Changes planned to pensions for new public servants will see the build up of retirement funds linked to an average of their working salary over the years rather than just their employment grade.
Public Expenditure Minister Brendan Howlin yesterday published changes in a bill and said that the move would put Ireland at the front of public service pension reform in Europe.
But trade unions threatened to mount a legal challenge against the reforms and even called the measures “larcenous”.
The changes will apply to all new entrants to the public service, including those in the civil service, the education and health sectors, local authorities, gardaí, army, non-commercial semi-state bodies as well as members of the Oireachtas and the judiciary.
Pensions will be calculated on average career earnings rather than the current position where the pension is based on a final salary.
The build up of retirement funds will also be linked to changing inflation rates, the Government said.
The minimum public service pension age will be increased to 66 and on a phased basis to 67 and 68.
The department say the new system is fairer as it will affect those promoted and on high earnings towards the end of their career rather than those on ‘flat’ salaries, like teachers or nurses.
Contributions to pensions will remain at the average level (6.5%) except for higher-earning occupations.
Under the system, new presidents, Oireachtas members, the judiciary and attorney generals will all have to pay a double contribution amounting to 13%.
The changes are one of the reforms agreed with the EU/IMF in the bailout.
The scheme will cut €1.8bn a year from the state pension bill by the middle of the century.
Primary teachers union INTO condemned the move. General secretary Sheila Nunan said: “There will be no net benefit from being in a pension scheme as many teachers will pay in far more than they will ever get out. This situation may be open to legal challenge, especially since membership is compulsory. It is larcenous.”
She said the pension levy in March 2009 brought the average pension contribution to 14% of income.
Mr Howlin described the claims as “extraordinary” but was willing to examine the concerns.
Fianna Fáil public expenditure spokesman Seán Fleming welcomed the move, but said it would be 40 years before benefits came.
Second-level teachers union ASTI general secretary, Pat King, said: “The ASTI is considering a legal challenge to the compulsory nature of the scheme.”
The proposed changes follow outrage at the recent package handed out to former government secretary general Dermot McCarthy who left office with a €600,000 retirement lump sum and €142,000 annual pension.
The Public Services Pensions and Remuneration Bill 2011 will now be debated by Oireachtas members.