Brendan Howlin (Wexford, Labour)

All long-term estimates depend on the presumptions made about pay and pay increases. They should be regarded as typical rather than as definitive.

Deputy Seán Fleming asked how many in the public service were on salary rates of over €50,000. He raised that issue in the context of the effect of the new pension arrangements on pensions below that rate. Obviously, any figure I give is a snapshot of the current position which may be very different by the time people retire under the scheme. To answer the Deputy's question directly, my Department estimates that approximately 60% of public servants are on rates of pay of less than €50,000 and that over 75% of public servants are on rates of pay of less than €60,000. Less than 3% of public servants are on salaries of over €100,000.

The Deputy also asked for details of my general estimate that the new scheme will produce a saving of €1.8 billion, or approximately 35% of annual payments on public service pensions. We estimate that by the middle of this century the total cost will be approximately €5 billion. Not all of these savings arise from the introduction of the new career average system. In other words, pensions are not expected to be reduced by 35%. We estimate that the increase in the pension age will introduce a saving of approximately €300 million. The linking of pension payments with the consumer price index, rather than pay, will save a further €500 million of that total. It is not the case, therefore, that pensions are being reduced by 35%. The overall savings will be approximately 35%.

Deputies have also raised the question of the administrative arrangements which might begin to apply when the new scheme is introduced. I entirely agree that the new scheme gives us a major opportunity to improve pensions administration, reduce costs and improve efficiency. There is already a considerable degree of centralisation in the service. The education offices are in Athlone and the defence offices are in Galway. The Department of Public Expenditure and Reform provides pensions administration services for approximately 50% of retirements from the Civil Service. Deputy Seán Fleming made the point that the case for further centralisation, aimed at improving efficiency, was even stronger as a result of the introduction of a single pension scheme. We now have a chance to improve things significantly. I want to improve pensions administration as part of the general public service reform programme in my Department. It will be a question of building on these developments as more and more entrants are recruited into the public service and become members of the new scheme.

I pay tribute to the other Departments and offices which have helped to produce this legislation. Officials in the Office of the Attorney General and the Departments of Education and Skills; Social Protection; the Environment, Community and Local Government; Health; Justice and Equality; and Defence assisted the staff of the Department of Public Expenditure and Reform in developing the policy that underpins this important legislation. Staff in every public service body will have to work on the practical arrangements which will arise after this legislation has been enacted.

I thank Deputies for their contributions. The debate has brought to light the key issues relating to these far-reaching measures. We will have to consider a number of the more detailed technical points raised. I will reflect carefully on all the points made and look forward to detailed engagement with Deputies on Committee Stage.

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