IRELAND - The government has confirmed the assets and liabilities of certain university pension funds and non-commercial state agencies will be transferred to the Exchequer to improve the General Government Balance (GGB) of Ireland.
In yesterday's supplementary budget Brian Lenihan, the minister of finance, announced an incentivised early retirement scheme for public servants to try and reduce the wage bill and confirmed there would be a "slight recasting" of the pension fund levy for public service workers to limit the impact on low-earners.
However, in the note on the policy changes included in the Budget, the ministry of finance noted it is "proposed to transfer to the Exchequer the assets and liabilities of certain pension funds in universities and non-commercial State agencies".
It estimated that at the end of 2008 the pension schemes affected by the measure had assets of €1.7bn and liabilities of €3bn, but because of the way these funds are classified under Eurostat rules, transferring assets from the schemes "would impact positively on the General Government Balance (GGB) when received".
The note added legislation will be required to allow the transfer, although once this takes place the assets would be managed as part of the National Pension Reserve Fund (NPRF) while any initial revenue and subsequent investment returns "would be offset in the future by the payment of pension benefits which would be recorded as government expenditure".
Lenihan meanwhile also confirmed there would be changes to the pension levy, introduced on 1 March 2009, to limit the impact on lower-paid public servants and to increase the payments by higher earners that would cost €100m in 2009 and €150m in a full year.
Under these changes the first €15,000 of earnings will now be exempt from the levy - it is currently 3% - while the levy on earnings between €15-20,000 has been reduced from 6% to 5%, and instead of a single 10% charge on €20,000 or more, the 10% will be payable on earnings between €20-60,000 and a new band of 10.5% has been introduced for earnings above €60,000.
In addition, Lenihan confirmed that in an effort to reduce the public sector wage bill the government is offering an 'incentivised scheme of early retirement in the public service' for certain workers aged 50 or over, who will then not be replaced.
This allows them to take their pension and 10% of their lump sum without actuarial reductions, from the age of 50, and the remainder of the lump sum is paid at the normal retirement age of 60 or 65.
The finance minister also suggested private pension funds could be used to support existing public private partnership (PPP) projects and other projects previously funded by the government through the Exchequer.
Lenihan told the Oireachtas: "I believe that there is scope to access significant private funds for infrastructure projects in order to sustain as many construction jobs and as much activity as possible. Discussions are in train with the pension industry about an initiative that seeks on a value for money basis to unlock additional private capital to complement debt financing provided by banks and the capital markets."
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email firstname.lastname@example.org