There appears to be a recurring theme in organisations that have contractual defined benefit pension schemes.
Before Christmas, ESB staff went to the brink of strike action over an attempt by the company to redefine their defined benefit pension entitlements as defined contribution. The company argued the change was purely semantic, the workers disagreed. Stalemate ensued.
Now staff at Aer Lingus and the Dublin Airport Authority are threatening to paralyse our national airports during St Patrick’s Weekend over a €780 million deficit in their defined benefit pension scheme. Aer Lingus management claims this is not their responsibility and has offered to contribute €140 million as a gesture of goodwill. Staff aren’t prepared to accept this deal.
Let’s get real here. Defined benefit schemes are anachronistic in the extreme, devised at a time when public sector workers were relatively low paid, when interest rates were higher and life expectancy significantly lower. It was a time before the country became bankrupt, before the markets suffered a cataclysmic collapse and many investment funds were wiped out.
They are utterly untenable in this day and age. But unfortunately there is a complete sense of denial in this respect.
The country just doesn’t have the money to fund these schemes any longer. And putting ourselves deeper into a debt that is already unsustainable is just not an option. Something is going to have to give.
Each principal officer in the public sector retiring on a DB pension of €50,000 will cost taxpayers €1.5 million.
It is going to come to the point that the guaranteed and generous pensions of today’s public sector workers will be funded by a future generation of young Irish workers who may not get a cent on retirement.
The government has already done the unthinkable and raided private pensions with their supposed temporary levy. How this theft has remained unchallenged astounds me. And yet they have no appetite to tackle the ticking time-bomb of public sector pensions. Most likely because they all hope to retire on generous packages (like the majority of the previous Fianna Fail government) before it all blows up in their faces.