Delay in public pension reform criticised

Ibec, the organisation that represents Irish business, has hit out at the Government’s delay in implementing public sector pension reform.

Responding to an Irish Examiner report which shows that Public Expenditure Minister Brendan Howlin has failed to sign off on a radical change in pension entitlements, Ibec’s director of industrial relations Brendan McGinty said: “The cost of pensions for serving public servants is unaffordable and projected to increase by €500m between 2009-2015. We cannot afford any delay in public service pension reform.”

As this newspaper revealed yesterday, thousands of new-entrant teachers and other public servants are continuing to qualify for gilt-edged pensions because of a signature delay by Mr Howlin.

They have avoided the imminent lower-paying pension regime by joining the public service over the last 12 weeks because of Mr Howlin’s failure to sign part of the 2012 Public Service Pensions Act that will base all new entrants’ pension benefits on career-average pay instead of final salary.

Mr Howlin’s department has no idea how many people have joined the public service since the act was signed into law at the end of July. However, in the education sector alone, almost 2,900 newly qualified teachers have been registered with the Teaching Council since July.

The reform is projected to cut public service pension costs by up to one-third, or €170m a year, by 2050.

Mr McGinty said it was essential that changes in pension benefits for public servants be introduced without delay. “The need for more radical reform is urgent and necessary, involving a shift towards career averaging in respect of future service accrual for serving public servants.”

Ibec’s concerns follow the organisation’s insistence that the payment of public sector pay increments be suspended, especially given the Government’s failure to achieve any significant savings to the allowances bill. Ibec said that it was not credible that pay increases were being sanctioned at a time when a further €3.5bn adjustment was needed in the upcoming budget.

“The country simply cannot afford public sector pay rises at a time when we’re spending €1bn more than we’re taking in every month,” he said. “The Government has failed to make any significant reduction to the public sector allowances bill, which is costing us €1.5bn per year. Savings will need to be found elsewhere. The increments, which cost up to €200m per year, should be suspended for the remainder of the Croke Park agreement.”