Public service unions attempt to prevent pensions erosion — but at what risk?

THE chairperson of the ASTI pensions committee, Bernadine O’Sullivan, commenting (Letters, July 16) on your report of the ICTU conference in Bundoran, highlighted the “very real cut” in lifetime wages arising because workers are being forced to accept defined contribution (DC) pension schemes instead of defined benefit (DB) schemes.

She concluded by stating “the trade union movement should be congratulated … in both the public and private sectors”.

PEPS (Pension Enlightenment for Public Servants) is a group of retired professionals and trade unionists which offers a voluntary pension information service for public servants.

We endorse Ms O’Sullivan’s statements with one major caveat. From our research over the past five years, we have to point out that far from “attempting to prevent the ongoing erosion of pensions,” the major public service unions — INO, TUI, INTO and Ms O’Sullivan’s own union, ASTI — have, with the tacit approval of ICTU, been one of the major driving forces in steering, via AVC pension enhancement schemes, their own members seeking additional basic pension away from the employers’ charge-free, wage-indexed DB notional service scheme (NSP) into the unions’ more risky fee-bearing DC/AVC plan.

They have also dragged their feet in implementing the solution suggested by the Commission on Public Service Pensions in 2001.

The commission had identified defects in the existing structures, such as information imbalance, conflicts of interest, high charges (on AVCs) and cost effectiveness.

It was envisaged that the proposed scheme for public employees’ additional retirement savings (SPEARS) would replace all the individual union AVC schemes with a single ‘bulk buying’ plan.

Control and responsibility would be taken from the unions and vested, as normally required by pension law, in the hands of a government agency which would share operating costs and underwrite guarantees. The joint working (implementation) group of employers and unions agreed in principle to the introduction of SPEARS.

It was agreed to establish a working group to promote its implementation.

That was in October 2003. We are told the working group has not been formed.

The three teaching unions, at a special meeting with the employers, said they had “difficulties” with this issue. In the meantime employees and taxpayers are losing out heavily.

George O’Sullivan

PRO

Pension Enlightenment for Public Servants

Knocnasuff

Waterloo

Blarney

Co Cork