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Taxpayer to prop up university pension schemes

Brendan Keenan Twitter Email

THE taxpayer is set to take over university pension schemes after generous retirement packages pushed them into large deficits.

The move could give guaranteed public service pensions to college staff who otherwise faced cuts in benefits and higher contributions of the kind which have become common in the private sector.

But academics and other staff may face stricter rules on early retirement.

Early pension payouts which allowed staff retire in their fifties on generous terms are blamed in part for an estimated €200m deficit in the €1.4bn pension schemes.

The moves have been in train for some time, and other semi-state workers will probably also see their pensions transferred. Difficulties in financial markets, along with longer lifespans, mean these schemes can no longer afford the generous pensions traditionally paid.

Their assets will probably be transferred to the National Pension Reserve Fund, but the pensions will be paid from current taxation, like full public-service pensions. The difficulties in the pension industry have widened the gap between public and private pensions. University staff did not have a guaranteed pension, unlike government employees, but depended on the return from their pension fund investments. They risked seeing their benefits reduced because of the shortfall in the funds.

It is expected that they will move to the "defined benefit" of public sector pensions. It is not clear whether they will get the "gold-plated," pension of half final salary, indexed to future pay, received by most public servants.

"We would certainly advise our members to take a defined benefit scheme if it is offered," said Mike Jennings, General Secretary of the Irish Federation of University Teachers.

Transfer

Such a transfer will involve an increase in the €2bn cost to the Exchequer of the third-level system. The Government is considering sending in a team of consultants to probe work practices and efficiency in the colleges.

But it might reduce the Government's deficit in the short term, if the assets of schemes were deducted from the deficit. A final decision on that would rest with EU statisticians. With liabilities exceeding the assets, it is not clear what the attitude in Brussels would be.

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