|Trinity College, Dublin. |
As the Government scratches around to find more than €4bn to reduce the
deficit in its forthcoming budget, it has been revealed that the Irish taxpayer
is stuck with a €1bn bill to bail-out the pension funds of State agencies like FÁS
and and public bodies such as
Responsibility for semi-State and university pensions was assumed directly
under the Financial Measures (Misc. Provisions) Bill which was rushed through
the Dáil in just three days in 2009. The National Pensions Reserve Fund is now
responsible for these funds and in a response to a Dáil question, the
Minister for Finance, Brian Lenihan, has signalled
in a letter
to Fine Gael’s Denis Naughten TD, that the deficit may exceed €1bn.
The university deficits amount to about €630m led by Trinity College at
While the majority of Irish private sector workers have no occupational
pensions and those who do face the prospect of meagre payouts, it has been an
exception in universities for both academic and non-academic staff to
retire without additional pensions years allocated.
This is an expensive perk and of course coming from the public treasury,
there wasn't much to worry about.
The Comptroller and Auditor General's (C&AG) 2010
report published last month shows that the net annual cost of a new
public pension entrant is 19.5% of salary while the net cost of an additional 1
year's service for ministers and judges is 62% of salary.
a separate report, the C&AG said additional years have become a feature of pension awards in
universities. By way of example, in UCD 78% of staff retiring between October
2007 and September 2008 had years added to their service for pension purposes.
These 42 employees had an average of 4.2 years added to their pensionable
service and their average salary on retirement was €74,434.
Similar provisions apply in other universities - - Trinity College stated that
since 1972, on the basis of custom and practice the award of added years has
become a legitimate
de facto entitlement under its Master Pension Scheme and that Scheme
members were advised that they had been granted added years.
This also arises in universities that operate pay-as-you-go schemes. For
instance, in the University of Limerick, nine staff retiring in 2008 were
awarded added years ranging from two years to the maximum award of ten years and
in 2009, 22 staff were awarded added years ranging from 3.67 years to the
maximum award of ten years.
academic staff appointed prior to 8 July 1986 are eligible by statute for
seven professional added years at age 60. The years are accrued in the first ten
years so that in the 11th year a
member of the academic staff has gained a right to seven added years at age 60.
Where such academics retire at age 65 they are entitled to a maximum of ten
added years as with the normal application.
The report says the statutes of NUI Galway (NUIG) state that the Governing Authority shall have the power
to award years in addition to the actual service of officers in specified senior
positions and posts deemed by the Governing Authority to be of a professional,
technical or specialist nature and in respect of appointment to which
qualifications and or experience ordinarily required would not permit
appointment of a person less than 25 years of age.
The C&AG said in practice, all staff in the grade of administrative officer and above
are awarded added years on retirement provided they meet specified conditions.
Eligibility is assessed by the Pensions and Investment Officer. The decision to
award added years is not sent to the Governing Authority for further approval.
The current Pensions and Investment Officer does not have a copy of the specific
delegation decision giving authority to award added years.
NUIG stated that although the wording of the relevant statute indicates that
added years are at the discretion of the Governing Authority, this discretion
has always been exercised in line with the provisions of the statute and staff
are annually advised of their projected added year’s entitlement (impacting
their decisions regarding overall pension planning).
Consequently, custom and practice and legitimate expectation dictate that
added years form part of the terms and conditions of employment. There is in
practice, effectively no discretion available to the Governing Authority in
respect of existing staff.
This is a convenient rationalisation from a university! The concept of 'legitimate expectation' is an interesting one when no authority exists to make these payments from public funds.
Such is life when there is little if any accountability.
American historian Daniel Boorstin, wrote in an essay,
"The Amateur Spirit and its Enemies,"
published in his book "Hidden History": "In the
United States today there is hardly an institution or a daily activity where we
are not ruled by the bureaucratic frame of mind -- caution, concern for
regularity of procedures, avoidance of the need for decision" -- all of
which, Boorstin suggested, was best summed up - -
"on a sign over the desk of a French civil
servant: 'Never do anything for the first time'."
Denis Naughten TD questioned why some funds were guaranteed when
other funds such as those of Aer Lingus and Aer Rianta were not.
“We don’t know what the implication of the final cost on
Government fiscal policy will be and we are yet to see if the
Government intends to make any attempt to recoup some of these
costs from the organisations,” he said.
It's interesting to observe the silence of normally voluble academic
commentators on public spending issues, about the gravy train under their noses.