Vol. 374 No. 11
(Limerick East) asked the Minister for Finance the main elements of the redundancy scheme on offer to certain public servants; the categories of public servant which will be eligible for this scheme; the way in which he intends to fund the lump sum element of the redundancy package; and if he will make a statement on the matter.
33.
asked the Minister for Finance the total number of new jobs created in the public service from June 1977 to June 1981 inclusive; the cost of their salaries for each year since their employment began until June 1987; and the estimated cost to the Government of paying redundancies to the members of the public service; and the numbers required in the Government proposals.
41.
asked the Minister for Finance if he will make a statement regarding the financing of redundancy payments for the public service for the year 1988 and subsequent years; if he has considered applying Central Bank reserves or surpluses to this end; and whether such payments are intended to be included in the public accounts submitted to and considered by Dáil Éireann.
44.
asked the Minister for Finance if he will give details of the manner in which redundancies in the public sector will be financed; and if he will make a statement on the matter.
51.
asked the Minister for Finance the plans, if any, there are in respect of Civil Service redundancies in the year 1988; and if he will indicate by Department the number of expected redundancies.
61.
asked the Minister for Finance the total expected cost of the proposed voluntary redundancy proposals for public sector workers; and the way in which it is intended to finance the payment of redundancy money.
I propose to take together Questions Nos. 68, 33, 41, 44, 51 and 61, all of which deal with aspects of the voluntary early retirement/ redundancy schemes for the public sector.
As regards the main elements of the scheme, I am circulating a summary of the relevant measures which covers all the essential features. As indicated in the summary, the measures are designed to apply over the entire public sector, excluding the Defence Forces and Garda Síochána. To date the package has been offered in areas where staff surplus to requirement have been identified, and this process will continue. In addition, it has now been decided to extend the scheme to other personnel aged 50 or over in the Civil Service, health and non-commercial State-sponsored bodies. As with the existing offers, management will still retain the right to refuse the terms to key personnel.
Since this is a voluntary scheme, it is not possible at this stage to predict how many public servants will avail of the scheme and from what categories, organisations and grades they will come. Similarly, it would be futile to attempt to give a precise figure as to the eventual cost of lump sums and additional pensions, as these depend on the salary levels and length of service of the people who apply for the scheme.
The position as regards financing is that, as I explained to the House on 25 October during my closing speech in the debate on the 1988 Estimates, the Estimates volume takes account of both the savings from the fall in numbers employed as a result of the voluntary redundancy package and the cost of pensions payable to employees who accept the package. I also pointed out that the cost of lump sum redundancy payments was not taken into account in the Estimates volume and that the costs of these payments would of course be influenced by the volume, nature and timing of the redundancies. I informed the House that the Government were discussing with the Central Bank arrangements for meeting these exceptional costs and that, when the total cost had been determined and the funding arrangements had been finalised, I would present the full details to the House. This is still the position. The full costs and their financing will of course be included in the relevant public accounts in due course. I have nothing further to add at this stage.
The position requested by Deputy Farrelly in respect of posts created from 1977 to 1981 is set out in a tabular statement which I have also circulated.
Summary of recently-announced measures to reduce public sector staff numbers
1. Subject to 4 below, the measures are designed to apply over the entire public sector, including commercial State bodies but excluding the Defence Forces and Garda Síochána, and are intended to meet situations where identifiable staff or groups of staff are surplus to requirements. Because of the range of organisations covered, there may be some variations, arising from local conditions, in the practical implementation of the scheme of early retirement but its essential elements, particularly as regards cost, will be the same in all areas.
2. The scheme of voluntary redundancy/early retirement terms is to be applied only in areas where identified redundancy or overstaffing exists or is reasonably expected to arise.
3. Where a prospective redundancy or overstaffing situation is identified, management will ascertain: the contribution which career breaks or job sharing can make to the reduction/deferral of the potential redundancy; the possibility of redeployment; the numbers likely to avail of the financial terms for retirement already announced (where it is apparent that the arrangements referred to above will not entirely eliminate staff surpluses). The application of these measures will be without prejudice to the existing rights of public sector employers in relation to termination of employment.
4. Further details of the measures as they apply to the Civil Service, health and local authority services are attached. They will be adapted for other public sector organisations and, in this connection, the provision in regard to guaranteed return from career breaks may require modification in the case of commercial State bodies.
Career Breaks
In order to promote opportunities for redeployment an extension to the career break scheme has been approved to allow staff to take up to five years special leave without pay with a guarantee of reemployment in a relevant grade within the service (but not necessarily within their existing organisation) within a period of twelve months of the date on which they had planned to return to work. The terms outlined below will not apply to staff returning from career breaks until they have given an adequate period of post-break service.
Job Sharing
The present job sharing scheme is being examined to see whether a more flexible approach could facilitate a wider application of the scheme. As an initial step, application of job sharing for a one year period will be considered.
Redundancy/Early Retirement terms for staff
(1) Staff with at least 40 years service — Immediate payment of pension and lump sum (based on actual plus purchased service subject to a maximum of 40 years)
plus
severance gratuity calculated at the rate of 2 weeks pay per year of potential service to age 65 (subject to a limit of 18 weeks' pay)
plus
statutory entitlements under the Redundancy Payments Acts, where appropriate.
(Note: Staff in category (3) below may also opt for these terms if they wish).
(2) Staff with less than 5 years service — Immediate payment of a short service gratuity calculated on the following basis
(a) 1/12th of salary per year of service
plus
(b) 3/80ths of salary per year of service where reckonable service exceeds two years
plus
(c) 2 weeks' pay per year of service (inclusive of statutory entitlements under the Redundancy Payments Acts, where appropriate).
