Most public servants who retire early escape financial impact of increase to State pension age

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Most public servants who retire early escape financial impact of increase to State pension age
Most public servants who retire early escape financial impact of increase to State pension age

As the backlash grows over the pension age, it has been confirmed that many public service employees can retire early and still get a supplemental pension equal to the State pension.

This lasts until the State pension formally kicks in.

In contrast, private sector workers who are legally obliged to retire at 65 are unable to claim the State pension until the age of 66.

The State (PRSI) pension age is due to go up to 67 next year, prompting a scramble by politicians.

Some are promising to row back on the plans, as the issue comes up on the doorsteps during canvassing in the General Election.

People are annoyed that thousands who are compelled to leave work at the age of 65 have to claim Jobseekers’ Benefit – getting €45 less a week than they would from their pension.

However, many public servants escape this change in the pension rules.

This is because large numbers of public servants qualify for a “supplementary pension” before they can qualify for the State contributory pension at 66. The supplementary pension can be claimed years earlier.

The Department of Public Expenditure has confirmed that the “supplementary” pension exists, that is basically a substitution for the State pension until public servants reach the State pension age.

Pension experts said this means that public servants have insulated themselves from the decision to raise the State pension age.

The extra protection for public sector workers came about when then public expenditure minister Brendan Howlin signed a statutory instrument in 2014 when the new, higher State pension age was first introduced.

The supplementary pension deal was struck with the public service unions as part of the deal to integrate their pensions with the State pension.

It applies to public servants who joined the service after April 1995.

Unfair

Pensions expert Tony Gilhawley, of Technical Guidance, said: “Public servants who joined between April 6, 1995 and January 1, 2013 (the majority of the current public service workforce) who are entitled to the State pension, can be paid a ‘supplementary pension’ by the State if they retire before the State pension age to make up for not getting the State pension until later.”

He said it was unfair that a public service employee who retires at, say, 63 can get a top up or ‘supplementary’ pension from the State equal to the State pension between 63 and 67 if they don’t work.

“It’s a case of inequitable treatment,” Mr Gilhawley added.

“One sector of the workforce gets insulated from the increase in the State pension age at the taxpayer’s expense, but the other – the private sector – doesn’t.”

“In fact, they are financially incentivised by the supplementary pension to not work between retirement from public service and State pension age.”

A spokesperson for the Department of Public Expenditure and Reform had no comment when asked why public servants had protected themselves from the controversial State pension changes.

The spokesperson would only say: “The arrangements for supplementary pensions stem from pension reforms made 25 years ago in 1995 when it was agreed that all future entrants to the public service would pay full PRSI and their contributory State pension would be fully integrated with their overall pension entitlement.”

Irish Independent

Source: Irish