Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Hardly, Acting Chairman. We are having an exchange across the House. I am sure there will be as much predictability in what I am about to say as there was in what the Deputy just said.

The public service pension reduction, PSPR, which was introduced on 1 January 2011, is the only measure that has decreased the value of public service pensions in payment since 2008. PSPR applies as a progressively structured imposition on public service pensions under terms set out in the Financial Emergency Measures in the Public Interest, FEMPI, Act 2010, as amended.  As such, it has been and remains an important element of the pay and pension measures under the financial emergency legislation which have been critical to the stabilisation of the public finances.

The PSPR burden on pensioners, which was increased for higher-income pensioners from July 2013 under the Financial Emergency Measures in the Public Interest Act 2013, is now being significantly alleviated under the 2015 Act. This substantial part-reversal of PSPR is proceeding in three stages over the period 2016 to 2018. When complete on 1 January 2018, it will mean most public service pensioners are no longer affected by PSPR. All public service pensions with pre-PSPR values of up to €34,132 will be fully exempt from PSPR from then on, while those pensioners not fully removed from the reach of PSPR will, in the majority of cases, benefit by €1,680 per year. The cost of this very substantial PSPR amelioration under the Financial Emergency Measures in the Public Interest Act 2015 is estimated at some €90 million on a full-year basis from 2018. 

In the past, the occupational pensions received by public service pensioners were generally adjusted in line with changes in the wages or salary of the pensioner's grade at retirement.  Sometimes referred to as "pay parity", this non-statutory linkage lapsed in 2010 when pensions were left unchanged notwithstanding salary cuts at the beginning of that year affecting all public servants. This pension protection, albeit tempered from 2011 in some cases by the imposition of the PSPR, has worked to the benefit of pensioners, as indeed have the "grace periods" in respect of new-award pensions which accompanied the public service salary cuts in 2010 and 2013.

In light of these developments, the issue of how to adjust the post-award value of public service pensions through appropriate pay or other linkages will be considered by Government in due course.

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