THE PROSPECT of early retirement is something being considered by fifty something public service employees. After the emergency Budget proposals, many face an attractive prospect of settling for 38 – 50 per cent of their current salary in return for postponing payment of 90 per cent of their gratuity (usually 1.5 times annual salary) until they reach 60 or 65. And, on top, you avoid paying the 7 per cent income levy towards your handsome pension.
Unless you are in serious debt, can reasonably anticipate significant promotion over the next few years or love your public service job, this is something to consider. Many teachers, gardaí and administrators are doing that. The initiative is a panic measure to address the public service wage bill and contrasts with the reluctance to introduce a similar scheme six years ago to relieve the new Health Service Executive (HSE) of its surplus layers of middle managers and administrators.
In the longer term, it is a disaster. We need to plan and support people to spend longer in their working lives and build flexible pension and retirement benefits so those who continue to work until 75 would have an incentive.
Mandatory retirement ages are becoming a difficult employee relations issue as they rarely allow for those who enjoy good health and are willing and able to continue to contribute. The solution is to introduce flexibility so a firefighter who retires at 55 is prepared for a different career just like lawyers or priests who get jobs as judges or bishops in their late 50s think it normal that they should continue working until they reach 70 or 75.
Last month, the European Court of Justice (ECJ) delivered its judgment in the long-running litigation initiated by AgeConcern regarding the UK’s retirement regime. The lobby group brought an action for judicial review before the High Court, challenging the legality of the right of employers to require staff to retire from 65. Their case rested on a contention that the age regulations failed to give effect to the EU’s Equal Treatment Framework Directive and the High Court referred a series of questions to the ECJ.
The court concluded that the directive permits member states to provide for certain kinds of differences in treatment on grounds of age if they are “objectively and reasonably” justified by a legitimate aim and if the means of achieving that aim are appropriate and necessary. It also concluded that it is for the national courts to ascertain if the legislation is consonant with such a legitimate aim and whether the means chosen were appropriate to achieve that aim. It also ruled that the national rules on retirement age fall within the scope of the directive.
Just as the new Budget initiative is a pleasant option for thousands of public service staff, the European court ruling is a disappointment for many employees approaching retirement age who are forced out of the labour market, irrespective of their desire to keep working. The ruling means experienced and capable older workers do not have the choice of staying in employment.
Gerald Flynn is an employment specialist with Align Management Solutions
