EMPLOYEES OF the Central Bank and Financial Services Authority argued before the High Court yesterday that the Minister for Finance’s refusal to exempt them from the public service pension levy is unconstitutional.
The employees claim their pension scheme is akin to a private fund and the Minister’s refusal to exempt them amounts to double or special taxation which is unconstitutional.
The claims were made yesterday at the opening before the president of the High Court, Mr Justice Nicholas Kearns, of a legal challenge to the levy by the Unite trade union and Paul Gallagher, chairman of its staff committee in the Central Bank and Financial Services Authority of Ireland (CBFSAI).
Mr Gallagher claims the levy has cut his monthly pay by €405 and he is already paying €312 monthly towards his pension.
Unite represents about 75 per cent of CBFSAI staff, 65 per cent of whom contribute to the pension scheme.
In the action against the Minister for Finance and the Attorney General, the plaintiffs want an order quashing the refusal to exempt them from the levy. Alternatively, they want declarations that certain provisions of the pension levy law are invalid, repugnant to the Constitution and in breach of the Maastricht Treaty.
They claim their rights under the Constitution to equality and property (Articles 40.1 and 40.3.2) have been breached. They also claim the levy contravenes Articles 101, 103 and 108 of the Maastricht Treaty relating to the Central Bank’s autonomy and a bar on the bank subventing its own State’s exchequer.
They say the Minister, Brian Lenihan, has told them the rules of their scheme “mirror” those applying in the Civil Service and in a large part of the wider public service.
Opening the case, Gerard Hogan SC, for the union and Mr Gallagher, said there was a critical difference between the CBFSAI employees and most civil servants in that the bank workers already have their own pension scheme fully funded by them and their employer.
They were now being asked to pay into a central exchequer fund related to superannuation of civil servants while they would “get nothing in return” unlike public servants, counsel said.
Despite the fact they were already paying into a ring-fenced employer/employee scheme, the Minister was saying other bodies such as Comreg and the Irish Aviation Authority were also required to pay even though they too have private pension schemes, counsel said.
The levy on his clients was unconstitutional and disproportionate because it was being levied against a small group of citizens who had been “singled out”.
The fact certain groups are exempt from the levy, such as members of the judiciary although they make a voluntary contribution, means this is not an ordinary tax, counsel said. The very fact there were exemptions under the Financial Emergency Measures in the Public Interest Act 2009, which brought in the levy, made it quite clear this was a means of making public servants contribute towards their pensions.
It was therefore a special tax and in breach of the bankers’ rights, counsel argued.