Pension changes confined to new entrants

26th October 2011

The Department of Public Expenditure and Reform has confirmed that there has been no decision to change pension arrangements for current public servants. The department was responding to a letter from ICTU’s Public Services Committee, which was prompted by a clause in new legislation that makes it possible for a minister to change the current link between public service pay and pensions at some time in the future.

The new legislation is introducing less favourable pension arrangements for new entrants to the public service. The changes will have most impact on those earning over €45,000 a year throughout their careers.

The department confirmed that there would be no changes to pension indexation arrangements for existing staff and pensioners during the lifetime of the Croke Park agreement, which expires in 2014. But it did note that the agreement allows for discussions about possible future changes. It said the enabling clause in the new legislation would allow a minister to implement any future changes without primary legislation.

The exchange of letters came as it emerged that – despite headlines about so-called ‘Rolls Royce pensions’ – 78% of civil service pensioners receive annual pensions of €30,000 or less. Most of them are not entitled to receive a social welfare pension.

Public service unions have now sought a meeting with the minister to discuss a range of problems arising from the new legislation, which was a condition of the State’s deal with the EU-IMF-ECB ‘troika.’ It will see new entrant’s pensions calculated on the basis of career average earnings instead of earnings at the time of retirement, introduce a minimum retirement age of 68 for most new entrants, and link pension increases to inflation rather than the pay of the grade from which pensioners retire.

Read more about the changes for new entrants HERE.