'Inevitable' big State pensions will be cut -- Hayes
Published 14/02/2013 | 04:00
NEW cuts to the pensions of former highly paid public servants like hospital consultants, judges and politicians are inevitable, a government minister has warned.
Public Expenditure and Reform Junior Minister Brian Hayes said a plan to reduce large pensions has been tabled to achieve €1bn payroll savings. He said there was an "inevitability" that those who enjoyed the biggest yearly payouts would be hardest hit.
The junior minister also indicated measures are being considered to impose a higher rate of tax on certain retired state employees.
Currently there are retirees with pensions worth a combined €100,000 but they avoid a 20pc rate of tax which applies to a single pension of that value.
Former ministers, including Charlie McCreevy, Dermot Ahern, John O'Donoghue and Mary Harney, escaped the tax because of a legal loophole. Anger about top-level pensions has mounted since it emerged that former Taoiseach Bertie Ahern, who had volunteered to give part of his €150,000 pension back to the State, did a U-turn and took it back.
When asked if he felt cuts to higher paid pensions would be part of €1bn payroll cuts over the next three years, Mr Hayes said: "I think there is an inevitability around that. All I'm saying is, it's on the table. The only way this agreement can be forged is if it is seen to be fair, and those who have most will have to give most."
He said the Government had already imposed a 20pc additional charge on "very substantial" public service pensions, but accepted there were "issues" with the measure.
"There are issues which will have to be part and parcel of an agreement in this area, so it could well include highly-paid public service pensioners in terms of additional reductions to their pensions," he added.
It is understood that the cuts could be imposed by capping top pensions, or imposing deeper cuts by amending legislation that reduced pensions.
Imposing pension cuts has an advantage for the Government in brokering a successor to the Croke Park deal as it will not be opposed by unions, who represent serving staff.
It would also send out a strong message that well-paid retirees are sharing the burden of the crisis in the state purse.
The junior minister also issued a warning to nurses, gardai and other staff who are refusing to engage in the talks or have threatened to pull out.
In what may be seen as a hint that they may face government-imposed pay cuts, he warned that they could not expect "favourable treatment" if they do not back a deal.
"I'd say to the nurses and to everyone else, to be part and parcel of these discussions," he said.
"You can achieve nothing on the fringes. You can achieve nothing on the outside. We want engagement on the inside.
"And of course no one group, be they nurses, gardai or anyone else, has the right to stand back from the process and think that they will be treated favourably just because of their negotiating tactics."
The minister's warning comes as frontline workers are gearing up to begin a campaign of lobbying TDs and senators over cuts to their premium pay and allowances this weekend.
"The Government is very ambitious for a deal here," said Mr Hayes. "You can't start picking and choosing your negotiating strategy."
He said the public sector unions who are at the table realise the talks are about the sustainability of state employees' pay and pensions in the future.
"If we get this agreement, it would put us in a very strong position in terms of what we need to do in the public sector, so I'm encouraging everyone to be part of this."
He said he agreed with Public Expenditure Minister Brendan Howlin that this would be the "last round" of cuts that public servants would be asked for. "I don't think the issue can be broached again," he said.
Mr Hayes was speaking at the launch of a guidebook 'Are tenders on your radar?' to help small and medium-sized businesses win public sector contracts at the Dublin Chamber of Commerce.