Wednesday 22 November 2017

Overhaul of public service pensions 'could save €20bn'

Photo: Thinkstock
Photo: Thinkstock

Charlie Weston, Personal Finance Editor

EMPLOYERS' body IBEC has called for a radical overhaul of the pensions arrangements for serving public servants in a move it said would save €20bn over the next few years.

And a new survey of the largest private sector pension schemes has found that no employer can afford to pay the controversial pensions levy.

This means that the cost is to be passed on to workers in lower retirement benefits and to the retired in cuts of up to 9pc in their pension payments, a survey by the Irish Association of Pension Funds (IAPF) found.

Some €457m has been paid to the Government this month in the levy. Trustees of private sector schemes that paid around a quarter of the levy reported that they are all cutting member benefits to meet the payment.

Jerry Moriarty, of the IAPF, which represents trustees, said: "This cut includes a reduction in pensions being paid by these schemes."

Almost 40,000 people currently receiving pensions will be impacted with cuts in their pensions of up to 9pc, he added.

He stressed that pension savers had already contributed €850m to the Exchequer due to cuts in the tax relief in the last budget.

Meanwhile, IBEC called for pension entitlements for serving public sector workers to be based on average income, and not just final salary.

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