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News : Irish Last Updated: Sep 23, 2010 - 5:07:55 PM


Cowen hoists white flag on Irish public sector pension reform; Pensions bill jumped 56.5% in the period 2004-2009 to €2.0bn
By Michael Hennigan, Founder and editor of Finfacts
May 7, 2010 - 9:10:35 AM

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Taoiseach Brian Cowen has hoisted the white flag on Irish public sector pension reform and has withdrawn proposals in the so-called Croke Park deal, that were agreed with the trade unions in March. The  public service pensions bill has increased by 56.5% in the period 2004-2009 to €2.0bn.

In 2009, the Department of Finance said pensions accounted for 10.7% of the total Pay and Pension Paybill, up from 9.1% in 2004. Overall, the pensions bill has increased from €1.3bn in 2004 to €2.0bn 2009 representing a 56.5% increase over the period (pay in contrast rose by 31.8%); the increase in the health sector pension bill has been 48% over the period  - - See Tables VII and VIII.

Currently, a pension is linked to the current pay of the individual's last job. The benchmarking award for example, was paid to pensioners because of this system which is extremely rare or non-existent in the private sector, as such pensions are very costly. Besides this special scheme for public staff including politicians, contrasts with a situation where the majority of private sector staff have no occupational pensions and increasingly, those who do, have no guarantee of final payment.

The existing agreement stated:"As announced in Budget 2010, the Government has decided to introduce a new single pension scheme for all new entrants to the public service. Consultations on the new scheme have started between the parties and it is agreed that these consultations will conclude in time for legislation to be enacted to allow for the introduction of the scheme on 1 January 2011.

Discussions will take place on the method of determining pension increases for existing public service pensioners and current public servants in the context of the review of pay policy in Spring 2011. There will be an extension of the period by a year within which the January 2010 pay reductions will be disregarded for the purposes of calculating public service pension entitlements."

 

It's reported that a new document clarifying elements of the deal was issued by senior officials of the Labour Relations Commission yesterday. It states the Government will not proceed, over the lifetime of the Croke Park deal, with the proposals for public sector pension reform.

“In the prevailing circumstances, the Government has clarified that no change in the current arrangements for the indexation of pensions for current public service pensioners and serving public servants will be implemented during the period of the agreement,”it says.

In response to the Government's climbdown, the largest public service union IMPACT is to recommend acceptance of the Croke Park agreement.

Previously IMPACT's executive had said that it could not recommend acceptance of the proposals because of concerns about its implications for the health sector, and the possibility that the Government could walk away from the deal if there were any unforeseen budgetary deterioration.

However the union reversed its position following the issuing of a set of "clarifications" of the Croke Park by the facilitators of the agreement Kieran Mulvey and Kevin Foley of the Labour Relations Commission.

The fudge has become a blancmange and little hope of significant reform is in prospect.

Finfacts articles:

Mar 2010: Irish Public Service Agreement 2010-2014: It could work or may not; "It's déjà vu all over again"

Mar 2010 Could the Irish public sector benchmarking fiasco provide a case for the DPP?

Apr 2010: Irish Economy: Ahern, Harney, McCreevy, Cowen and the other individuals/groups with responsibility for the economic crash

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© Copyright 2010 by Finfacts.com

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