Public sector pensions boost

Two thirds of retired public service workers who saw their pensions slashed during the economic crash are set to benefit from increases of up to €1,680 over the next three years, in sharp contrast to their private sector colleagues.

Public Expenditure and Reform Minister Brendan Howlin confirmed the €90m plan last night, saying the Government needed to ensure 65,000 low and middle-paid public sector retirees were among the first to benefit from the recovery.

Under a deal agreed in tandem with recently announced public sector pay rises, retired public sector workers will receive an average increase of €400 on January 1 next year, €500 in 2017, and €780 in 2018.

Mr Howlin said the development was taking place in order to address two separate public sector pension reductions during the crash, including the January 2011 cut on pensions in excess of €12,000 and a second FEMPI cut in 2013 for pensions in excess of €32,500.

The minister described the move as “prudent in the context of the fiscal space available to the Government”, adding he believed it “will not compromise the ongoing recovery in Government finances”. However, despite the return of funds to public sector pensioners, no plans have been put forward to help their private sector counterparts who experienced substantial reductions and losses in recent years.

Jerry Moriarty, chief executive the Irish Association of Pension Funds, said Mr Howlin’s comments jar considerably with those of Finance Minister Michael Noonan, who told the Dáil last week he has “no plans” to return what the group said was the “€2.5bn in tax” collected since the pension levy was introduced.

“The relative generosity between the two ministers is telling,” he said.

“Minister Howlin has demonstrated his commitment to reversing the burden of public service pension reductions at the earliest date economic progress permits.

“In contrast, Minister Noonan said only last week in answer to a Dáil question that he has no plans to repay any of the €2.5bn in pension fund levy tax collected from private sector workers. This seems wholly unfair.”

The €90m payment is in addition to the pay increases the Government agreed last month with public sector workers.

The Fiscal Advisory Council, IMF, and other notable financial bodies have urged Government not to overstretch too soon as this may stall the recovery.