PUBLIC SERVANTS TO CEASE PUBLIC SERVICE
As many as 8,500 public servants will retire in the coming months to avail of current benefits that are due to expire in February and over fears lucrative lump sums will be taxed in future, according to The Sunday Business Post.
“A peak in retirements in the coming months is now expected across the public service to avail of generous pension entitlements and benefits, with applications due by the November notice deadline,” the newspaper says. “Retiring public servants are typically entitled to a pension of 50 per cent of their final salary for life plus an untaxed lump sum of 150 per cent of final salary.”
Under the current regime, the terms are based on salary figures from before the public sector pay cuts. After February 2012, they will be calculated on existing salaries, translating to potentially hefty reductions. Also, many fear lump sums could be taxed in future.
While the government will save on the public sector wage bill, the cost of pensions will increase sharply.
“These costs are particularly acute in the first year because of the lump sum payments to retirees,” the article notes. “Figures released last week showed that, while there has been 14 per cent reduction in the public sector pay bill since 2008, the pension bill has increased by 44 per cent.”
With any voluntary redundancy or early retirement programme, there is also the danger the “wrong” people will retire and there is no guarantee public services will be unaffected by the exodus.