Employer’s group IBEC has today said that the Government must move to cap the escalating cost of public service pensions and introduce more radical reforms.
“The revelation last week that the state’s pension bill in 2007 for all serving and retired public servants has soared to €75bn is extremely worrying,” said IBEC director Brendan McGinty.
“This has jumped dramatically from €45bn. Most public servants are unaware of the value and cost of their pension scheme and the massive financial investment needed by government to maintain it.
IBEC has proposed a contribution rate cap beyond which employees would have to fund any pension liabilities on an equal basis.
The group has also suggested that all public servants should be required to contribute towards the cost of funding retirement benefits.
“The recent report by the Public Service Benchmarking Body brought reality into pay settlement in the public service at a time when Ireland is facing its biggest economic challenge in 20 years,” said McGinty.
“The report gave some recognition of this reality by putting a differential value of 12% on public sector pensions. This is probably understating the difference but it is at least a move in the right direction
“Today, private sector employees face the prospect that they may be among the 1,300 that are now losing their jobs each week. Even the prudent employees and self-employed that make provision for themselves and their families at retirement must face the uncertainty of global markets. The generous-state backed pension scheme enjoyed by public sector employees would offer them security beyond their wildest dreams.
"Civil servants recruited since 1995, who now make a contribution to their own pensions, were reimbursed for this in the form of a salary increase, fully paid for out of the public purse. Despite very modest reforms in recent years, these are a far cry from the reforms introduced in the private sector and about 60% of public sector workers continue to enjoy the more generous pre-1995 pension benefits.”