At a meeting of the PNA National Executive Committee on 11/12/09 it was decided that:
- The PNA is committed to taking Strike Action in support of a campaign to have the Pay Cut announced in the Budget removed.
- The PNA hopes that other Unions will also engage in Strike and believes that the Action should be centrally co-ordinated.
- The declared purpose of the Action should be to force Government to broaden the Tax base and have all in this society who can afford to pay to contribute to the Country's recovery.
- We should be willing to commit to discussions on the Transformation Agenda with no predetermined outcomes.
- The offer of 12 days unpaid lay off was cast away by the Government and should remain off the agenda.
We will be meeting with all the constituent members of the 24/7 Alliance of Frontline Staff in the coming week
provisions of budget at a glance
In his budget speech to the Dail on 9th December the Minister for Finance, Mr Brian Lenihan TD, announced a reduction in the pay of public servants to take effect from 1st January 2010 as follows:
è A reduction of 5% on the first €30,000 of salary
è A reduction of 7.5% on the next €40,000 of salary
è A reduction of 10% on the next €55,000 of salary The Dept of finance has published a table to assist in working out what the effect will be at a particular payrate.
Queries have been raised as to whether this is a Permanent or Temporary Pay cut.The Dept of Finance has clarified as follows: “The pay reduction will apply a general reduction in all pay rates on 1st January 2010; it is not designed as a temporary reduction”
PREMIUM PAY AND ALLOWANCES
The Dept of Finance has also clarified that reductions will apply to the following:
è Overtime Rates and other Premium rates of Pay“Any element of remuneration, such as overtime, premium rates of pay or allowances, that is based on the basic salary or wage will be reduced proportionately to the reduction to basic rate of pay.”
è Fixed Allowances“Fixed Allowances: those that are not based on the basic salary or wage, will be reduced by a fixed percentage. Fixed rate allowances for public servants in receipt of basic pay not exceeding €125,000 will be reduced by 5%”.
(In Nursing an example of fixed allowances are Location and Qualification Allowance, Community Allowance, Acting Up Allowance etc.) The PNA believes that the strong campaign of the 24/7 Alliance of Frontline Staff was successful in preventing an even greater attack on Allowances and Premium Pay. We must maintain this strong alliance.
Increments will continue to be applied but the appropriate rates of reduction of between 5% & 7% (for most Nurses) depending on your earnings will be applied on all points of the incremental scale.
TRAVEL AND SUBSISTENCE
The Dept of Finance has clarified that “Travel and Subsistence rates will not be affected by this pay reduction. Civil service travel and subsistence rates were already reduced this year by 25%.
Due to retire in 2010 – your Lump Sum and pension is protected from effect of pay cut.
The Minister for Finance in his budget speech on 9th Dec following his announcement relating to proposed pay reduction for public servants stated: “in order to avoid a destabilising rate of retirement among older public servants the pension entitlements of those retiring in 2010 will not be affected”
Subsequently the Department of Finance has issued the following clarification:“To manage any increase in the number of retirements before the end of 2009, the draft legislation on pay adjustments in the public service provided that any retirements on 2010 would be on existing, pre-cut terms. This balances the needs of the public service and gives assurance to staff who may retire shortly.
The legislation also gives the Minister for Finance the power to extend the period if necessary- this will give Departments and Offices scope to plan for and deal with the effects of increased retirements.”
The Department of Health and Children has clarified the matter further: “Therefore public health sector employees planning to retire in 2010 should be informed that their pension benefits (lump sum and pension) will be calculated by reference to the scales applying on 31/12/09, with incremental credit on those scales if appropriate. This includes employees who retire in the normal way on age grounds, those retiring on health grounds or under Cost Neutral Retirement or the Incentivised Scheme of Early Retirement. It also applies in the case of a preserved benefit coming into payment in 2010.”
Due to retire after 2010
The Department of Finance has stated the following:“The draft legislation on pay adjustments in the public service proposes that the Minister may, by statutory instrument, extend the period within which the cut has no effect on pensions.”
There is no guarantee beyond 2010 but there is a probability that the Minister may extend this protection beyond 2010 if the level of retirements is causing a systems problem.
TAXATION OF LUMP SUM: The Minister stated:
“I accept the Commission on Taxation’s recommendation that pension lump sums below €200,000 should not be taxed.”
In his budget speech the Minister stated: “The link to earnings or ‘pay parity’ basis for post retirement pension increases is a feature of Irish Public Service schemes.
The recent special report by the Comptroller and Auditor General estimated that the present cost of public service pensions is €108 billion. A change to a CPI basis for post retirement increases would reduce that cost to €87 billion, a reduction of 20%. On average, pay increases have been significantly greater than increases in CPI.
As part of the reform of public service pension arrangements, I will review the current arrangements and consider linking pensions to increases in the cost of living. Pending that review, I do not intend to apply the cuts I have already outlined to existing public service pensioners.”
The Department of Finance has confirmed that: “The Government will consider using CPI as the basis for post retirement increases for both existing and future pensioners”
NEW ENTRANTS The Government has decided to introduce a new single pension scheme for all new entrants to the public service. The legislation will be introduced in 2010 and the scheme will be in place by the end of the year. According to the Minister in his budget speech the new scheme “will bring public service pension terms more in line with private sector norms.” He said that “among other things it will change the calculation of benefits so the pensions are based on “career average” earnings rather than salary on retirement as at present”. He went on to say that “this will be more equitable than that present system which favours those with higher earnings later in their careers.”
The minimum pension age for new public servants will increase from 65 to 66.
A new maximum retirement age of 70 years will be introduced.
A most worrying inclusion in the “Summary of 2010 Budget measures/Policy Changes” issued by the Dept of Finance is a paragraph in the section on a new single scheme that could have implications for existing staff who retire beyond 2010.
“ For existing public servants retiring after 2010 (or any longer period authorised by statutory instrument) the Minister will consider what legislative changes, if any, will be appropriate and bring forward proposals as part of the legislation introducing the single new scheme.”
It is possible that the Minister could use this legislation to introduce C.P.I. as the basis for post retirement pension increases for both existing and future pensioners.
If the Minister proposed this or any other detrimental change it will have to be resisted.
The Minister in his budget speech has indicated his intention to introduce significant revisions to the PRSI and Income Tax system for 2011. Pending these changes he has left tax credits and tax rates for 2010 unchanged from their 2009 levels.
TAX RELIEF ON PENSION CONTRIBUTIONS
The tax treatment of contributions to pension schemes including a proposal to introduce a consolidated 33% rate of relief will be considered in the Governments National Pensions Framework to be published shortly by the Minister for Social and Family Affairs. The Dept of Health and Children has indicated that it understands that the measures contained in this framework will be effected from early 2010. It had been understood that this measure would not be introduced until 2011 but the Department of Health statement seems to indicate that this could be introduced early next year (2010)