Moves on pensions are radical, says Howlin

LEGISLATION TO create a “sustainable” pension system has been introduced in the Dáil, but its impact is not expected to be fully felt for up to 40 years.

The Public Service Pensions (Single Scheme) Bill 2011 will base the pensions of new entrants to the public service on their career average earnings rather than on their final salary as at present.

Minister for Public Expenditure Brendan Howlin said the Bill would introduce “far-reaching reform of public service pensions” and aimed to strike a balance between public sector workers and the taxpayer.

But Sinn Féin deputy leader Mary Lou McDonald said the “elephant in the room” was that the legislation did not address inequities in the existing pension system.

She said “the scheme deals with new entrants only and fails to tackle the scandalous practice of excessive pay and pension arrangements for the big hitters across the civil and public service”.

The Dublin Central TD said “the country is in crisis, but judges, hospital consultants, county managers, the President and members of this House will continue to enjoy pay and pensions that would literally make our EU counterparts’ eyes water” and it was “utterly scandalous”.

Introducing the Bill, Mr Howlin said that in the next decade the number of people over 65 was expected to increase by 50 per cent. The cost of public sector pensions had doubled in the past decade and would double again. The reforms were essential because of changing demographics and increased life expectancy, where a man aged 66 this year has a life expectancy of 81 and a woman can expect to live to 85.

When the State pension was first introduced average male life expectancy at birth was 10 years lower than the pension age.

Ms McDonald pointed out that the Minister “has repeatedly said he cannot touch the existing schemes”. He had hinted there were legal issues regarding legitimate expectations but she called for him to provide “something more concrete”. She said it was “much preferable that a single, fair, equitable scheme should apply to all working in the civil and public service and that such distinctions not be made”.

Government “still believes it is acceptable to shell out for excessive pay and pension packages”, she said. Public servants on low and average incomes are feeling the pinch of the cuts and the majority of public service pensions work out at an average of €20,000 to €30,000 per year. But she believed there could be 1,000 retired public servants in receipt of the “whopping €100,000 per year pension payment”.

Fianna Fáil public sector reform spokesman Seán Fleming asked if the provisions on stopping or reducing the pension of a person dismissed for causing financial loss to a public body could apply to former financial regulator Patrick Neary. He was receiving a pension when “he did not do that job in a competent manner”.

Mr Fleming was also concerned that a provision in the legislation offered a “tremendous incentive” to senior public servants to “pull a sickie” and go out on disability with up to seven extra years’ pension entitlement.

He said those retiring on medical grounds would have their extra years’ pension calculated based on their last full year of salary. That runs “utterly counter to the principle” of the Bill to base pension on career earnings.

The Laois Offaly TD said the Minister should use the opportunity to have a single agency deal with pensions for the entire public service rather than each Government department and local authority dealing separately with pensions in their area.

Richard Boyd Barrett (PBP, Dún Laoghaire) opposed the legislation and said “the bottom line is that workers are being asked to work longer for less. It is part of a nasty, regressive attack on the rights and entitlements of working people generally.”

The debate continues.