Pensions to dominate negotiations on public service agreement

A key portion of talks on a new public service pay deal will see the Government and unions debate who should contribute more for their pensions; how much they should be expected to concede; and at what pay rates contributions should kick in.

The pensions of almost 250,000 public servants are worth 12%-18% more than their private-sector counterparts while, for a further 23,000 state employees who have achieved their full pension in less than 40 years, the gap is even wider.

That is according to the Public Service Pay Commission (PSPC), which recommends those public servants should make an additional contribution to their pensions even as the current pension levy is phased out. 

The size of that contribution will be one of the primary matters to be discussed when the unions and Government get into negotiations on a new pay agreement in the next fortnight.

The 12% differential mentioned by the PSPC is reflective of the difference suggested by the Irish Congress of Trade Unions, while the 18% figure is reflective of the submission from the Department of Public Expenditure and Reform.

Sources said the assumptions made by different bodies reflect different views on issues such as longevity, relationship with and movements in the State pension, and long-term investment returns. The PSPC put the gap at 13%-14%.

Unions will welcome the commission’s estimation that the pensions of public servants entering after 2013, of whom there are 50,000 is on a par with the private sector defined contribution schemes.

However, overall, they say public servants currently pay more than 20% of their earnings above €28,750 towards their pensions, once you take account of pension contributions, PRSI and the pension levy.

“The Commission believes that the values identified for those on legacy pre-2013 standard accrual pension schemes and fast accrual schemes [those who accrue full pension faster than 40 years] should be addressed by providing for an increased employee pension contribution for those who continue to benefit from those schemes,” said the PSPC.

“The rate of increase and the grades and categories to which it should apply is a matter for negotiation between the parties, taking account of the level of benefits accruing.”

Talks this month are likely to see a debate as to the percentage public servants who are pre-2013 should contribute to their pensions. 

The majority are in roles which attract a salary of between €30,000-€60,000 and unions representing that cohort will want the threshold for contributions to kick in at as high a level as possible.

However, the Government will want it to come in at as low a level as possible.

Public Expenditure Minister Paschal Donohoe would not be drawn on the Government’s opening position.

“The subject of how we will achieve this will all form part of negotiations that we will have later on in this month,” he said.

“The objective that we have is to put public service pensions and pay on an affordable footing to make sure that they are taken account of in negotiations that we have. 

"I acknowledge that those who work in our public sector already make contributions to their pensions, through superannuation payments so that is already in place.”

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