'Give civil servants pay rises - but make them fork out for pensions'
A new advisory body will tell the Government to keep giving public servants pay rises - but will also recommend they make a bigger contribution towards their pensions.
The first report of the Public Service Pay Commission is expected to advise that it keeps unwinding the €692m pay cuts that remain in place under emergency legislation known as Fempi (Financial Emergency Measures in the Public Interest Acts).
But it will support in principle its desire to turn a pension levy imposed during the crash that is worth another €720m a year into a higher pension contribution. It concludes that public sector pensions are significantly out of line with private sector workers' benefits.
The commission will advise that the levy is converted into a pension contribution on top of existing contributions.
Its report is due to be presented to the Cabinet tomorrow and will trigger talks on a new public sector pay deal to extend the Lansdowne Road Agreement later this month.
The Government has already begun restoring some of the pay rises that it cut during the fiscal crisis from 2009 under Fempi legislation, as well as easing the levy. A total of €1.4bn is still in place in the form of pay cuts and the pension levy under the legislation, which Public Expenditure Minister Paschal Donohoe must justify in the Dáil this July.
Transforming the levy into an additional contribution can be done by amending the statutory schemes that established the pension schemes.
The report is also expected to point to the need to continue the process of unwinding Fempi.
It compares public and private sector pay with international comparators. A recent report by the Central Statistics Office found that when the pension levy was taken into account, public servants earned 0.6pc less than private sector employees.
Therefore, leaving it in place would give the Government a basis for claiming that such a deal would be fair to all taxpayers.
The pensions issue is likely to lead to clashes at talks as unions have warned they will oppose any cut to benefits.
They appear more open to negotiate an increase in contributions, although face a dilemma as a "one-size-fits-all" approach will hit members with the lowest benefits.
Sources said the pension levy has a "built-in equity" because it is graduated depending on earnings, with those on the highest earnings paying most. Under the terms of the Lansdowne Road Agreement, the levy no longer applies to workers earning less than €28,750.
Separately, the Government will seek to break a link between pensions and pay, which means pensioners get increases when someone in their old job does, which it can do under existing legislation, at the talks.