Pensions boost for public servants is ‘unfair to private sector workers’
MOVES by the Government to restore some of the cuts to the pensions of retired public servants have been condemned as unfair.
The move is expected to mean that staff are to receive about €1,680 more in their pensions over the next three years as part of what is called pension restoration initiative.
The cost of the measure will be €30m each year, for three years.
Minister for Public Expenditure and Reform Brendan Howlin said that by 2018, a total 65,000 lower-paid pensioners would be removed from the scope of the pension reduction scheme.
The move has been described as unfair by groups representing private sector workers, as there is no plan to refund the levy imposed on their pension funds.
Retired public servants had two cuts in payment in 2011. Some 90,000 public servants were affected by the reductions.
Mr Howlin said the reductions would be reversed on a phased basis after agreement from the Cabinet.
He described the move as “prudent in the context of the fiscal space available to the Government”.
He added that he believed it will not compromise the ongoing recovery in Government finances.
Pensioners on less than €35,000 a year will get the largest increase. They are set to receive €1,680 over three years.
From January 2016 most pensioners who were affected by the public service pension reduction measures would receive a boost of €400.
There will be a further boost to pension income of €500 for most retired public servants from January 2017.
The minister said from that start of January 2018 there would be a further restoration of €780 to most pensioners hit by the pension reductions.
But the Irish Association of Pension Funds, which represents private sector pension fund holders, said the move was unfair.
IAPF chief executive Jerry Moriarty said: “The relative generosity between the two finance ministers is telling. Minister Howlin has demonstrated his commitment to reversing the burden of public service pension reductions at the earliest date economic progress permits.”
Mr Moriarty said that in contrast, Minister Noonan said last week in answer to a Dáil question that he has no plans to repay any of the €2.5bn in pension fund levy tax collected from private sector workers.
“This seem wholly unfair,” the boss of the IAPF said.
He said the Government has decided to prioritise the restoration of pay and pension for those within public sector employment ahead of private sector workers and retirees, all of whom have been affected by the €2.5bn taken in the pension levy.
“By contrast, the full-year savings from the pension measures applied to the public sector is a relatively modest €125m per annum,” he said.
Public servants who are still in work are due to get pay rises of around €2,000 on a phased basis.
This will cost the State €566m over three years.
Mr Howlin has insisted this was “affordable” and the “right thing to do”.
Under the proposals all public service staff will receive a €1,000 flat-rate boost to earnings next year.
Staff on low incomes who cannot benefit fully from the pension levy changes will receive special salary increases to bring them up to the €1,000 level.