IRELAND - The Irish government has outlined planned reforms to its public service pension system, launching a new, single, public service scheme and shifting employers away from final salary payments.

Brendan Howlin, minister for public expenditure and reform, pledged in a speech to introduce legislation for a raft of pension changes by the end of the month and argued that a career-average revalued earnings (CARE) approach would create a "fairer, more equitable system".

The Labour party TD explained that the exchequer's "substantial bill" for public service pensions - estimated at €2.9bn for 2011 - necessitated structural change within the system.

He said reforming the system and introducing a single scheme for all public service employees would allow for a "more straightforward and efficient" approach to pension management and that, in time, all civil servants would have the same basic pension scheme.

However, he conceded the government would differentiate between the various types of employees, making "appropriate" changes for specific terms and conditions required my some areas, such as the county's defence forces.

"In the new scheme, pensions will be based on 'career average' earnings rather than final salary," he said, adding that inflation-proofing would now be provided by linking payments to the consumer prices index (CPI), rather than the level of wage increases offered by the pensioner's last position prior to retirement.

"With the introduction of the new scheme, there will be a major opportunity for improvements in the management of pensions, particularly in the development of shared services, which the government is determined to pursue," he added.

While Ireland is increasing the minimum public service pension age to 66, the minister stressed that workers would not be expected to work beyond 70.

The changes come as part of reforms agreed last year with the International Monetary Fund and European Union as part of the country's bailout package.

At the time, Ireland's previous government agreed to put public service pensions on a "more sustainable" footing by introducing CARE over final salary, as well as linking any indexation to CPI.

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