Dáil Éireann Debate, Wednesday - 10 March 2010
47 Deputy John Perry asked the Minister for Finance if his decision to alter the public service pay cut for the top earners will mean a discriminatory impact on their pension rights compared to lower paid public servants. [11626/10]
Amharc ar fhreagraThe Financial Emergency Measures in the Public Interest (No. 2) Act 2009 made provision for a reduction in the salaries of public servants with effect from 1 January 2010. Under section 6 of the Act, I varied the application of the pay reductions for the assistant secretary and deputy secretary grades in the Civil Service, and related public service grades, to take account of the reduction in remuneration which had already taken place for these grades arising from the termination of the scheme of performance-related pay.
Section 3 of the Act provides that, for those public servants currently in receipt of a pension or those public servants retiring up to 31 December next, the pay reductions would be disregarded for the purpose of calculating their pension benefits. This provision applies equally to all public servants who are subject to the legislation irrespective of their salary and, accordingly, no discriminatory impacts arise.
Is it not the case that bonuses were non-pensionable and that what the Minister has allowed is that senior public servants would see a cut in a non-pensionable allowance instead of a proposed cut in their pensionable pay, and, therefore, the implications are that their pensions have been protected where every other public service had to see an effect not only on their serving pay, but on their pensions into the distant future? Typically, this is worth €17,000, half of which is a pension of some €8,500 in perpetuity. Is this not another element of unfairness in the way the Minister handled this in respect of pension entitlements?
The error in what Deputy Bruton suggests this afternoon is that there has been no change in pension entitlements. Pensions are linked to the previous rates. There has been no change in the basis of the calculation of pension and, therefore, no question of discrimination can arise. Everyone, for pension purposes, has been treated in the same way as they were treated before the budget, and that remains the case for the duration of this year.
That is nonsense and the Minister knows it.
That is the position and, therefore, there is no question of a discrimination having arisen.
The Minister is like the Red Queen in Alice’s Adventures in Wonderland stating that if he says it is, it is.
I welcome Deputy Bruton's interruption. However, no final decision has been taken on how the pension issue will be addressed and, therefore, it is incorrect to suggest that there is any discriminatory effect at this stage.
Has the Minister any appreciation of the fact that the majority of civil servants earn under €50,000 a year? Those civil servants are facing a cut of approximately 5% under the emergency measures. Civil servants, however, at the top of the scale, some 700, in the Minister's Department, the Health Service Executive and other various public bodies are taking a cut of only 3%. If the Minister wanted to make special provisions for senior management and assistant secretaries, why did he not take the honest course and announce it on budget day? Instead, it was done by a sleight of hand which has resulted in disaffection among low-paid civil servants.
The Minister spoke about pensions in his earlier reply to Deputy Bruton. Many low-paid public servants relied on quantities of overtime to top up their salaries but this has been either lost or cut severely. There has been no alteration in the rest of their pay reduction to reflect that they relied on a percentage of overtime. However, the Minister did recognise this for the bonuses of the higher paid.
We dealt with this matter on the last Question Time. Today's question relates to pension provisions. I do not believe there is any profit in going over the same ground again; suffice to say that the former bonus arrangement was treated as remuneration for the purposes of a particular grade that was benchmarked. If the bonus were withdrawn from this grade, it would have had a greater reduction in salary than a grade senior to them. It must be also pointed out that when benchmarked, their salaries were already at an international norm and were not significantly in breach of any of them. The Deputy referred to them being in my Department. They are in many other Departments, as well as local authorities, the Health Service Executive, the Defence Forces and the Garda Síochána.
Does the Minister have any understanding of how many low to middle-income civil servants feel completely shafted by the Government and the Minister's treatment of the assistant secretary grade? Does he understand why they feel sold down the river while assistant secretaries get favourable treatment? Will he admit he made a wrong decision on this matter?
Higher paid civil servants will take a 3% pay cut in 2010 while the low-paid will take a 5% cut.
I do not accept that.
Did the Minister confirm earlier that from 2010 onwards, the pay cuts will have no impact on any public sector pensions?
No I did not. What I indicated today was that we have a period to devise an appropriate solution until the end of the year and that no solution has yet been agreed or decided upon by the Government.
As regards Deputies Morgan and Burton, I understand many people are unemployed as a result of the economic recession. I also understand many people's incomes have come under pressure, not just in the public but in the private sector. Of course I understand these matters. The task of the Government, however, is to ensure it puts the economy on the road to recovery. That requires certain basic decisions be taken and not evaded.
The Minister has chosen to mince his words. He is admitting he has made no final decisions about the impact on pensions. However, has he substituted a non-pensionable pay cut when everyone else suffered a pensionable pay cut? Through this action has he put the foot in the door for discrimination between the low and high paid?
No, as I indicated the period was necessary to, first, prevent a disorderly withdrawal from the public services and, second, to afford a period for reflection on how we devise pension strategy and payments for these grades.
