of course, many private-sector workers do not have an occupational pension scheme, although in theory they can address the problem through the Personal Retirement Savings Accounts (PRSA) system. Unfortunately, the PRSA initiative has been an unmitigated failure, even by the standards of this Government.
Your own columnist, Fintan O’Toole, last week pointed out that only 6 per cent of employees had availed of PRSAs, and the average number of contributors was just three and a half per firm. Like anyone else with a private pension scheme or additional voluntary contributions (AVCs), they will also have seen the real value of their contributions fall sharply over recent years.
Rather than seek to drive down public-service pensions, and indeed good private-sector defined-benefit schemes, to the lowest common denominator, we, as a nation, should be reforming our system to provide a decent occupational pension scheme for everyone. At present the top earners in our society receive almost as much in tax breaks each year as all our contributory old-age pensioners receive – €3 billion versus €3.4 billion.
That must change. Targeting public servants yet again to divide PAYE sector workers may succeed in distracting attention from the real inequities in our society but it will not solve the underlying problem – namely, the lack of a government with the political will and the political skill to take on powerful vested interests such as the insurance industry, in the interests of us all. – Yours etc,