Pensioners of An Post have taken to the streets to highlight how their pensions have been devalued by the company through the imposition of a “pension accord” to cap increases. Their latest peaceful protest was held in pouring rain outside the GPO in Cork last week where it was joined by some current employees and general election candidates. It followed an earlier large protest outside the headquarters of the Communications Workers Union on North Circular Road in Dublin.
The protests are being organised by the Post Office Pensioners United (POPU). Its Leader, Paul Moreland, says “the accord was brought in to save the pension fund after the financial crash of 2008. That emergency is long since over and we want the accord terminated. Emergency restrictions imposed in the public service were removed some years ago. The financial hardship being caused by this injustice cannot continue for our pensioners. Some of these people are in the 70s and 80s so it’s a sad reflection on An Post management and Ministers that they have to take to the streets in protest to highlight how their pensions have been devalued”.
Many of these pensioners were civil servants who were transferred to An Post in January 1984 under the terms of the Postal & Telecommunications Services Act 1983 that guaranteed them “not less favourable conditions” in their pensions than would be the case if they had remained in the civil service.
Increases in their pensions were paid over the 30-year period up to January 2014 under the ‘pay-pension parity’ basis that has operated in the civil service since the early 1970s and remains so under the current Public Service Pay Agreement. When the An Post pension scheme, like most others, ran into a deficit during the financial crash of 2008, the company imposed a ‘pension accord’ to cap increases at 2% or CPI whichever was the lower. The accord was to be reviewed at the end of 2023, but it appears to have become a permanent feature for the company to save on pension payments.
At the same time, the company reduced its contribution to the fund from 14.4% to just 8% which is one of the lowest contributions across state companies. The saving of 6.4% of turnover is now being used to subsidise the operations of the company’s “transformation” programme. On top of that, Minister for Finance, Michael Noonan’s raid on pension funds took €53m out of the An Post pension fund between 2011 – 2016.
In 2024, staff in An Post were paid a 4% increase, but pensioners only received 2%. As part of the accord, the company re-defined salary into “pensionable” and “not-pensionable” contrary to the definition in the rules of the pension scheme. Of the 4% increase to staff, 2% was pensionable so that device was used to pay 2% to pensioners.
The accord was intended to be in place for 10 years up to December 2023. Pensioners are now demanding that it be removed, and the pay/pension parity method of calculating pension increases be restored. Additionally, they point to Kieran Mulvey, Chairman of An Post, telling the Oireachtas Committee on Transport on 16 October that the pension fund is “in rude good health and has a surplus of €500 million in it”.
These issues have been raised numerous times in the Dáil and in the Seanad over the past two years including by Senator Gerard Craughwell on 6 July 2023 – . The Minister answered no less than six Parliamentary Questions on the issue on 9 September 2024. One pensioner, Matt Moran, told Gript that he and five others sent a letter to Mr. Mulvey, the CEO and all the Directors of An Post on 28 February 2023, but yet Mr Mulvey told the Oireachtas Committee that he was not aware of the problem.
Increases offered by An Post must be authorised by the Minister for Communications and the Minister for Public Expenditure & Reform after receipt of advice from NewERA which, as part of the NTMA, is a financial advisory body to Ministers. The complicated approval process took eight months last year and nine months this year with the increase due since last January only being paid two weeks ago. That delayed payment system has been raised in the Dáil over the past two years by Labour Deputies Duncan Smith and Sean Sherlock.
An Post claims that increases are discretionary, and it is not in contravention of the “not less favourable” guarantee in the 1983 Act. The pensioners understanding of that guarantee is based on a letter each of them received in July 1983 from then Minister for Posts & Telegraphs, the late Jim Mitchell TD. It also appears to have been confirmed by the Attorney General in advice to the Department of Finance in January 2004.
When challenged about applying the accord to pensions in payment which the pensioners say is illegal based on case law and WRC determinations, the company maintains that it has not applied the accord to such cases but rather adopted a new policy in how it exercises discretion. Yet the accord states that the cap “also applies to increases to pensions in payment and to deferred pensions.” The pensioners maintain that exercising discretion within the constraint of a collective agreement, such as the accord, is an unusual practice and it raises a question about transparency and taking all relevant factors into account at the time.
So, whether it is the exercise of discretion or the application of the accord, the level of the cap on increases is exactly the same. Matt Moran told Gript that the coincidence is not credible. “The accord is clear he says” he says. “It re-defined salary into ‘pensionable pay’ and ‘non-pensionable allowance’ which was a cute move but a deceptive means to undermine and to circumvent Section 46(4) of the 1983 Act that was intended by the Oireachtas as a copper-fastening of our pension conditions after we transferred out of the civil service. That guarantee had been fought hard for at the time by the unions and was central to the transfer agreement. In recent years, the company and the state have chosen to re-define it as merely a ‘transitional provision’ that is not mentioned anywhere in the legislation or in the scheme. The re-definitions and play on words are a cute legal ploy to deny us our conditions. It is unjust and immoral”, he says.
The pensioners point out how An Post was granted the reduced or Class D rate of PRSI which has yielded it savings in payments to the Social Insurance Fund which they estimate as being over €400m compared to the Class A rate. However, the Class D PRSI rate does not provide for entitlement to the state pension or its accompanying benefits, including dental and optical services or the annual increases granted by the Department of Social Protection. Matt Moran questions if that form of “subvention” to An Post complies with state aid rules under Articles 107 and 108 of the Treaty on the Functioning of the European Union. He feels that it warrants investigation by the EU Commission.
Many of the An Post pensioners are on low pensions and with the cap on increases in their pensions compared to the improved annual increases in the state pension, their weekly income is less than the state pension… and that’s after up to 40 years of service to the state. Hence, they feel that their pensions have been devalued and their expected income and spending power diminished significantly.
The 7,000-member Retired Civil & Public Servants Association supports these pensioners. In a recent letter to the CEO of An Post, David McRedmond, it said: “As the financial emergency of 2008 is over and your company’s pension fund is in such ‘rude good health’, (and noting that the FEMPI provisions in the public service have been removed), we ask you and your Board of Directors to remove the cap on increases as it is no longer necessary as an emergency measure but is causing financial hardship to these pensioners who are covered by the contractual obligation in Sn 46(4) of the 1983 Act”.
The new Minister for Communications will have this issue to deal with when he or she takes up the office in the coming weeks. Several new TDs have promised to raise the issue in the Dáil. Ken O’Flynn, elected for Independent Ireland in Cork North Central, said numerous pensioners had raised it with him during his canvass.