I have been asked by Council to address the AGM in relation to the recent establishment of the Alliance of Retired Public Servants.
The Alliance came together informally last year. This arose out of a situation in which pensioners had no representation whatsoever at any of the Croke Park or Haddington Road talks and in which Emergency Legislation had repeatedly been brought forward without any involvement of public service pensioners in the process.
Public service pensioners had no voice in decisions which crucially affected them and were alienated from government.
The Alliance is comprised of pension organisations representing about 75,000 retired public servants – including former civil servants, local authority and health employees, teachers, nurses, doctors, gardai, army officers and others. Its establishment on a formal basis in January has been welcomed by the Minister for Public Expenditure and Reform and his department, and a process of structured engagement with them has now commenced. We recently met the officials, in the first instance, and we are awaiting a meeting with the Minister.
While the Alliance very much shares the concern of all pension organisations at the extent to which increased taxes, costs and charges, especially in relation to health matters, has affected pensioners, its prime focus is on the additional impact on public service pensioners.
There are four issues at the heart of our concern:
- The need to develop an Exit Programme from the use of Emergency Powers to reduce public service pensions;
- The removal of the discrimination against public service pensioners in relation to the application of the Universal Social Charge;
- The need to change the practice under which eligibility for medical cards as applied by the HSE fails to take into account pension deductions made under emergency powers; and
- The need for access to Third Party Mediation/Arbitration
The Exit Programme
When we met the Minister for Public Expenditure this time last year he welcomed the proposed establishment of the Alliance on a formal basis and he indicated his intention “as a priority” to move towards reducing the burden of public service pension reductions, with the initial focus on people in receipt of low pensions, as soon as economic circumstances permit, and he envisaged ongoing bilateral discussions with the Alliance in this regard.
Governments have gone to the public service well on three separate occasions, in 2010, 2011 and in 2013, to reduce public service pensions.
The combined effect of is that emergency powers are now being used to reduce all public service pensions above €12,000 per annum by between 8% and 28%. This is penal. For many pensioners, their actual pension rate is close to what it was nearly ten years ago.
While the common populist belief (which governments are aware of and at times encourage) is that public service pensioners as a class are fat cats. The reality in, for example the civil service, is that less than 0.1% have pensions over €100,000 and the average is in the order of €20.000.
What many people also do not realise is that public service pensioners, unlike their private sector counterparts with coordinated pensions, do not receive the DSP state pension and, if their spouses did not work outside the home, the spouse has no entitlement to a state pension.
In many cases, public service pensioners, lifelong members of the coping class, are already struggling to survive on one reduced pension and meet ever increasing costs of healthcare, property tax, water charges, etc. Their household budgets have been squeezed to the very core.
Listening to some Ministers before and after the bye elections one could determine a political will, in improved economic circumstances, to move in the budget toward tax reductions, reduced Universal Social Charge, etc.
But it would surely be obscene to have a situation in which emergency powers are being used to take money from low paid pensioners to fund tax reliefs for the rich.
An Exit Programme should now be drawn up which will lead to ending the use by government of these emergency powers. The alternative, as economic circumstances improve, is that one section of the community (public sector workers both serving and retired) will be expected to disproportionately fund recovery. This is an untenable proposition and and does not serve the common good.
The Universal Social Charge
Public service pensioners are, in practice, subjected to a major discrimination in comparison with their private sector counterparts on a coordinated pension.
This discrimination occurs because, unlike the public service pension where all income counts for the purposes of the USC, the state old age pension element of the coordinated private service pension is entirely excluded in the calculation of the USC.
Let me give a simple and stark example.
Take two pensioners, both with defendant spouses, one from the private sector (with a coordinated pension) and the other one from the public service – both with pensions of €32,500 per annum.
The public service pensioner will pay a universal social charge of €1,593.80. The private sector pensioner will pay no Universal Social Charge.
This is the equivalent of the public service pensioner being required to pay a second property tax and water charge. If it happened to private sector pensioners, there would be a revolution!
And, this does not take into account the fact that, at a pension level over €24,000 every public service pensioner is already subject, on foot of emergency powers, to a reduction of 12% before tax – on top of a deduction of 8% already made for earnings over €12,000.
Medical Card Eligibility
There is a problem also with medical card eligibilty. What apparently is happening is that, although cuts from public service pensions are being made under emergency powers, the HSE is including the cuts as income received in determining whether you can receive a medical card. This is a simple anomaly which should also be rectified urgently.
Third Party Access
While we have, as I mentioned, commenced a process of structured engagement we are at present at a major disadvantage in that pensioners, unlike workers, have no access to any third party mediation or arbitration. Any concepts of treating pensioners fairly requires this to be rectified.
In conclusion, Colleagues, I want to emphasis a number of points.
The central issue is not one of retired public servants wanting to avoid paying their share. They understand, better than most, the essential role effective public services play in society and are fully prepared to pay their share and have more than done so.
What they want, however, is to be treated fairly and to pay their taxes and charges on the same basis as the general public and not be subjected to the continuing use by government of emergency powers and discrimination.
A prolongation of the use of emergency powers against serving and retired public servants is increasingly untenable as economic circumstances improve. The potential for a two strand recovery with all boats rising, except the public service boat, which remains holed below the water line, has to be be avoided. Restoration of the social fabric of the state is the responsibility of the entire community.
Progress, however, is not just a matter to be handed over to the Alliance. We have close contacts with the trade union movement and with the Public Services Comittee of Congress and we support their efforts on behalf of serving staff.
Ultimately, progress will be hugely dependent on support from constituent pension organisations like the RCPSA and, above all, on the determination of individual public service pensioners to become involved and to do whatever is necessary to help secure a fair and balanced outcome.