THE DEPARTMENT of Finance believes that up to 3,500 staff in the public service could leave under the Government’s new early retirement scheme.
Minister for Finance Brian Lenihan told the Oireachtas Committee on Finance and the Public Service yesterday that so far aabout 300 civil servants had applied to retire early under the scheme.
The Department of Finance has estimated that a rough extrapolation of these figures would suggest that between 3,000 and 3,500 staff across the wider public sector could apply to retire early as part of the new programme.
The proposed new scheme will allow an eligible civil or public servant over the age of 50 to retire without “actuarial deduction” of pension entitlements.
Ten per cent of the relevant lump sum will be paid immediately with the balance paid at the normal retirement age of 60 or 65.
However, for those who apply to retire now, the full lump sum will not be taxed even if the Government introduces such a measure in the future.
The note on the scheme drawn up by the Department of Finance for the Minister yesterday represented the first public indication of the numbers who have or who are now expected to apply to leave the public service under the early retirement scheme.
The Department of Finance told Government departments last month that the purpose of the early retirement scheme was “to facilitate the permanent structural reduction in the numbers of staff serving in the Civil Service, local authorities, HSE and non- commercial State bodies with associated restructuring of organisations and operations in as timely a manner as possible”.
Government departments began accepting applications under the scheme from last month and this process will continue until September.
However the largest public sector employer, the Health Service Executive (HSE) has suspended the operation of the early retirement scheme for the present as part of a row with trade unions over instructions given to members not to co-operate with redeployment arrangements in the civil service.
The HSE believes that redeployment of staff is crucial to facilitate the departure of employees under the scheme while still keeping services in operation.
The largest public sector union, Impact, has criticised the Government’s early retirement scheme for public servants as a “recipe for public service chaos”.
It has said that in its current form it would force thousands of public servants, mostly on modest incomes, to gamble on their retirement income.
Impact general secretary Peter McLoone has said that the “uncertainty over future taxation means staff must either gamble that pension lump sums will be taxed in future, in which case they are effectively forced to take early retirement and forgo up to 10 years of pay”.
Otherwise, he said “they must gamble that their pension won’t be taxed, and possibly end up with a much-reduced retirement income if the Minister decides to impose a tax”.
The early retirement scheme is just one of three initiatives introduced by the Government in recent weeks aimed at reducing the numbers on the State’s overall pay bill.
The Government has also offered staff in the public service a special incentive payment of up to €12,500 annually if they take a three-year career break.
It has also proposed a new scheme to allow staff in the civil service to take special unpaid leave for up to 13 weeks.
