State Pension Scheme and break with final pay.

I was just thinking about the public sector and the position of staff who leave before Feb 29 2012.

These staff will have their pension based on their pay prior to the cut.

Staff who retire after Feb 29th will have their pension based on their current, reduced pay.


Look forward 20 years, the staff that retire after 29 Feb will get their pension based on the current pay for the job the retired from. i.e. They will get benefit from all pay rises over the next 20 years, assuming that at some stage pay will rise.

Staff that retire before 29th Feb have effectively broken the link between their final pay and pension.

Will these pensioners benefit from any increases in the pay of their grade.

Just looking at my father who retired 20 years ago. If his pension was based on his final pay it would be worthless without getting benefit from pay rises.

I am interested in this and any ideas would be most welcome.

As far as I know DingDing, the fact that public servants retire before 29/2/2012 does not break the link between salary for the grade and pension. So they will benefit from any % rise in the pay for that grade over the 20 years also. Slim

DingDing said:

I was just thinking about the public sector pension.

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While it is clear you are talking about the public service here the distinction between the public service and the broader public sector is an important one.

Traditionally most civil and public service pensions rose in line with the wages of the employee who is currently in the postion.

The situation in the broader public sector varied to that which pertains in the public & civil service to an annual increase in line with CPI or perhaps to an annual increase at the discretion of trustees of the scheme,

I am aware of several (distressed) public sector schemes who have gone several years without paying any increase to pensioners.

I meant civil and public sector workers who's pension is funded and paid for by the state. i.e. Teachers, Gardai etc...

I don't think any change has been made to the indexation of PS pensions.

Person 1 retires on 650pw, based on lower final salary.

Person 2 retires on 700pw, based on higher original salary.

Their future pension % increases will be the same, though obviously their
actual pensions will be different.

DingDing said:

I meant civil and public sector workers who's pension is funded and paid for by the state. i.e. Teachers, Gardai etc...

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If you mean teachers, guards, army, prison officers, university employees etc then you are talking about the public service. Public service pension schemes are unfunded - this means that pensioners are paid of of government current expenditure and there is no ringfenced scheme fund.

Funded schemes do exist in the broader public sector (ESB, Bord Gas etc) some of these schemes are wage indexed, some are CPI indexed and some are not indexed at all)

Most public servants now contribute to their pension through Superannuation Deductions. The number of Public or Civil servants who are not making any contribution is small and dwindling all the time.