Pay commission will consider value of public sector pensions

The forthcoming commission on public sector pay will consider the value of public servants’ pensions as part of their remuneration, compared to those available in the private sector.

Minister for Public Expenditure Paschal Donohoe will bring a memo to Government seeking authorisation to set up the commission. It is likely to be established before the end of the year and will be asked to report by the middle of next year.

Its report will compare pay and conditions between the public and private sector, and also between public servants in Ireland and other countries.

Public sector trade unions are relying on the process to underpin the case for pay rises when talks on the successor to the Lansdowne Road Agreement get under way next year. Unions are seeking an early reversal of the public sector pay cuts and the abolition of the pension levy.

However, the inclusion of the pensions in the process will not help the unions’ case. Public sector workers generally enjoy pensions that are vastly superior to anything available in the private sector, where many workers have no pensions at all.

Lump sums

The Irish Times

reported yesterday that one in five retiring civil servants last year received tax-free lump sums in excess of €100,000, in addition to guaranteed pensions of 50 per cent of their final salary for retirees with full service.

Independent analysis shows such pensions in the private sector would cost millions of euro. The pension of an average civil servant retiring at 60 with 40 years’ service would cost €1.5 million if bought in the marketplace.

The Department of Public Expenditure has also confirmed there are no plans to break the link between pensions and current salaries.

Legislation introduced in 2012 enabled the minister to link public sector pensions to inflation, rather than existing salaries, though the relevant section has not been brought into operation. The Department confirmed there are “no plans at present to change that.”

Terms of reference

Trade unions are currently lobbying heavily on the terms of reference for the commission and on the identity of its chairman and members. The Impact trade union has told its members the commission “should not be packed with academics”. Impact is arguing that it “should include an adequate number of members with trade union backgrounds”.

Ciaran Rohan, general secretary of the Association of Higher Civil and Public Servants, said the chairman should be "someone familiar with the industrial relations field, not a judge, for example".

However, sources say the Government has also been told an independent person with actuarial or accountancy expertise should be appointed.

Mr Rohan said that the “first thing it will have to do is the reversal of Fempi”, the public sector pay cuts introduced at the height of the financial crisis under the Financial Emergency Measures in the Public Interest (Fempi) legislation.