Claims over public pensions ‘fantasy’

PUBLIC sector unions have said a survey that claims private sector workers are paying €5,000 a year per person to fund public service pensions is using “fantasy figures”.

The Professional Insurance Brokers Association (PIBA) claims the 1.6 million private sector workers are contributing about €8 billion a year to the public sector pension bill.

According to the study, more than €4bn in private funds are spent on social welfare pensions, in addition to €2.3bn in retirement payments and more than €1.7bn in National Pension Reserve Fund contributions.

As a result of the “deep inequity” highlighted by the findings – which the study said included a trebling of the retired public servants bill since 1999 – PIBA chief executive Diarmuid Kelly said the pension system was in need of immediate reform.

In particular, he said there was a need to more closely examine the “hidden 25% per year plus employer pension contribution currently enjoyed by public servants” and to ensure the “madness” of cutting private pension tax relief is avoided.

However, dismissing the study’s findings, IMPACT trade union national secretary Paddy Keating said PIBA was attempting to “drum up business” for companies offering private pensions and was operating in “fantasy figures”.

“PIBA’s own statement conceded that half of this €8bn figure referred to ordinary social welfare pensions. These go to all workers, public and private, and are largely funded from workers’ PRSI contributions made over their working lives,” said Mr Keating.

“According to PIBA’s statement, another €1.7bn of the alleged €8bn went to the National Pension Reserve Fund, which did not represent any payment to public or private sector pensioners.

“These are fantasy figures which take no account of the 6.5% of gross salary that most public servants pay towards their pensions or the 7.5% pension levy.

“This interest group, whose objective is to drum up business for companies selling private pensions, also fails to mention that the headline figures paid to public service pensioners include their social welfare entitlements, paid for out of their PRSI payments,” he added.

According to PIBA, less than 40% of private sector employees have private pensions compared with 100% of public sector workers.

It has warned that while public sector superannuation benefits are guaranteed by the taxpayer, just 10% of defined benefit schemes for private sector employees are adequately funded.