Brian Lenihan: proposal

Public servants recruited from next January will have to make do with a reduced pension and a later retirement age under new pension cutback plans ann­ounced by the Department of Finance last week.

Under the plan, designed to cut back on the rapidly rising public service pensions bill, which will come in just shy of €3bn this year, the minimum retirement age for new recruits is to be raised to 66.

The current minimum retirement age is 65 but most public servants can stop work on a full pension at age 60 as long as they have 40 years' service.

The new maximum retirement age will be set at 70 although there will be exceptions to this, such as the president.

And in a move that will significantly cut back a public servant's pension, the final pension will be based on 50% of career average earnings rather than 50% of final salary, as at present.

Gardaí, firefighters, prison officers and psychiatric nurses who can now retire on a full pension at age 50 with 30 years' service may see that benefit disappear or at least be severely curtailed under the plan.

And annual increases in pension payments will be based on inflation rather than being increased in line with pay increases granted to serving public servants.

However, if inflation is negative, as it has been for the last two years, the plans promise that there will be no corresponding reduction in pension payments.

Civil partners, including gay partners, will be able to benefit from a pension with public service pensions being brought into line with the recently passed civil partnership bill.

Originally put forward by finance minister Brian Lenihan in last year's budget, last week's announcement has been the subject of negotiations between the public service unions and the department at the Labour Relations Commission for the last few months.

The LRC's Kevin Foley and Maedhbh Cronin put forward the plan last week after months of negotiations, though some issues remain outstanding, including a cutback on the generous early retirement provision for gardaí and soldiers.

The unions have yet to endorse the plan though it is understood the department will proceed regardless. But there will be no cash saving for the exchequer for at least 40 years, as the change affects only civil servants recruited from next January, who will be retiring in 2050.

And it may be even longer than that as the government's ban on recruitment means very few civil servants will be recruited next January or for the following few years.