Public sector elites made sure they didn't lose out on bumper packages
Published 26/10/2013 | 02:00
IT is said that the first thing the mandarins in the Department of Finance do when they examine a Budgetary proposal is check to see how it will affect them.
You can be pretty sure that is exactly what happened when the Government finally got around to implementing the commitment in the Programme for Government to limit the size of pensions that people can build up for tax relief purposes to €60,000 a year. A way had to be found around this to ensure that retiring public servants and politicians continued to end their working days on bumper pensions.
The €60,000 a year amounts to an overall pension pot of €2m.
Private sector employees in common defined contribution schemes will be hit from January with the €60,000 pension limit.
But two things were done to ensure that the big retirement incomes in the public sector were protected. First, a complicated calculation is being used to ensure that the older the person retiring is, the higher pension they can get out with. Those up to the age of 70 are the big winners here.
So that looks after the judges who whinged hard last year that they would lose out under the plans to cap pensions at just €60,000 a year. Then there was the other little shimmy. Defined benefit pension entitlements accrued up to the end of this year are protected.
This applies to all public sector employees and those in private sector defined benefit schemes. The mandarins had to allow private sector defined benefit schemes into the party, but it is a moot point as most are in deficit.
The net effect of all of this is that private sector employees in common defined contribution schemes will be hit from January with the €60,000 pension limit, while those in the public sector won't see the limit fully applied until January 2054.
Public servants retiring in the next five years will be able to enjoy a pension of up to €115,000.
The elites win again.