End to Pension increases – Retired Pub. Sector.

The Irish Independent, 27th December, 2016 reports:  “An end to pension increases for retired public-sector workers is on the table in the next round of pay talks. Public-service pensioners have traditionally benefited from pay parity, which means they go up when there is an increase in the salary of the person in their old job.

The Government would save billions by breaking the link between public-sector pension increases and State worker pay hikes. If the measure is enacted, their pensions would increase only in line with inflation.

Government sources have revealed that stopping public-sector pensions rising when State workers get wage increases will now be on the table in talks with unions next year. This would slash the pensions bill by €16bn over 70 years.

Public Expenditure Minister Paschal Donohoe has legislation on the books that would stop State workers’ pensions rising when someone in the grade from which they retired gets a pay rise.

Now that pay rises are firmly back on the agenda following years of cuts, Mr Donohoe is expected to give the cost-cutting measure fresh consideration.

Wage increases worth €290m are already due under the Lansdowne Road Agreement (LRA) next year, with payments to those earning over €65,000 due in April, followed by a €1,000 pay rise for those earning less than this in September.

Unions will also demand further pay rises at talks due to take place in the summer on a deal to succeed the LRA.

A total of €1.4bn cut from wages under emergency legislation has not been refunded.

The Public Expenditure Department said the issue of pension increases would be examined as its pay and pension strategy stabilised.

“As we move beyond FEMPI (Financial Emergency Measures in the Public Interest) pay and pension measures, including PSPR (public service pension reduction), towards more normal pay and pension setting conditions in the public service, the issue of how to adjust the post-award value of public service pensions through appropriate pay or other linkages will be considered by Government,” said a spokesperson.

Cuts to public service pensions imposed during the financial crisis are being partially reversed in three stages up to 2018. When fully rolled-out from January 1, 2018, the changes will mean all public service pensions worth up to €34,132 will be exempt from the cuts.

“Given that pensions were being reduced by the application of PSPR, the issue of public service pension increases did not arise,” the spokesperson said.

Negotiations

The department spokesperson said talks with unions due to begin next year would be informed by the Public Service Pay Commission’s first report, which would examine the unwinding of FEMPI legislation.

“Anything deemed to be relevant will form part of those negotiations,” she said.

The issue of linking pay with inflation was high on Government officials’ agenda in briefing documents prepared for Mr Donohoe when he took up his portfolio.

In an interview with the Irish Independent, Mr Donohoe said future negotiations had to take account of the value of public pensions.

“The reasons for that is that my expectation that the difference between public and private pensions has now widened in recent years,” he said.

“I’m only going to have those discussions on the basis of evidence because it’s a very, very difficult subject. That’s why I want the Public Sector Pay Commission to do their work.”

The Public Service Pensions (Single Scheme and Other provisions) Act 2012 provides for a potential replacement of pay parity increases for public service pensions with CPI increases.

The link between pensions and inflation already exists for public servants hired since 2013. But the legislation also contains a mechanism that would allow a similar link for all other civil and public service pensions.

In response to a parliamentary question in 2015, former minister for public expenditure and reform Brendan Howlin said the value of all expected future superannuation payments to current staff and their spouses was estimated at €98bn up to 2012. He said the pension payments to discharge this liability were spread over the next 70 years or so.

Mr Howlin noted that the 2012 Public Service Pensions Act allowed the Public Expenditure minister to link future pension increases with the consumer price index.

“Were this to be done, the accrued liability would reduce by a further €16bn to €82bn,” he said. The value of pensions and job security will be central to talks between unions and the Government when it comes to the crucial issue of pay rises”.

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7 Responses to End to Pension increases – Retired Pub. Sector.

  1. patrick joseph mc December 28, 2016 at 8:19 am #

    In many cases the provision of services for age related illnesses is the biggest problem. In an age of perceived entitlement to everything without individual effort the biggest losers will be people that gave and still give to society silently by work both paid and voluntary

  2. timothy December 28, 2016 at 7:29 pm #

    There doesn’t seem to be a realistic expectation that the austerity pension cuts will be restored. Inflation linked to cost of living will be the way ahead.

  3. John Brennan December 29, 2016 at 7:16 pm #

    There are two issues here which the Public Service unions will have to do a deal on and hopefully they won’t roll over as easy as they did in the Croke Pk, Haddington rd and Landsdowne rd deals. Firstly they will have to insist that all pension cuts be restored to their original levels and ideally with some level of retrospection for pensions foregone. It is in the interest of serving employees to have restoration of pensions as they will be facing retirement in due course. The second issue is the proposed abolition of the link between pay and pension. The Government will want to get rid of that arrangement and link pension rises with the rate of inflation. The big problem is who will decide what the rate of inflation is and what method is used to decide it. There have been very significant increases in medical insurance, motor insurance, fuel ( a variable depending on oil supply and the dollar rate I accept). Will these costs be factored in when deciding the rate of inflation? Hopefully now that the GRA/AGSI etc. have access to the Labour Court and other machinery that they will be in a position to fight the cause of pension restoration and maintenance.

    In any case Happy New Year to everyone in GSRMA.

  4. timothy December 30, 2016 at 6:33 pm #

    State pensioners, of which I’m one. are not too badly off at all. I have children working in the private sector as emigrants abroad and I’m acutely aware of the provisioning they have to make for their own personal and family welfare now and in retirement. In Ireland there is a dependency culture and clearly not enough entrepreneurship which leaves us the way we are. As a small island with an inward looking people we have suffered and romantic notions, coming mostly from poets writers and makebelievers, of 100 years ago were delusional and the formal state celebratory events that went on throughout this year lacked substance as to what nationhood should be in my view. Cronyism.deceit, dishonesty are very must alive and well here, sadly – look at what we elect to our dail tells us the story, good honest decent hardworking upright people would struggle to get in there. Populism rules the roost.

  5. patrick joseph mc January 1, 2017 at 10:53 am #

    Very well put Timothy ,many do not want to face reality or look at the bigger picture,

  6. John Brennan January 1, 2017 at 5:10 pm #

    I’m afraid Timothy that while certain State pensioners are doing fine there are many who are not. Every case is different and no one knows what is happening inside someone elses door. Family circumstance differ. I know many state pensioners who are struggling in minding sick partners or family members perhaps with special needs or who are single parents following marital difficulties. Life is hard for these people and so its not right to generalise. With regard to your other comments there is a good deal of truth with some exception.
    Ireland as a country after independence developed fine semi state industries, electricity, turf development, sugar manufacture which operated at profits. They were excellent examples of our native initiative. Unfortunately in regard to the sugar industry it was sold out by the European Union with Germany buying the Siucre label and the plant machinery from Carlow and Mallow taken apart and reassembled in Poland.
    Our education system for all its critics is turning out graduates who are in demand in every country in the world. However there is a clear lack of leadership from Government and in general our politicians are very mediocre with a very much “do as I say not as I do ” style of patriotism. It takes forever to make a decision on matters that require urgency such as our housing and health system difficulties. Nimbyism is alive and well and too many people want the quick buck via compensation for imaginary or exagerated injuries.
    Somebody voted in these politicians. As one man said to me at the last election. “I never vote. It only encourages them”

  7. timothy January 3, 2017 at 1:03 pm #

    Happy New Year all. It’s up to us all, through effort determination honesty, to make our country a better place and that has always been a new year resolution of mine. We really can’t blame the government because we elect them through populism and many of them fear making hard decisions.

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