SPECULATION is mounting that the Government will cut the pensions of existing public service pensioners in the upcoming budget.
The pensions of retired public servants are currently linked to the pay of existing public service workers in that any increases in pay to the latter are also applied to the pensions of the former.
While Finance Minister Brian Lenihan cut the pay of public servants in the last budget by an average of 7%, pensioners did not suffer the equivalent loss to their entitlement.
Nonetheless, when it emerged just three months later, the Croke Park deal on public service pay and reform offered existing pensioners no such protection. Informed sources have been saying privately they believe it could be an area of revenue generation for the cash-strapped Government. In fact, some believe one of the key reasons why the Government is maintaining its support for Croke Park is that it knows it leaves a loophole open to it.
Trade unions representing existing workers will not allow a deal that offers some protection to their members to be scuppered by cuts to those outside their ranks.
The last budget allowed public servants retiring during 2010 to retire on their pre-pay cut salaries and the Croke Park deal extended that concession to those retiring up to the end of 2011.
Industrial Relations News has pointed out that if a pensions cut for those who retired before January 1, 2010, was implemented in Budget 2011, but leaving 2010 and 2011 pensioners untouched, “it would lead to the anomalous situation whereby the 2010/2011 retirees would be on a higher pension than all other public service pensioners”.
That in turn would mean a mass exodus of retirees towards the end of 2011 as those retiring afterwards would be doing so on the basis of the post pay-cut salaries.
It is likely that such a mass exodus would be favourable to a Government which is already in the process of trying to drastically reduce the numbers of state employees being paid out of the dwindling Exchequer coffers.
There would, however, be complications in how the cuts would be applied.
Would the cut be in line with the percentage cut applied to public servants in the last budget?
And should the additional cuts currently borne by public servants through the pension levy be imposed as well?
At present a full pension after 40 years’ service equates to 50% of the salary of serving staff in the same grade from which the pensioner retired.
Meanwhile, Health Service Executive management are to meet unions at the Labour Relations Commission on Monday to discuss controversial proposals to shed up to 5,000 staff by the end of the year. They will discuss the redundancy terms on offer as well as the effects the loss of staff will have on services.
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