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Public workers have 18 months to retire on 'peak' pay

Staff who retire before August 2014 will receive pensions based on the salary they had before the ‘Croke Park 2′ pay cuts.

Image: markhillary via Flickr

THE GOVERNMENT is to revive the incentivised retirement plan used last year to try and encourage further public workers to take early retirement, in an effort to reduce the size of the public workforce.

The Department of Public Expenditure and Reform has said staff who choose to retire before August 2014 – a year-and-a-half from now – will receive pensions and lump sums as if their pay had not been cut, as it is planned to do under the ‘Croke Park 2′ proposals.

Those proposals will see public workers on salaries above €65,000 have their pay cut by at least 5.5 per cent – rising to 10 per cent cuts for those earning over €185,000 a year.

This would ordinarily have an impact on the pensions paid to those workers when they retire – but a special ‘grace period’ is being arranged so that workers who opt to leave the public workforce are spared the impact on their pensions.

A spokeswoman for the Department of Public Expenditure and Reform said the scheme being offered for workers under the ‘Croke Park 2′ proposals was similar to that offered in previous years.

Public staff who retired before February 29, 2012 did so under a similar arrangement, where their pension entitlements were calculated as if pay cuts for public workers – which had been implemented by Brian Lenihan as part of Budget 2010 – had not taken effect.

This was to give staff an incentive to retire, as part of the government’s plans to cut the public pay bill by taking tens of thousands of staff off the payroll.

The new scheme will work similarly, and will hope to expedite the removal of another 9,500 staff from the public workforce.

The number of public workers stood at 292,000 at the end of 2012, a number which the government hopes to have reduced to 282,500 by mid-2014.

Under both the original Croke Park Agreement and the proposed amendment to it, which would extend the deal until mid-2016, the government agrees not to pursue any compulsory redundancies.

Those who retired under the original grace period will, however, face a slightly increased levy on their pension payments: the Public Service Pension Reduction, which already takes about 4 per cent off the value of the average pension, will be increased by a further 2 to 5 per cent.

A similar 2 to 5 per cent levy will apply to those applying under the new incentivised period.

However, neither levy will apply to anyone whose annual pension is under €32,500 a year – as this indicates they would have earned less than €65,000 a year if they were still working, and therefore would not have been subject to any of the new proposals for pay cuts.

Read: Frontline Alliance announces nationwide campaign against Croke Park II proposals

More: IMPACT recommends workers vote to accept Croke Park 2 deal

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Gavan Reilly

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