Sunday Read – Preserving Pension Certainty
One of the main negotiating priorities at the recent public sector pay talks was to provide members with certainty surrounding the value of their pensions – it was right up there with pay restoration and maintaining protections against privatisation.
Prior to the negotiations, the Government made clear its intention to attack the value of public service pensions. They had already passed (though not triggered) legislation to allow pensions to be indexed to inflation instead of the preferable existing link between pensions and salaries.
The government also flew its kites in the media about calculating all pensions on the basis of ‘career average’ earnings, instead of the more favourable final salary-based pension now in place for most. SIPTU, IMPACT and other unions were able to negotiate an agreement that stopped both these measures, which would have substantially reduced the value of pensions, from happening.
But every hard-fought victory has a price, and our members will now decide now if it was a price worth paying.
But first some context, the Public Service Pay Commission (PSPC), whose May report had informed the Government agenda going into the talks, recommended that most public servants should pay more towards their pensions. This reflected the fact that public service pensions are worth between 12% (the union estimate) and 18% (the employer’s) more than those available in the private sector. Other areas of the employer’s agenda could be fought off but it was impossible to simply stonewall a PSPC recommendation that the Government was determined to push through.
The end result is that an ‘additional superannuation contribution’ or ASC will replace some – though not all – of the so-called pension levy which will, in turn, be reduced by €575 a year over the lifetime of the deal.
The amount of post-pension levy ASC paid will vary depending on how much you earn. By 2020, a public service worker earning €35,000 per annum will pay €50 (or 0.14% of salary) in ASC each year. A worker on €45,000 a year will pay €1,300 (or 2.9% of salary). Those on €55,000 will pay €2,300, or 4.2% of salary.
There are two important caveats. Staff who joined the public service after January 2013 will pay a significantly lower ASC to reflect the fact that their pensions are not yet on par with pre-2013 arrangements.
And those on ‘fast accrual’ pensions (mainly firefighters, prison officers, Gardai and soldiers) will pay more as to reflect their pension benefits.
The ASC comes on top of the 6.5% that virtually all public service workers already pay towards their pensions, but the so-called pension levy will be gone.
And, when pay adjustments are taken into account, there will be a net gain of 7-7.5% for 73% of public service workers and every SIPTU member working in health will be removed from the FEMPI legislation.
When SIPTU’s elected national executive council met to discuss the proposals, it considered that the additional contributions were on balance a price worth recommending in exchange for the substantial gain of keeping the value of pensions intact, protecting our members against the threat of wholesale privatisation and given our members early pay restoration and a roadmap to pay progression.
Importantly, union negotiators also ensured that the proposed pay deal specifically links the additional superannuation contribution to the existing level of pension benefits. By spelling it out in black and white that the ASC “is intended to underpin the sustainability of public service pensions” the agreement makes it far more difficult for future Governments to interfere with your hard-fought for pension benefits.
When pay adjustments are taken into account, there will be a net gain for everyone – through pay restoration (6.8% – 9% for all SIPTU members) job security and certainty over the value of your pension when you retire.
Don’t leave it to others. Read the agreement. Have your say. Use your vote.