(Note: staff in categories (3), (4) and (5) may opt for these terms, in which case their benefits will be calculated as if they had service of 4 years and 364 days).
(3) Established civil servants and other public sector staff on modified PRSI with at least 5 and less than 40 years service — Immediate payment of lump sum and pension, with a maximum of seven years added to existing service entitlements. The seven-year maximum will apply only to staff with at least 20 years actual service. For those with less than 20 years actual service the number of added years will be calculated on a pro rata basis, as following:
|
Actual Service |
Added years |
Total |
|
5 |
1.75 |
6.75 |
|
6 |
2.10 |
8.10 |
|
7 |
2.45 |
9.45 |
|
8 |
2.80 |
10.80 |
|
9 |
3.15 |
12.15 |
|
10 |
3.50 |
13.50 |
|
11 |
3.85 |
14.85 |
|
12 |
4.20 |
16.20 |
|
13 |
4.55 |
17.55 |
|
14 |
4.90 |
18.90 |
|
15 |
5.25 |
20.25 |
|
16 |
5.60 |
21.60 |
|
17 |
5.95 |
22.95 |
|
18 |
6.30 |
24.30 |
|
19 |
6.65 |
25.65 |
The foregoing is subject to (a) added years as above not exceeding potential service to age 65; (b) an overall limit of 40 years reckonable service.
(4) Unestablished civil servants and other public sector staff on full PRSI — under age 60 with at least 5 and less than 40 years service — For staff in this category, two options are available, as follows:
Option A
A preserved lump sum and pension will be payable at age 60.
plus
Statutory entitlements under the Redundancy Payments Acts.
plus
2 weeks pay per year of service (severance gratuity).
The application of these terms to this category is subject to the sum of (a) the severance gratuity and (b) the actuarially reduced equivalent of the preserved lump sum not exceeding two years pay. The method of dealing with such cases should be cleared with the Department of Finance.
Option B
Immediate payment of lump sum and pension (based on actual plus purchased service).
plus
Statutory entitlements under the Redundancy Payments Acts.
plus
Supplementary severance gratuity, equal to the difference between (a) Statutory entitlements under the Redundancy Payments Acts; (b) severance gratuity as applicable to staff in category (1) but payable only in cases where the amount at (b) above exceeds Redundancy Acts entitlements.
(5) Unestablished civil servants and other public sector staff on full PRSI — aged at least 60 with at least 5 and less than 40 years service — Immediate payment of lump sum and pension (based on actual plus purchased service).
plus
Statutory entitlements under the Redundancy Payments Acts.
plus
2 weeks pay per year of potential service to age 65.
Notes:
(I) The foregoing is of necessity a general statement of the main features of the terms. It may be necessary, in the detailed formulation of the terms, to make adjustments in particular cases.
(II) In the case of staff who are on full PRSI and whose superannuation schemes provide for co-ordination of pension (having regard to Social Welfare entitlements), pensions will be calculated by reference to "net pensionable remuneration" i.e. pensionable remuneration less twice the maximum personal rate of Contributory Old Age pension payable (at the date of retirement) to a person under age 80 without dependants. However, the existing rules governing supplementary pensions (hitherto applicable only to ill-health pensioners or pensioners over age 60) will be extended to apply to all staff who retire on grounds of redundancy. Thus, any person who retires on grounds of redundancy with a co-ordinated pension and who is (a) under age 65; (b) unemployed and; (c) ineligible for Social Welfare benefit due to circumstances beyond his control; will qualify for a supplementary pension sufficient to give him a total pension from the scheme equivalent to a pension without co-ordination.
Estimated salary costs of additional public servants recruited 1977-81
The number employed in the public service increased by about 29,000 in the period 1977-1981. It has been roughly estimated, on the basis of necessarily crude assumptions, that this increased the Exchequer pay bill as follows:—
|
Year |
Cost |
|
£m |
|
|
1977 |
20 |
|
1978 |
60 |
|
1979 |
105 |
|
1980 |
210 |
|
1981 |
305 |
|
1982 |
340 |
|
1983 |
345 |
|
1984 |
325 |
|
1985 |
365 |
|
1986 |
385 |
It is not possible at this stage to give an estimate for the first half of 1987.
The figures for the years to 1983 include workers in the Department of Posts and Telegraphs who were transferred to An Post and Bord Telecom in 1984.
The annual figures shown in the table represent broad orders of magnitude and are based on the product of the additional numbers employed and the average cost of employing a public servant in each of the years.
(Limerick East): What is the minimum number of redundancies the Minister requires over the next three years to fulfil his policy objectives? Will the Minister inform the House as to why if he found it possible to include in the pension subheads across all Votes the increases required to pay the pension element of the redundancy scheme, he cannot give the House a total for the lump sums, with the excuse that he does not know how many people will retire?
In relation to the numbers of personnel, the underlying assumption is that there will be a reduction of approximately 9,000 on the public sector payroll, including local authorities, during 1988. The corresponding figure for 1987 is 10,000. Those figures do not necessarily imply specific figures for redundancy or early retirement since much of the reduction will happen by natural wastage, retirements, career breaks and so on. The extent of this is impossible to predict as is the final takeup or the eventual mix of grades of those leaving on early retirement. In relation to the subheads, that relates to the pension. It does not count the lump sum, as we said quite clearly when the Estimates were published and as we have been saying ever since.
(Limerick East): Is the Minister saying he does not know how many people he expects to avail of the redundancy package, that he found it possible to include an amount of money to pay for this unknown number of pensions in the subheads but that he could not do the calculations for the lump sums?
That is what I am saying.
(Limerick East): How did the Minister manage to have such insight when calculating the pensions?
I had good advice.
Can I have the permission of the House to deal with the remaining question in the name of Deputy McDowell? Question No. 69 please.
