Public service pensioners fully understand and appreciate the impact of economic crisis on the community (of which they and their families are part) and the difficulties facing any government in addressing them. Many of the austerity measures, especially those touching on medical matters (changes in medical card entitlement and increasing medical costs) have particularly impacted on pensioners who, by definition, are already on reduced income. Recent revelations that patients in the Republic who do not have medical cards are being charged 18 times more for the same generic medicines than they would in the North exacerbates an already difficult situation.
Public service pensioners, perhaps better than most, understand and accept the vital need for society to maintain effective public services and they are fully prepared to pay their fair share, i.e. on the basis that those on the same income should contribute equally. Many have already had their pensions already reduced under emergency powers.
Public service pensioners are increasingly characterized, politically and in the media, as privileged fat cats ripe for plucking. This ignores the reality that the average public service pension is not high (€19,000 in the civil service); that public service pensioners are excluded from receiving the state pension; that, not alone has there been no increase in pensions for the last six years, but public service pensions have already been reduced through the use of emergency measures by government and that public service pensioners are discriminated against in the application of the universal social charge.
This discrimination in the application of universal social charge arises due to the exemption applying to other state pensions. At lower levels, this means that a public service pensioner who receives a pension of €12,442 from the state after forty years’ service pays the universal service charge on every cent earned, whereas a person receiving a non contributory state pension of €12,442 pays no universal social charge. Equally, a private sector pensioner receiving a non contributory pension of €19,966 (for themselves and an adult dependant) pays no universal social charge whereas a public service pensioner on the same income of €19,996 pays a universal social charge of €716 before tax.
The current decision (associated with the Draft Croke Park II Agreement) to further reduce public service pensions has been accompanied by a large element of political spin. The impression initially created was that the pension cuts would focus on top political and top public service pensions, and Ministerial announcements since have focused on serving public servants and largely ignored the proposed pension cuts.
Not alone are top level public service pensions proposed to be cut, but pensions down to the level of €32,500 are to be targeted again. No government spokesperson has been rushing to present this level of income as ‘highly paid’ or to explain that, if the normal pension rules are followed, surviving spouses’ pensions down to €16,125 per annum will also be cut.
The majority of the pensioners involved joined the public service in the 50s and early 60s and worked through difficult years in the development of the modern Irish state. They are now in their seventies, in declining years and health, often supporting spouses (who worked in the home and are not entitled to either contributory nor non contributory state pensions) and, as best they can, adult children on what, in any terms, are modest enough incomes. At an income level of €32,500 they will already have suffered one pension cut and be liable for a universal social charge of €1,593 before paying income tax, property charges or water charges, whereas a private sector pensioner at the same income level (receiving an occupational pension of €9,796.80 and a state pension of €22,703 for self and spouse) will pay no universal social charge.
An absolutely vital element of their service was that they had a guaranteed pension, not based on a pension fund the value of which might fluctuate, but on a contract with a sovereign state. Their salary was reviewed over the years by independent pay determination machinery headed up by a high court judge or senior counsel. Their pension contributions were at the level determined appropriate by successive governments. They have fully discharged their debt to the government and the community and are now private citizens like other taxpayers.
Governments have paid every single debt on contracts concluded since the foundation of the state, with the exception of that owed to public service pensioners whose property rights have been restricted by emergency legal measures. There are an estimated 870,000 people in Ireland who receive incomes over €32,500 but only public service pensioners are targeted in these cuts.
Government spokespersons are frequently heard explaining why they cannot, for constitutional reasons, touch other individuals or sectors of the economy. The high level of pensions in the state supported banking sector come to mind, not to mention the fact that a recent ESRI shows that, in 2009, Irish public companies made average pension contributions of €100,000 per annum (25% of salary) to top executive directors. These pension contributions were 36 times the average for other employees and the tax reliefs on pensions were €2.7bn. The fact that the Sunday Independent can reveal that Irelands’ (North and South) 300 wealthiest people now have a combined fortune valued at more than the entire state of Ecuador and grew by 6.3% or €3.9 bn last year is, of course, entirely irrelevant to concepts of social justice.
The reality is that, when the public service tag is taken off and public service pensioners are seen just as retired workers, the overwhelming majority are at the heart of the middle classes in Ireland. Like many others they are caught in the middle between one political philosophy which is not seen to be especially sensitive to middle or senior management and another which is consistently anti public service, pro big business and, as time goes by, becoming more and more like the republican party in the United States. Watch My Lips – No Increase in Taxation may be a populist catch cry at election time but it can lead to serious inequities and unsustainable economic policies