Thursday 21 September 2017

Unions will fight any attempt to cut pensions by linking them to inflation

Tom Geraghty said unions were absolutely unanimous that there would be no deal that would reduce their members’ retirement benefits. Photo: Frank McGrath
Tom Geraghty said unions were absolutely unanimous that there would be no deal that would reduce their members’ retirement benefits. Photo: Frank McGrath

Anne-Marie Walsh

Unions will fight an attempt by the Government to stop State workers' pensions rising when someone in their old job gets a pay rise.

But sources revealed they may be more open to negotiate a higher pension contribution for their members.

The value of public sector pensions will be the big battleground at talks on a new pay deal due to begin later this month and a senior union official last night admitted it is likely to be more contentious than pay rises.

The Government will seek to drive down its pension costs and argue that the value of its employees' retirement benefits are far superior to private sector entitlements.

The first report of the Public Service Pay Commission that is currently being finalised is expected to uphold the Government's aim that a pension levy that brings in €720m a year is converted into a higher contribution.

The Government will also move to link pensions to inflation rather than the current system of pay increases for most staff, which could save the Exchequer an estimated €16bn over 70 years.

It has the power to do this under legislation enacted in 2012 which permits linkage with the cost of living rather than public servants' wages.

A senior union official said pensions will be the main battleground at new talks on a wage agreement to extend the current Lansdowne Road Agreement.

Bernard Harbor of Impact predicted that the discussions will be much more difficult than the negotiations on the Lansdowne Road Agreement.

"Pensions and the value of pensions will be one of the main battlegrounds," he said.

He said the union's absolute priority will be to protect the value of its members' pensions.

"There's an inevitability that employers will raise the question of the contribution towards the pension and that will feature in the talks," he said.

"If it is the main priority, it seems inevitable to me that the Government side will say if you want to protect the value, we have to have a conversation about contributions towards the pension."

Pay rise

He refused to say if Impact, whose general secretary Shay Cody is the chief union negotiator, is prepared to negotiate on higher contributions for its members. But he warned the union will resist attempts to break the link between pension increases and pay rises.

However, the secretary of the public sector union leaders' body - the Public Services Committee of the Irish Congress of Trade Unions - Tom Geraghty, recently said retaining part of the pension levy was "up for discussion". He said unions were absolutely unanimous that there would be no deal that would reduce their members' retirement benefits.

The commission's report will trigger talks on a new deal and pay rises may be included in next year's budget.

An invitation from the Government is likely to be sent to the Public Services Committee shortly after the report goes to Cabinet next week.

Negotiations on a new agreement are due to begin in the middle of this month, with a provisional deadline to conclude by the end of June to give unions time to ballot members.

The pension levy, formally known as the pension-related deduction, was imposed in 2009 as the government tried to stabilise its finances.

Its effect on the pockets of public servants has since been eased under the Lansdowne Road Agreement. The first €28,750 of earnings are now exempt so it no longer applies to the lowest paid. It is graduated depending on earnings and those on bigger salaries pay more.

In addition, public servants pay between 3pc and 7pc towards their pensions on top of the pension levy. Some civil servants do not make a personal contribution although they pay into a dependants' scheme.

Public servants get guaranteed defined benefit pensions, which are calculated on their final salaries, and increase when someone in their old job gets a pay rise.

Irish Independent

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