Sunday 23 July 2017

Pay body is 'ignoring reality' in assessment of the pensions gap

Minister for Public Expenditure and Reform Paschal Donohoe Picture: Tom Burke
Minister for Public Expenditure and Reform Paschal Donohoe Picture: Tom Burke

Anne-Marie Walsh and Kevin Doyle

Expenditure Minister Paschal Donohoe has insisted that the gaping difference between public and private sector pension provisions will be on the table at new talks, despite a report advising it stands at just 14pc.

The commission advising the Government on its pay policy has been accused of ignoring the "elephant in the room" in its calculations - because most private sector workers have no pensions at all.

Pensions expert Tony Gilhawley criticised the Public Service Pay Commission for failing to count this key factor in when calculating the gap between public and private sector workers' benefits.

Its report does say it is important to note that most private sector workers do not have occupational pensions.

However, it concludes that this is a broader societal matter and there is merit in saying it should not be used to disimprove public sector pensions.

The value placed on pensions at talks due to begin shortly on a deal to extend the Lansdowne Road Agreement will be highly contentious.

The Pay Commission estimated that the gap in public and private pensions is between 13pc and 14pc.

However, if the lack of coverage in the private sector was taken into account, the gap would be much wider.

Mr Donohoe is expected to represent taxpayers at the talks.

Many may feel aggrieved that they are funding retirement benefits that are worth much more than their own.

But speaking to the Irish Independent, Mr Donohoe insisted he would be putting it to the unions that most private sector workers don't have any pension.

He said the Pay Commission had to give some basis between existing public and private pensions, but that didn't mean he couldn't factor in the broader issue.

"That is a matter I will be taking into account in the negotiations that we will be having," he said.

Mr Gilhawley said he was surprised that the public-private gap is estimated to be just 1pc to 2pc higher than it stood in 2007.

"How can you ignore that two-thirds of the private sector workforce has no pension?" he said. "It's the elephant in the room. The commission notes it alright, but then explains it as not being a public sector problem. This ignores the reality.

"They could have gone on to give their estimate of the gap, and then said if private sector coverage was taken into account, it would be x amount."

He also disputed the commission's figures that 40pc have pensions in the private sector, claiming it is closer to 35pc.

Irish Independent

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