MARTIN WALL, Industry Correspondent
Wed, Feb 04, 2009
PENSION LEVY:THE GOVERNMENT’S new pension levy will see more than 350,000 staff in the public sector pay more in additional contributions towards their guaranteed pensions.
The levy will be applied on all income including elements of pay which are not currently reckonable for pension purposes. The levy will be deducted from the gross income of the State employee. Income tax, PRSI and other deductions will be assessed on the balance of income after the new levy and any existing pension contributions have been deducted.
For individual grades in the Civil Service, the Department of Finance has said that clerical officers who were recruited after 1995 and who are currently on point three of their pay scale will pay a levy of €1,077 or 5.3 per cent of their gross salary of €26,672. This would bring their total deductions to €4,558.
For assistant principals who joined the Civil Service before 1995 and are currently on point one of their pay scale, the levy will cost 8.1 per cent of their gross income of €66,179.
The Department of Finance said the levy would be graduated so that the effect was somewhat less at lower income levels and greater at higher levels.
On average, the levy will be 7.5 per cent and it is expected to generate €1.4 billion.
“The basis for the deduction is that public service pensions are acknowledged to be significantly more favourable than the generality of pensions in the private sector, both in regard to their terms and their overall security and it is therefore appropriate that a deduction should be made to reflect this reality at a time when savings are needed from the public service pay bill,” the department said.