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Thursday 22 February 2018

Pension contributions 'will still fall short, even if reforms accepted'

Maeve McElwee of Ibec. Picture: Damien Eagers
Maeve McElwee of Ibec. Picture: Damien Eagers
Charlie Weston

Charlie Weston

Changes to ensure public sector workers permanently contribute more to their pensions have been dismissed as inadequate.

The pensions levy is to be renamed and become permanent.

But a leading business group said the State's 320,000 public servants would still not be making a big enough contribution to what are regarded as "gold-plated" pension arrangements if the deal is agreed.

Neil McDonnell of lobby group Isme said the changes to the pensions levy were not enough. He questioned the sustainability of the deal.

"The Government has set the bar too low in terms of public servants making a meaningful contribution to their pensions. Even after this deal the contribution will only be nominal," he said.

Chief executive of the Irish Brokers Association Ciaran Phelan said it was only right that gardaí, judges and firefighters would end up having to contribute up to 10.5pc of their salaries to fund their pensions.

"Public servants who are members of fast-accrual pension schemes face contributions of up to 10.5pc, but it should be remembered that they have one of the best pension schemes in the whole world.

"The cost of providing comparable pension benefits, often with a relatively young retirement age, would be unaffordable for almost all workers and their employers in the private sector."

Employers' body Ibec said it was pleased the pension levy, introduced as a temporary measure during the downturn, was effectively to stay in place under the proposed deal.

Officially known as the pension related deduction, the levy will be replaced by what is to be called an additional superannuation contribution (ASC).

Director of employer relations at Ibec Maeve McElwee said: "This is an issue that Ibec has consistently called for to be addressed as part of the deal."

In a key change, the new pension contribution will apply to higher levels of salary than the pensions levy. This will mean its impact will be less severe than the levy, under proposals agreed as part of a three-year extension to the Lansdowne Road Agreement. It also means the new pension contribution will not wipe out the pay rises for the majority of public servants.

Those who joined after 2013 will have to pay a smaller percentage of their salary in the new contribution than the current levy. This is to reflect the fact they have less generous pensions.

Irish Independent

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