Wednesday 7 December 2016

Central Bank staff fail in challenge to pension levy

Tim Healy

Published 09/10/2010 | 05:00

CENTRAL Bank and Financial Service Authority employees have lost a High Court challenge to Finance Minister Brian Lenihan's refusal to exempt them from the public service pensions levy.

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They claimed their pension scheme was like a private fund and Mr Lenihan's refusal to exempt them amounts to double or special taxation, which was unconstitutional.

The Unite trade union and Paul Gallagher, chairman of its staff committee in the Central Bank and Financial Services Authority of Ireland (CBFSAI) brought the challenge against Mr Lenihan and the AG.

Mr Gallagher said the levy had cut his monthly pay by €405, on top of €312 a month he already paid toward a pension.

Yesterday, High Court president Mr Justice Nicholas Kearns dismissed the action, saying the bank workers had not rebutted the presumption that the 2009 Financial Emergency Measures in the Public Interest Act, which brought in the levy, is constitutional.

The compatibility of the 2009 act with constitutional guarantees of equality and property rights had already been established in other recent High Court decisions, the judge said.

The purpose of the 2009 act was more than just to cut current exchequer spending, but for those getting a public service pension to make a contribution, or further contributions, given the serious economic circumstances of the State, he said.

Other considerations

There were other considerations that may justify the CBFSAI workers having to pay the levy, chief of which was clearly and undeniably that their pension scheme was modelled on the public service scheme, which was significantly and markedly more favourable than those in the private sector, the judge said.

He rejected the workers' claim that it amounted to double taxation, and said there was clearly a public interest in the deductions principally to ease the pressure on the State's finances.

In the context of the 3pc to 10pc deductions involved, it did not amount to a disproportionate additional contribution from a person with the benefit of a public sector type pension, given current economic circumstances.

Even if their property rights were being interfered with, he was not satisfied that it was an interference as to amount to an "unjust attack" on those rights.

The workers had failed to establish unequal treatment as against other public servants.

No expert evidence was advanced during the proceedings to show the manner in which pensions are paid across the public service and any comparison with how schemes are operated in the commercial semi-state sector, he said.

He further rejected their argument that the act contravened articles 101 and/or 103 of the EU Treaty by consisting of or constituting a form of financing by the Central Bank of public sector obligations regarding third parties.

Irish Independent

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