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Dublin: 9 °C Thursday 20 June, 2013

McCarthy bemoans Government’s “ham-fisted” public retirement scheme

The chairman of An Bord Snip Nua attacks the “very poorly designed” system which may leave the public sector understaffed.

Image: Eamonn Farrell/Photocall Ireland

ONE OF THE COUNTRY’S most respected economists has criticised the government’s retirement scheme for public sector workers, saying it had been “poorly designed and poorly executed”.

Colm McCarthy, the UCD economist who chaired the previous government’s ‘Bord Snip Nua’, was responding to figures suggesting that the public sector could be set to lose as many as 8,000 staff in a month’s time when a retirement deal kicks in.

Staff taking the option to retire before February 29 would receive pensions and lump sums calculated on the basis of their salaries from 2009, which have since been heavily deducted through public sector pension levies as well as other general charges.

The retirement of almost three per cent of the workforce is expected to pose major problems for the public service, particularly given that the majority of departing staff are at senior grades with management experience.

“I think it’s been very poorly designed,” McCarthy told RTÉ’s Morning Ireland, saying the scheme offered by the government was a “ham-fisted way of doing things”.

“An ordinary business, faced with the problem of having payroll costs that are too high, would not embark on a programme which said people could self-select to go off and retire early.”

The scheme also posed a major financial liability for the government, McCarthy said, because of the massive financial obligation of the pensions it would now have to meet.

A recent report from the Comptroller and Auditor General, he said, had shown the “unfunded long-term liability” for public sector pensions to be close to €120 billion.

“That’s hanging there, it hasn’t been addressed,” McCarthy said, describing its financial setup as akin to a “Ponzi scheme”.

The scheme would also be cash-negative in the first years, given the large lump sums people were receiving, which were not subject to tax, he said.

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Comments (28 Comments)

  • Colm McCarthy always seems to be so full of distain for everyone when he talks about anything. Congratulations to everyone that managed to listen long enough to hear him speak on Morning Ireland.

    Reply
    • Ciaro 03/02/12 #

      Comment of the week.
      He’s as interesting as the fella who reads the shipping forecast, but less informative!

      Reply
    • spot on Reada! this programme has been known since 2009 but now the experts come out..typical..I have no doubt that FG will dump croke pk and cut ps pay again..labour will resign but FF will keep inda in office..cut cut is their axiom..real reform like issuing sw smart card that can be used at pt if sale for extra benefits like school uniforms fuel etc…would save millions by reducing administration and only paying exact benefits…but reform..ha these cretins can’t spell the word

      Reply
    • He’s a capitalist tool alright. He couldn’t give a shit about people. We’re all statistics to his sort.

      Reply
  • Sean – surely the point of all this is that services should get better and be delivered more efficiently, not just that they won’t get any worse? And I’m pretty sure that there is a general ban on promotion as well as recruitment so there won’t be any opportunity for those down the line to advance.

    Reply
    • Yes, Neil I would agree that that is the desired outcome. I used the term worse on purpose as the perception real or otherwise is that services are poor. My (limited) experience of interaction with our health service for example was that once you are “in the system” so to speak the service and standard of care is excellent. The problem I think is “getting into the system” be that in the case of the health system getting thru A&E, awaiting for appointments, referals etc. Yes there is apparently a ban on recruitment and promotions but you can be sure that there will be some limited QT recruitment on an ongoing basis and there will be some promotion (maybe on a different basis as heretofore) as certian functions can only be legally carried out by a person at a particular level.

      Reply
  • McCarthy is treated with such reverence by the mainstream media RTE Irish Times indo. Yet his prescriptions for the economy, which have been followed by 2 governments, have not worked. He is always described as “UCD economist” yet does anyone ever ask how many hours he teaches over the year! He is also described as “a top economist” what does that mean? It means you are expressing the views that back up medias agenda. He has been spouting the same nonsense since 2008. Remember take the pain upfront.Has it worked? No as many warned it wouldn’t yet instead of hiding in embarrassment he is rolled out again and again to offer more advice.

    Reply
    • Pain…yep a public service pay freeze with increment pay increases…

      His presciptions have been followed as closely as an alcoholic would follow their prescriptions when told not to drink with their antibiotics…

      Reply
  • The 29 Feb deadline is mostly of benefit to those PS workers at the top of the payscale and who will retire in a couple of years anyway. Many are occupying management or supervisory positions and therefore are not frontline. An alternative approach would be to offer a redundancy programme to all PSW. 1 and a half years salary taxfree. Average payment would be approx €40,000. I reckon thousands of newly recruited but fed up people would take the bait and leave. It would save the State a fortune in the long run but could devastate frontline services. There is no easy way to cut staff numbers without affecting services, but the present model is the most ineffective and most expensive model possible.

