News & Updates

900,000 Irish workers have no pension for their old age

Date Posted: 07.05.2015

Public sector pensions in this country are considered among the most generous in the EU. But try telling that to a public servant, be they a civil service mandarin, a teacher or a nurse.

A senior official in the Department of Public Expenditure and Reform conceded that her colleagues across the sector do not understand just how valuable a perk their pensions are.

Take a teacher on point 20 of the pay scale who earns €52,472, according to the ASTI union.

With full service this person can retire on around €25,000, and get a tax-free lump sum of €77,000. It is not riches, but it is very generous by private sector terms.

A principal officer on €85,700 will get an annual pension of around €41,000, when account is taken of the 4pc public service pension reduction measure.

No wonder then that these unfunded defined-benefit schemes have been called gold-plated.

Yet some 900,000 workers in the private sector have no pension, other than the State contributory older age pension to look forward to in retirement.

And with an expected drop in the numbers in work, and a rise in those in retirement, it is unlikely that the State contributory pension will still be a relatively generous €12,000 a year in years to come.

The Government is still promising to introduce some kind of auto-enrolment pension scheme for those with no private sector pension provision.

But, as yet, all we have had is promises.

Then there is the fact large numbers of defined benefit schemes in the private sector - the ones that used to guarantee a certain level of pension based on final salary and years of service - are disappearing fast.

Most of those that remain have cut the pension benefits for those yet to retire and upped the contribution levels, and closed them off to new members.

Even Aer Lingus pensioners, once semi-state employers, fear a 50pc cut in their retirement payments once the scheme is restructured.

All of this means that the €1bn a year being stumped up by taxpayers to fund the annual shortfall in generous public sector pensions is contentious.

This will become even more contentious when the unions enter talks with the Government next year seeking a reduction in the unpopular pensions levy as well as pay rises.

The problem is that the pensions levy is a temporary "emergency" measure that is open to legal challenge.

Major changes are being introduced in Britain to make public sector pensions there more sustainable. It would be only fair to have similar reform here in return for reducing the levy.

But just don't bet on it with an election coming down the road.

source: Irish Independent


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