Top pensions face cut as State aims to save €1bn
Published 25/01/2013 | 05:00
THE €100,000-plus pensions of retired politicians, judges and hospital consultants face new cuts under government proposals to slash its payroll by €1bn.
Senior sources say the highest pensions of former public servants are in the "crossfire" again. The cuts may be achieved by amending existing legislation that reduced public servants' pensions twice in the last few years.
It follows revelations that former Taoiseach Bertie Ahern is taking his full €150,000-a-year pension since he left the Dail, after doing a U-turn on his decision to give part of it back.
A pension cut brought in by former Finance Minister Brian Lenihan hit all public servants on pensions above €12,000, although those who enjoyed the top payments lost out the most. The cuts ranged from 6pc on amounts between €12,001 and €24,000 to 12pc on amounts over €60,001.
The following year, a 20pc tax on pensions over €100,000 was brought in – but those with more than one pension, including many politicians, avoided it because of a legal loophole.
New cuts for the top pensioners would not spark opposition from unions at ongoing talks, as they are currently only negotiating payroll cuts on behalf of current staff. And it would not breach the Croke Park Agreement, which guarantees the pensions and pay of existing staff.
The Lenihan pension cuts, which applied to all retirees on pensions over €12,000, raised €100m. But any saving by targeting the highest pensions is likely to be lower because it would hit a smaller amount of people .
It is understood there are now only 250 pensioners on pensions above €100,000, although the cuts could apply at a lower threshold.
However, the measure would send out a strong signal that the Exchequer's top beneficiaries are sharing the pain.
"Around 80pc of public servants are on pensions of less than €30,000 and I don't think there is any interest on the part of the Government to go after lower-paid pensioners," a source said
The Department of Public Expenditure and Reform refused to comment on the possibility of a cut for existing pensioners. It did signal further "pensions measures" would be on the table at talks on a successor to the Croke Park deal recently, but did not give any details.
In addition, a letter from the secretary general of the department Robert Watt to the public service unions said the Government aimed to reduced the pension bill as well as pay costs.
A new voluntary redundancy scheme, announced this week, aims to make savings of €228m a year in two years' time. Along with cuts for public sector pensioners, this saving would also reduce the €1bn in savings being sought from existing staff from now until 2015.