The state's public pay body says workers should contribute more for their pensions

PUBLIC-SECTOR WORKERS on the most generous pension schemes should contribute more to fund their own entitlements, according to the state’s Public Service Pay Commission.

The expert body also said that any “adjustments” to public-service pay should be conditional on reform in the sector alongside better productivity.

The commission was set up last year as the government faced calls to unwind the FEMPI pay cuts brought in during the economic crisis alongside snowballing demands for wage rises in various sectors.

In its report, the body found that those on standard, pre-2013 public pensions enjoyed a premium of between 12% and 18% in their entitlements when compared to private-sector norms.

The cost to the exchequer of paying public-sector pensions, after allowing for the pension levy, was €3 billion last year, down slightly on the 2012 peak but double the figure spent in 2007.

The commission said:

“The values identified for those on legacy standard accrual pension schemes and fast accrual schemes should be addressed by providing for an increased employee contribution for those who continue to benefit from those schemes”.

However the report added that it would be “reasonable” to apply any increases in pension contributions at the same time as the dumping of the FEMPI-related pension levy.

Those on higher pensions saw their benefits cut during the recession, while the majority of public-service workers hired since 1995 also make pension contributions worth at least 3% of their pay.

At the launch of the report today, Minister for Public Expenditure and Reform Paschal Donohoe said that the “public-service pension issue is a complicated and changing situation”.

Public vs private pay

Separately, the commission’s report backed up earlier findings from the CSO that the pay premium public-sector workers enjoyed over comparable employees in private firms had largely disappeared during the recession.

The report noted that the Irish public pay premium in 2010 was still among the highest in EU, but it had since declined and become a discount for workers on higher pay scales.

The commission also said there didn’t appear to be any widespread problems in recruiting staff to the public service, with the exception of some specific areas like health.

It added that the rolling back of the FEMPI measures should be done in an “orderly” fashion taking into consideration other government spending needs, the need for “sustainable national finances” and “equity considerations”.

The commission said that its research didn’t take into consideration the clear benefit of “security of tenure” in the public service as there was no method of assigning it a specific value.

Unions have been calling for the pace of public-pay restoration to pre-recession levels to be sped up from the measures agreed under the Lansdowne Road agreement of 2015.

However, the commission instead called for the agreement to be extended, adding that the country needed “a modern, agile and flexible public service”.

“The commission considers that where adjustments to pay are implemented in the public service, they must continue to be contingent on the delivery of reform and continuous improvements in productivity, in addition to other relevant criteria,” the report said.

With teachers, nurses and gardaí all voting in favour of industrial action during the past year, any moves to increase pension contributions or stall pay rises are likely to run into strong opposition.

Donohoe said he will ask public-sector unions for talks on “affordable and sustainable” pay agreement.

“Every euro that is available to the exchequer can only be spent once, and this agreement has to be in the context of the other things the country at large wants me to deliver,” he said.

“The demands upon available resources to the state are very, very, very large.”

Additional reporting Gráinne Ní Aodha and Christina Finn.