Public Sector In Line For Pay Restoration

08 Nov 2017 | 03.44 pm

Public Sector In Line For Pay Restoration

Complete unwinding of FEMPI

08 Nov 2017 | 03.44 pm

A new Bill from finance minister Paschal Donohue will unwind the provisions of FEMPI  and lead to the restoration of public sector pay cuts and other restrictions imposed during the financial recession.

The Public Service Pay and Pensions Bill 2017 gives effect to the provisions of the Public Service Stability Agreement 2018-2020, approved by the government in June and ratified by the Public Services Committee of the ICTU in September. The Bill also provides for a nine-month delay in respect of groups which do not subscribe to the stability agreement, such as the secondary teachers union, ASTI.

Donohue said: “The publication of this Bill represents the statutory roadmap for the full and complete unwinding of FEMPI as it affects the remuneration of public servants, the pensions in payment of retired public servants and contractor fees in respect of services provided to the state by health professionals and others.

“The measures provided for under the legislation are appropriate, sustainable and fair, and reflect the legal obligation of the government to address the Financial Emergency Measures provisions now that the finances of the state are  recovering.”

One provision in the Bill may cause grumbling among some of Donohue’s colleagues around the cabinet table, as the legislation will also prevent ‘members of government’ from being paid or granted any benefit from “the further unwinding of pay cuts provided under the Bill for other public servants in 2021-2022”.

Another aspect of the legislation provides for reform to ‘contractor fees’, including hospital consultants’ remuneration, with statutory regulation across a range of professions.

The new Bill provides for:

  • Pay increases over the three-year period 2018 to 2020 ranging from 6.2% to 7.4%, with benefits weighted towards those on lower pay. These increases to pay will bring 90% of public servants out of FEMPI by end-2020.
  • Further measures to eliminate the remaining impact of the FEMPI measures on public servants by July 2022
  • The introduction of a permanent Additional Superannuation Contribution (ASC) for public servants as a further contribution towards pension costs from 1 January 2019.
  • Lessening of the impact of the public service pension reduction on public service pensions out to 2020, with a provision to provide for the elimination of the remaining impact of the measure by Order to be made by the end of 2020
  • A process to remove contractor fees from the FEMPI legislation and to place those payments on an alternative statutory basis. In this regard, health minister Simon Harris intends to engage with relevant representative bodies on service delivery and contractual reform and associated fees next year.

Additional Superannuation Contribution

The Public Service Stability Agreement runs from 2018-2020 and has a cost over that period of €887 million. The benefits to different income groups range from 7.4 per cent for the lower paid to 6.2 per cent for the higher paid, over three years. Once again these proposals are progressive.

They include restoration of pay cuts and the conversion of the existing FEMPI Pension Related Deduction (PRD) into a permanent Additional Superannuation Contribution (ASC) while providing modest increases in the exemption threshold providing some relief. At the end of this Agreement pay cuts will be restored to all public servants earning up to €70,000, which is equal to almost 90 per cent of public servants.

According to Donohoe, the ASC measures will ensure that over 70 per cent of public servants will be making a further permanent contribution to their pensions.

Public Servants who are Members of pre-2013 Pension Schemes with Standard Accrual Terms

1 January 2019

Band Rate
Up to €32,000 Exempt
€32,000 to €60,000 10%
€60,000 plus 10.5%
 

1 January 2020

Band Rate
Up to €34,500 Exempt
€34,500 to €60,000 10%
€60,000 plus 10.5%

 

All Public Servants who are Members of the Single Public Service Pension Scheme

1 January 2019

Band Rate
Up to €32,000 Exempt
€32,000 to €60,000 6.66%
€60,000 plus 7%

 

1 January 2020
Band Rate
Up to €34,500 Exempt
€34,500 to €60,000 3.33%
€60,000 plus 3.5%

 

Public Servants who are Members of pre-2013 Pension Schemes with Fast Accrual Terms (Unchanged)
Band Rate
Up to €28,750 Exempt
€28,750 to €60,000 10%
€60,000 plus 10.5%

 

Pay Measures

2018

  • 1 January 2018 annualised salaries to increase by 1%;
  • 1 October 2018 annualised salaries to increase by 1%.

2019

  • 1 January 2019 annualised salaries up to €30,000 to increase by 1%;
  • 1 September 2019 annualised salaries to increase by 1.75%.

2020

  • 1 January 2020 annualised salaries up to €32,000 to increase by 0.5%;
  • 1 October 2020 annualised salaries to increase by 2%.
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