As this is the first Public Service Pay Agreement (PSSA) news updated of the New Year, I would like to take this opportunity to wish you a happy and healthy New Year.
This update will set out the scheduled changes to your pay as agreed under the PSSA that INMO members voted in favour of in September 2017. It will also set out details of two other areas of change as follows:
- revenue changes to notification regarding illness benefit from Social Welfare; and
- details of changes to pension age.
Pay restoration under the Public Service Pay and Pensions Act 2017 and also Budget changes to income tax and the Universal Social Charge (USC) begin to take effect from 1st January 2018. The Public Service Pay and Pensions Act 2017 was enacted on 16th December 2017 and gives effect to the provisions of the PSSA 2018 – 2020.
Under the pay terms in the legislation and the PSSA, INMO members will see their basic annualised salary increased in 2018 as follows:
- 1st January 2018: 1% pay increase
- 1st October 2018: 1% pay increase
It is important for members to be aware that the restoration to basic pay in 2018 will not be applied to allowances in 2018. The FEMPI No. 2 Act 2009, reduced allowances by 5% (for those earning less than €125,000) and 8% (for those earning more than €125,000). The legislation, however, provides for the restoration of allowances from 1 October 2020. The INMO and the ICTU Public Services Committee have pressed Government to bring this date forward to 2019 and discussions are ongoing with regard to the timing of the restoration.
Further pay adjustments will apply in the years 2019 and 2020 as follows:
- 1st January 2019: 1% pay increase for those earning up to €30,000
- 1st January 2019: Pension levy threshold up from €28,750 to €32,000
(worth €325 p.a.)
- 1st September 2019: 1.75% pay increase
- 1st January 2020: Pension levy threshold increased to €34,500
(worth €250 p.a.)
- 1st October 2020: 2% pay increase
The value of the combined pay and pension levy increases over the lifetime of the agreement are set out below:
- 7.4% for those earning €30,000 a year or less
- 7% for those earning between €50,000 and €55,000 a year
- 6.6% and 6.9% for those earning between €55,000 and €80,000 a year.
As part of the WRC nursing and midwifery recruitment/retention agreement, of March 2017, and as confirmed by the PSSA, the following nursing and midwifery allowances are sanctioned from 1st July 2017:
- Midwifery qualification (Public Health Nurse).
- Registered General Nurse in the Community.
- Nurse Co-Ordinator Allowance.
- Specialist Co-ordinator Allowance (Nurse Tutors).
- Nurses assigned to Occupational Therapy.
Retired INMO members will also benefit with effect from 1st January 2018. Already, under the FEMPI Act 2015 the Public Service Pension Reduction (PSPR) will be reduced to zero for those with pensions below €34,132. This will amount to the return of €780 to most PSPR-impacted pensioners. The new legislation now provides for the further lessening of the PSPR in the years 2019 and 2020. This will occur at different rates for those who retired on or before 29th February 2012 (retired on their pre-cut salary) and those who retired after that date (on their January 2010 salary).
In addition to the reductions in PSPR, for those who retired post end-February 2012, to the extent that they retired on reduced salaries for pension award purposes, they will receive pension increases in line with pay increases received by their peers currently in employment in accordance with the terms of the PSSA. For those who retired pre end-February 2012, whose pensions are based on (pre-cut) salaries of less than €70,000 they will receive increases where the PSSA increases result in the current salary exceeding its pre-FEMPI peak.
Budget changes to Income Tax and USC
Income tax and USC Budget changes that take effect from 1 January 2018. Prior to 1st January 2018, a single taxpayer became liable for the higher rate of income tax of 40% after earning €33,800. The threshold for the higher rate has now increased by €750 to €34,550.
The rates of USC have also changed and apply from 1st January 2018. The 2.5% rate of USC has been reduced from 2.5% to 2% with the threshold rising from €18,772 to €19,372. The 5% rate payable in respect of income between €19,372- €70004 has been lowered to 4.75%.
The combined income tax and USC savings for a single person earning €40,000 is approximately €250 a year.
Revenue Decision of Taxation of Illness Benefit and Occupational Injury Benefit - Notification
With effect from 1st January 2018, there will be a change to method of the taxation of Illness Benefit and Occupational Injury Benefit.
Up until 31st December 2017 tax was deducted through the Pay as You Earn (PAYE) system. Employers were issued with Illness Benefit or Occupational Injury Benefit notices direct from DEASP. These notices informed your employer of the amount of taxable benefit and the date payments started. While you were on sick leave if your employer paid you, the taxable Illness Benefit or Occupational Benefit was part of your pay. The total amount was taxed, without deducting USC and PRSI from the Illness Benefit or Occupational Injury Benefit.
With effect from 1st January 2018, Illness Benefit and Occupational Injury Benefit will be collected by reducing your tax credits and rate band. Revenue will incorporate the taxable element of Illness or Occupational Injury Benefit into your Tax Credit Certificate (TCC). Your employer will not get Illness Benefit notices from DEASP. Revenue will send a new TCC with total tax credits and rate bands to your employer.
While you are on sick leave, if your employer pays you, as is the case throughout the public sector, then you must tell them, in a timely manner, the weekly amount of Illness Benefit or Occupational Injury Benefit you are eligible to receive from the DEASP. The DEASP will no longer notify your employer of the amount.
Where your employer does not pay you a salary while you are on sick leave, these revenue changes do not require you to inform your employer of the amount of the weekly Illness Benefit or Occupational Injury Benefit.
These revenue changes relate solely to the method of taxation of Illness Benefit and Occupational Injury Benefit and should not affect the amount of salary or illness Benefit / Occupational Injury Benefit which an employee is eligible to receive while absent from work on sick leave.
Changes to Pension Age
Currently the qualifying age for the Contributory State Pension (CSP) is 66. This is set to rise to 67 in 2021 and 68 in 2028.
Public Servants recruited before 1st April 2004 have a compulsory retirement age of 65, although they may retire at 60 if they so wish. However, public servants recruited between 1st April 2004 and 1st January 2013 already have no compulsory retirement age, while those recruited since 1st January 2013 already have a compulsory retirement age of 70.
The Government recently decided to increase the compulsory retirement age for public service employees to age 70 and legislation is required to give effect to that decision. In advance of the legislation, interim arrangements are being introduced for serving public service employees who reach the age of 65 between the date of the Government decision (5th December 2017) and the coming into effect of the necessary legislation, to enable them to remain in place, subject to certain conditions, until they reach the age of eligibility for the CSP.
The conditions are:
(i) they retire and are then re-hired for the extra year;
(ii) the lump sum is paid but pension is suspended/pension abatement rules apply;
(iii) they will be paid at the minimum point of the relevant scale (waived for nursing and midwifery grades under recruitment and retention initiatives HSE Circulars 10/2016 and 18/2017); and
(iv) no pension contribution is payable and no public service pension benefits are accrued during the period of retention.
The HSE is to issue a Circular shortly, advising of the interim arrangements and eligibility criteria which will apply to all public health service employees appointed before 1st April 2004. The INMO has sought confirmation from the HSE that the minimum retirement age of 60 for pre-2004 recruits is not affected by these new arrangements, that remaining in work for longer is completely voluntary and the entitlement to receive a supplementary pension will not be affected in any way.
If you have any questions or queries in relation to the above, please do not hesitate to contact the INMO’s Information Office or, alternatively, your local IRO.
I look forward to working with you all in the months ahead.
With kind regards.
PHIL Ní SHEAGHDHA