> Moving from a system of calculating Pension based on 'final salary' to one based on a calculation based on a fraction of salary for each year worked,  uprated by the CPI (Consumer Price Index)
> Breaking the link between Pay increases and Pension Increases & replacing this with a system of increasing Pensions post-retirement based on CPI increases
> Changing / reducing the system of 'fast accrual' for members of the Force
> Increasing the pension subscription of Gardaí, above that of Public Servants

As a result the value of Pensions will be calculated on an annual basis over the course of a member's whole career. Where someone is promoted late in their career, such promotion will have a much minimised impact on the value of Pension. In addition, as Pension will be calculated per year worked the question of having to work "thirty years" to avail of pension will no longer apply. Instead members of an Garda Síochána will be able to avail of Pension, on retirement from age 55 - based on actual pensionable career earnings.

The Bill has also a potential effect on the Pensions of current serving or retired members as it contains an enabling provision which would allow the Minister to alter the method of applying increases in their Pensions post-retirement to one based on the CPI as above.
The Association met with officials of the Department of Justice, the Department of Finance and the Department of Public Expenditure & Reform on the 3rd November 2011 and made an extensive oral / written submission on what we view as the discriminatory elements of the Bill.

View the text of the GRA's Submission on the Public Service Pensions (Single Scheme) and Remuneration Bill 2011 below:-

READ THE FULL TEXT OF THE Public Service Pensions (Single Scheme) and Remuneration Bill 2011 here >>

Garda Representative Association

 Submission re

Public Service Pensions (Single Scheme) and Remuneration Bill 2011

1^st November 2011

1. Section 39 (Adjustment of pension and referable amounts)
provides that the referable amounts shall be up-rated automatically in line with increases in the Consumer Price Index (CPI). It also provides that, in respect of pensions payable under the Scheme, that, subject to subsection (4), pensions payable under the Scheme shall be increased to reflect any such increase in the CPI.

The Garda Representative Association has to object to the proposal contained in Section 39 of the bill, that proposes for new entrants that any increases in pensions, post-retirement will be on the basis of CPI increases; and secondly the proposal contained in Section 39 (4) that “The Minister shall decide when any increase in pensions under this section is to be paid having regard to movements in the consumer price index, including the timing and the means by which any increase is paid”.

(a) The proposal to move away from linking increases in Pensions to serving Pay rates & to determine Pension increases by movements in the CPI will have the net effect of impoverishing Pensioners within a short few years of retirement.

When Minister Howlin launched the Bill on the 29th September 2011 he stated “modifying the earnings-linking of pensions – the new scheme provides for post-retirement pension increases to be linked to consumer prices not pay; the cost of retaining an earnings link is estimated over the past twenty years to have resulted in increases twice those which would have applied had post-retirement pensions been linked to the cost of goods in the form of the consumer price index”.

In effect the Minister acknowledged that the move from linking Pension increases to the CPI as opposed to Pay will halve the increases paid to Pensioners under the new system. Linking Pensions to Pay has over many years has effectively meant that Pensioners have kept pace with developments in the economy, as at times of inflation the value of Pay / Pensions has generally increased to match costs; and at times of no growth or inflation there has been generally no increases. Moving to a system of linking Pensions to the CPI will ensure, within a short space of time, that the value of Pensions will quickly lose their value vis-à-vis the “real” economy and Garda Pensioners, their Dependents and Widows will quickly be cast into penury – unable to keep pace with rising costs.

(b) It is totally unsatisfactory to insert a clause as at Section 39 (4) that the Minister “shall decide when any increase in pensions under this section is to be paid”.

This has the effect that regardless of what upward movement there may be in the Consumer Price Index – that reflecting CPI increases in Pensions will only happen when the Minister of the day “decides”. This is a shocking negation of the principles set out in the rest of Section 39 and a proposal that future Pension increases will be conditional on the whim of the Minister of the day.

2. Section 46 (Extension of section 39 to pre-existing public service pension schemes) provides that the Consumer Price Index may be applied to pre-existing public service pension schemes.

It is unprecedented and unconscionable that the Minister would propose in Section 46 to alter the terms and conditions of the Pension Scheme of current Garda employees.

The Garda Representative Association strenuously opposes & will strenuously oppose any attempt to modify the Pension conditions of current employees as set out in Section 46. To include such a proposal in a Bill presented before the Oireachtais must be viewed as a breach, by Government, of the terms of the Croke Park Agreement. That Agreement made reference to discussions to be held in this regard prior to 2014, but what the Minister has done is to unilaterally grant himself the right to interfere and alter the Pension terms of current employees.

Since 1925 the only changes to the terms and conditions that have taken place in the Pension scheme for serving Gardai have been where such changes have been mutually agreed and accepted by members of that Scheme. In 1951 members were asked to choose between a balance of the payment of Pension / Gratuity Lump Sum and opted individually and again in 1983 serving members were given the option individually to opt in or out of an alteration to the Scheme which would allow retirement after 25 years’ service having reached 50 years of age. Other than that all changes to the Scheme have applied to new entrants. This Section is an attempt to grossly interfere with the existing terms and conditions of employment of current employees in a negative way and is unprecedented.

In the Minister’s own words, during the Second Stage Reading of the Public Service Pensions (single scheme) and Remuneration Bill 2011 on the 19^th October 2011 he stated “I would like to make it clear I see a clear distinction between offering someone a public service position with single scheme membership and changing the pension terms for someone who took up their public service employment under clearly defined and understood terms and conditions. A new entrant can decide whether or not to take the job on the terms offered, a serving person does not have that option…….. It may not, however, be legally straightforward to reduce accrued pension benefits by adjusting their terms, particularly where benefits have been accrued and contributed to over many years.”