    Reply
  • McCarthy made alot of recommendations to Government for cuts.Quangos were singled out,but they would have hurt politicians buddies so they went after other options.Attack the ordinary person instead first but always blame McCarty when they do it.Gotta love the courage of these guys.

    Reply
  • He is 100% correct in what he is saying.

    Any normal company, when faced with budget problems, and the prospects of needing to reduce staff numbers, would go about this reduction in a focused way, so that company comes out of the reduction in numbers in as strong a position as possible.

    The way that the government is reducing numbers through voluntary means is ridiculous. Highly trained people, with necessary skills are walking away and not being replaced, and at the end of the exercise we will still be left with those people who should have been straight out made redundant. This approach is arguably as stupid a decision as the decision to decentralise.

    Reform ? what reform.

    Reply
  • I think it’s about time McCarthy resigned :)

    Reply
  • not trying to be smart but is mccarthy a closet fianna fail man.

    Reply
  • Ciaro 03/02/12 #

    McCarthy has an opinion on everything and a solution to nothing. He’s the biggest whinger in Ireland.

    His policy on debt correction mirrors what the government is doing, slash and burn, so what’s his problem?

    Reply
  • Its a bit chicken licken like, the sky is going to fall in when all these people leave. It won’t…! Remeber the HSE “exit scheme” last year. All those people left and relatively speaking I don’t think anything got significantly worse than it was before hand, I am open to correction if someone can produce credible evidence to the contrary. So we have a whole load of people leaving at the end of teh month many from senior management. It generates opportunities for promotion and advancement for people and once it it is done on ability rather than “well its his/her turn” then all the better maybe we might see some new ideas. On March 1st the sky is not going to fall in!

    Reply
  • Like him or loath him, McCarthy is 100% correct on this issue.

    Come next year, the governments hand will be forced by the Troika into real reform in the public service.
    The medicine will be a 25% reduction in PS staffing numbers, OR, a 25% reduction in PS salaries.
    That may not be what people want to hear, but that’s what happens when you invite the IMF in to bankroll your country.

    Reply
  • Silent P 03/02/12 #

    @ Jason Bourne. Would you be at all interested in proposing a solution yourself?? Not all leaving necessarily go onto the dole. My idea would appeal to low ranking public servants who are on low and reduced wages with little prospect of promotion or advancement in a contracting and demoralised public sector. Some might take the cash and leave to travel, pay off debt, raise young children etc in the hope of the jobs market improving in 3-4 years. The state would not have future wage & pension commitments. A redundancy package could be targeted to ensure essential services.. Nurses, Gardai, teachers etc do not exit on-mass.

    Reply
    • silent p the history of recruitment to AGS is one of a binge..massive numbers in and then a hiatus..1985 to 1989 and now..when members reach 30 yrs they are able to retire..there is already an experience deficit which will only get worse..a police service needs constant new blood..who gain exp..it also needs constant programmes of replacement of essential equipment..patrol cars for example..our govt is negligent in regards to these issues

      Reply
  • Colm, I was wondering what the point of your post under my original comment was but seeing what you posted below is an excellent point and has probably more to do with the situation that pertains rather than any ranting that Colm McCarthy had about the retirement scheme being badly planned.

    Reply
  • Poor Mc Carthy, it must hurt when you are a hate figure for your fellow well heeled public servants but as usual his analysis is bang on….

    Reply
  • McCarthy is right but he offers no alternative solution.

    Most of the people are in top grades meaning they get very nice pensions. He’s right that it’s a ponzi scheme because it’s the younger working generations who are paying for it.

    My solution would be to radially increase the public sector pensions levy that would recude all pensions well below 100k and hopefully as low as a 50k max.

    Reply
  • Silent P 03/02/12 #

    Totally agree Colm. Which emphasizes the folly of allowing only senior people retire and leaving gapping holes at supervisory and management level. A targeted redundancy programme in various grades and professions makes much more sense IMO.

    Reply
    • unfortunately..our successive govts have failed dismally to grasp that essential services should be treated differantly to the day to day machinery of govt..gardai fire and rescue..ambulance and health. the fact that we do not have a national full time fire service is scandalous..no reflection on the dedication of retained brigades but in 21st century a full time fire & rescue service..nationally run like AGS is a MUST have! a national c & c system..computerised dispatch for emergency services and the proper populatiin based provisiin of a & e and air ambulance…instead we get waffle about dynamic plans that would embarass baldrick! i hear the word reform ad nauseum from these publicans solicitors and teachers but do they know what reform is? have they ever asked those of us on frontline? do they even care..some civil.service depts are understaffed over worked and struggle with outdated systems..social protection medical cards etc while others are underworked..agriculture..none of this the fault of low grade civil.servants btw but management who resist change

      Reply

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