Howlin warns public sector of pension deadline
State employees considering retirement have until end of November to keep all benefits
The Minister for Public Expenditure and Reform Brendan Howlin has warned public sector workers that unless they apply for retirement by the end of November they will lose a significant proportion of their pension benefits.
Describing it as the "last chance" for State employees to obtain their maximum pension benefits, Mr Howlin and the Government is providing a "grace period" to allow the pensions of those who retire prior to February 29, 2012, to be calculated at their pre-cut higher pay rates.
Mr Howlin said: "I would be very anxious to convey to public sector workers that any-one who retires after next February will do so, on a reduced pension. November 29 this year is the last chance for any-one to avail of the old scheme."
In a memo sent to staff, Mr Howlin is calling on workers who want to leave, to provide three months' notice by no later than the end of November, and the Government is hoping this concession will help it achieve the necessary reduction of 25,000 workers by 2014, to 280,000, as demanded by the latest IMF/EU Memorandum of Understanding, published on Friday night.
In an interview with the Sunday Independent, Mr Howlin said that whilst the Government does not yet have full data on this year's retirement figures, initial figures indicate that it "expects a significant number to leave".
He added: "I have required anyone planning to leave to give three months' notice because in areas such as teaching where a lot of departures are expected I want to be in a position where contingencies can be put in place.''
Mr Howlin's comments come as new figures obtained by the Sunday Independent reveal public sector workers who retired last year shared €750m in tax free lump sum payments, despite the country's budget deficit of over €18bn.
This figure could double if the Government is to meet its reductions target. In total, the pension bill was €2.2bn, up 65 per cent since 2005.
All public sector pensions are based on length of service and on what your final salary was on retirement. When they retire, all new pensioners receive a tax-free lump sum worth one-and-a-half times their final salary, and then up to half their salary in a pension for the rest of their lives.
Also, many people's pensions have been index-linked to the salaries of their successors, so thousands of former workers are receiving pensions worth more than what their final salary was. In contrast, the new arrangement will see pensions based on average career earnings.
"Public servants enjoy significantly better pension terms than the generality of their counterparts in the private sector, both in terms of benefits and greater security," a department memo on pay and pensions states.
The level of Coalition unity on reducing the pay bill was epitomised by a recent joint meeting involving the Taoiseach and Brendan Howlin with the Independent Implementation Body which is in charge of the public sector Transformation Agenda.
Mr Howlin said that at this meeting it was made clear that when it came to reducing public sector numbers "the Taoiseach and I are ad idem on this issue".
Mr Howlin also warned that wasteful expenditure at local and national level is being targeted. Responding to a query as to whether this was not part of Environment Minister Phil Hogan's domain, he succinctly noted "numbers are ours".
The latest EU/IMF update, published on Friday set out the strict parameters for Finance Minister Michael Noonan's first Budget in December.
The document commits the Government to major reform of public pensions, which will include "a review of accelerated retirement for certain categories of public servants. New pensions will be based on career average earnings".