Nearly 77,000 retired public servants will benefit from yesterday's Government announcement that a range of public service pay deals are to be matched by increases in pension payments. The announcement, by the Minister for Finance, Mr McCreevy, was welcomed by trade union leaders. Separate planned demonstrations by retired nurses and primary school teachers have now been called off.
Mr McCreevy said that public servants who retired before restructuring pay deals were agreed under the Programme for Competitiveness and Work (PCW) will now get pro-rata increases in their pensions.
He made the announcement to coincide with publication of the interim report of the Commission on Public Service Pensions which warns of a likely fourfold increase in the cost of such pensions, from £540 million in 1995 to £2.2 billion in 2025.
The Minister said the issues involved in restoring the link between pay increases and pensions had been "very complex". The difficulty was caused by the variety of restructuring deals struck under the PCW.
While nurses had received double-digit pay increases, other groups such as teachers had waived increases in favour of a package including early retirement and extra promotional posts.
As a result, the Government has agreed a minimum pension increase of 3 per cent, even where the relevant group accepted a lower pay increase under the PCW. Trade union leaders expressed delight at the Minister's announcement and said it had fully met their demands.
"We're pleased because what we'd been seeking all along has been conceded and the commitment that was made prior to the election has now been honoured," said Mr Peter McLoone, general secretary of IMPACT and chairman of the ICTU's public services committee.
The Irish National Teachers' Organisation (INTO) said the Minister's announcement was a "positive and welcome resolution" to the problem. "It is a great source of optimism for elderly retired teachers and a great release of concern and worry," it said.
The INTO has called off a demonstration planned for next Wednesday. A demonstration by the Retired Nurses' Association which was to take place in Dublin today has also been cancelled.
Mr McCreevy said the cost of the Government's decision would be £23 million a year. Back payments - coincidentally also totalling £23 million - are due to the vast majority of the 77,000 retired public servants. Government Departments are to start processing those immediately.
Asked if he was surprised or worried at the projected dramatic increase in public service pension costs outlined in the Commission's interim report, Mr McCreevy said: "I was not surprised but I am worried."
The Commission, chaired by Prof Dermot McAleese of Trinity College Dublin, dismisses "alarming suggestions" of a pensions "time bomb". But its report warns that the projected increase in the pension costs of public servants gives "serious grounds for concern".
While an increase to £2.2 billion by 2025 is forecast, the pay-out could rise to £2.9 billion by then if pay rises remain well ahead of the rate of inflation. The Commission is due to issue its final report to the Government next year.