The statements above are incongruous with the terms of Section 46 of the proposed Bill. The Minister clearly recognized the difference between proposing changes in the terms of new entrants and those of a serving person. In addition the Minister recognized the legal constraints on altering serving member’s conditions.

This Association seeks that Section 46 be removed from the proposed Bill or it will be forced to take legal advice on challenging this Section as well as examining the implications of this gross breach of the Croke Park Agreement.

3. Section 16 (Contributions to Scheme, etc.) provides for the scheme member to make contributions. For most scheme members these will be integrated with the social insurance system, i.e. 3 per cent of pensionable remuneration and 3.5 per cent of net pensionable remuneration. For certain public servants, (the President, qualifying and designated office holders, the Judiciary, Oireachtas members and those who must retire early such as Gardaí, PDF personnel, Prison Officers and firefighters), different contribution rates apply as set out in the Table below.
…… Persons to whom section 25 (Gardai) refers -  4.2% of Net pensionable Remuneration + 3.3% of pensionable Remuneration

The vast bulk of new entrants to the Public Service will be obliged to pay a combined Pension contribution of 6.5%. However, new entrants to an Garda Síochána will be obliged to pay a combined contribution of 7.5% - or an additional one per cent contribution.

Members of an Garda Síochána who joined after April 2005 are obliged to retire at 55 years of age, or at a possible maximum of 60 years of age and currently pay a combined Pension contribution of 6.5% (similar to the bulk of current Public Servants). It is not proposed to alter these retirement requirements for new entrants; however for new entrants to an Garda Síochána it is proposed to increase their pension contribution to a combined 7.5%. This increased contribution – unlike the vast number of new entrants to the Public Service is apparently due to a decision to categorise members of the Force for the first time in the same category as designated office holders, the Judiciary, Oireachtas members – those who must retire early.

It is unfair to include Gardaí in the same category as the above Office Holders who, although they will pay varying higher levels of contributions to a maximum of 13%, can retire & benefit in some cases after a short number of years in office. If there were principles of fairness & pro-rata equality in this regard, either other Office holders would pay up to 100% contributions in order to benefit – or Gardaí should pay a fraction of what is proposed.

New entrants to the Force who join at a young age – 18-20 years could serve for 40 years. Those who join at 25 years plus may not be in a position to serve even 30 years due to the determination that an Garda Síochána is an occupation that requires serving members to retire early. In either case, under the Bill, new entrants on retirement will only qualify for a Pension commensurate with actual years of service. In this sense it is unfair to additionally penalise members of the Force, over & above the bulk of the Public Service, twice by seeking they pay a larger contribution towards Pension.

4. Fast Accrual. Heretofore in recognition of the fact that police officers are required to retire earlier than normal a system of fast accrual applied which meant that a Garda earned one year of service per year for the first twenty years’ service; and two years per year for the next ten years of service. This gave a total after the required thirty years, of 40 years’ service – or 40/80ths towards Pension (half-pay pension) and 120/80ths (one & one half times final pay) towards Lump Sum Gratuity.

Although for new entrants to the Force the requirement to retire early remains unchanged, a new much diminished system of fast accrual is proposed. Pension will accrue at the rate of 1/70^th per year worked & gratuity will accrue at the rate of 3/70^th per year worked. Given a member working the same 30 years, under the new scheme a new entrant will have accrued 30/70ths towards Pension and 90/70ths towards Gratuity.

The net result is that for new entrants, after 30 years’ service, Pension will be reduced from 50% of pay to 42.8% of pay; and Gratuities from 150% of pay to 128%.

Combining this with the huge reduction that will apply in Pensions in moving away from calculating same on final salary to a date 30 years previously, this will have only one result to greatly impoverish retired members of an Garda Síochána who give sterling service to the State.

Uniquely, once again in this Bill, Gardaí are being asked to make a bigger sacrifice that the vast bulk of new entrants to the Public Service, who can serve 40 years and accrue Pension contributions at 1/80^th per year of service; and 3/80^th Gratuity contribution per year of service – giving 50% Pension and 150% Gratuity on retirement, as they must serve 40 years.

The Garda Representative Association would urge that fast accrual would be restored, as now, to take account of this unique unfairness. This can be done by amending the proposal to read that Gardaí would accumulate Pension at the rate of 1/60^th per year service and Gratuity at 3/60^th per year service.

5. Section 27 (Preservation of benefits) provides for the preservation of benefits where a person, other than the President, after completing the vesting period, ceases to be a public servant other than under cost neutral early retirement or on medical grounds. He or she is entitled to a pension and lump sum payment at the age at which they would be eligible to receive a contributory State Pension. The person must make an application in a manner provided for by the Minister.

It is unclear from this Section as to whether it is intended to apply to members of an Garda Síochána who may be obliged to retire prior to attaining the minimum retirement age of 55. Currently members who are so obliged are paid preserved pension/gratuity from age 60. If it is intended in this Bill that preserved benefits would not be paid until age 66 or the age at which the person would from time to time become eligible for the state pension (i.e. age 66, moving to 67 in 2021 and 68 in 2028) this is a severe penalisation of members conditioned to retire at age 55 – as opposed to civil servants conditioned to retire at age 66.