2014 before changes kick in

THE public service pension arrangements announced by Brian Lenihan yesterday will barely apply before 2014 given that it only applies to new entrants and there is a staff recruitment ban for the next four years.

For those who will be subject to the scheme there are a number of facets to it which make it substandard to the scheme for existing workers.

From 2010 onwards entrants to the pension scheme will be subject to:

* An additional year’s work. The minimum public service pension age is being lifted to 66 initially from 65. Brian Lenihan said it was to bring the scheme into line and link it with the state pension age.

* A higher maximum retirement age. For staff recruited before 2004 there was a maximum retirement age of 65 years. That is being increased to 70 years.

* In most cases a lower pension. Rather than being based on the wage at retirement age, the scheme will be based on “career average” earnings. Under this scheme public servants pay at the start of their careers will still impact on the final amount they receive as a pension.

“A specific ‘pension accrual rate’ will be applied to pensionable pay so that each year public servants will earn a certain amount of pension payable on retirement,” the Finance Department said.

“This is a fairer system: it lowers the pensions of persons with high earnings especially in late career with less impact on the pensions of lower paid public servants such as nurses and manual workers.”