Social partnership talks between the Irish Congress of Trade Unions and the government broke down around 4am this morning.

The talks broke down over the details of what was described as a “proposed levy” on public service pension contributions.  It was not in fact a levy on pension contributions but a levy on all pay, both pensionable and non pensionable, both basic and overtime pay.

This was to have meant average levy of an average of 7.5% on all pay ranging from 3% to 10%. All public sector workers were to be affected.

This was to have brought in €1.35bn in the current year. 

A teacher on €40,000 was to have an additional deduction of €2,750 or 6.9% rising to 8.3% for a teacher on €75,000. 

The formula for the calculation of the contribution was 3% on the first €15,000 of pay, 6 on the next €5,000 and 10% on all other pay.  This was to apply to pay from any source, pensionable or not.

In addition the proposed pay increases under the Towards 2016 interim agreement agreed last September was to be deferred for 2009 and for 2010.

In addition there was to have been a reduction of 25% on all Travel and Maintenance payments to public servants.

ICTU General Secretary David Begg said this morning that the process had “run out of road”. Acknowledging some progress in the talks he said this was not sufficient to reach agreement. He said that the additional pension contributions would have been very onerous for workers in lower and middle income brackets.

Early this morning the Taoiseach Brian Cowen said government would consider the position at this morning’s cabinet meeting and would take “the necessary decisions”.

The TUI Executive will meet to consider these developments and any announcements from today’s cabinet meeting.