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Public Service Pension Reform - does not go far enough

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  • 09-12-2009 8:23pm
    #1
    funnyname
    Registered Users Posts: 1,763 ✭✭✭


    Denfined contribution not Defined benefit based on career average!
    Exchequer spending on public service pensions will be over €2 billion in 2010.

    As life expectancy improves and the population ages, this cost is set to rise. The State's pensions bill will grow from about 5 per cent to 13 per cent of GDP by 2050, with two thirds of the increase in spending going on social welfare pensions and the remainder on public service pensions.

    Cost increases on this scale cannot be ignored by a responsible Government determined to secure our economic future.

    The Government has decided to introduce a new single pension scheme for all new entrants to the public service. The legislation will be introduced in 2010 and the scheme will be in place by the end of the year.

    The new scheme will bring public service pension terms more in line with private sector norms. Among other things, it will change the calculation of benefits so that pensions are based on "career average" earnings rather than final salary on retirement as at present. This will be more equitable than the present system which favours those with higher earnings later in their careers. The minimum pension age for new public servants will also be increased from 65 to 66 and then linked to increases in the state pension age.

    More details of the main elements of the new scheme are given in the Summary of Budget Measures.

    The link to earnings or 'pay parity' basis for post-retirement pension increases is a feature of Irish public service schemes.

    The recent special report by the Comptroller and Auditor General estimated that the present actuarial cost of public service pensions is €108 billion. A change to a CPI basis for post-retirement increases would reduce that cost to €87 billion, a reduction of 20 per cent. On average, pay increases have been significantly greater than increases in the CPI.

    As part of the reform of public service pension arrangements, I will review the current arrangements and consider linking pensions to increases in the cost of living. Pending that review, I do not intend to apply the pay cuts I have already outlined to existing public service pensioners.

    These are significant changes. The Government is determined to meet the immediate fiscal problems Ireland faces and, at the same time, to make far-reaching reforms for the future.


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