Tuesday, 19 January 2016
Public Sector Pensions
55. To ask the Minister for Public Expenditure and Reform the full-year cost of ceasing the public service pension reduction on pensions of up to €50,000; the number of persons who would benefit; his plans to do this; and if he will make a statement on the matter. [1916/16]
What is the full-year cost of ceasing the public service pension reduction on pensions up to €50,000, which is approximately the figure up to which a couple can receive a medical card automatically if they are over 70 years of age, and the number of people who would benefit in doing this? The reduction only extends as far as those on pensions of €34,132, despite the amendments I tabled when Members were discussing the passage of the financial emergency in the public interest, FEMPI, legislation.
As the Deputy is aware, the Financial Emergency in the Public Interest Act 2015 provides for incremental increases in the threshold before the public service pension reduction, PSPR, applies this year from 1 January, next year and in 2018, ensuring that from 1 January 2018, all public sector pensions with values less than €34,132 will be exempt from the pension reduction. This means that 80% of all pensioners will see no pension reduction within 24 months. The PSPR amelioration provided for under the FEMPI Act delivers on my previously stated commitment to reduce the burden of the FEMPI legislation for retired public servants at the earliest date economic progress allowed me to so do. The measures have been costed on a full-year basis in 2018 at a figure of €90 million. In all cases the maximum pension restoration figure is €1,680 over the two-year period. The Deputy's proposal to increase the pension size threshold below which the PSPR does not apply to €50,000 per year would cost approximately €117 million per year. In addition, those pensioners still affected by the PSPR, including the very highest paid, would secure a pension boost of €4,080 per year via the PSPR restoration.
I did not think it was the right thing to do to provide for that level of pension restoration for some people, of whom we would be very critical and who have walked away with very good pensions in the State.
Under section 12 of the FEMPI Act, I am required to review the necessity for the FEMPI legislation annually. Whoever sits in my seat will be required to lay the results of a new evaluation before the House next summer. All of these matters will be considered in that context.
The Minister might clarify two of the figures he mentioned. My proposal would only apply up to a figure of €50,000. The Minister spoke about people on higher salaries who had walked away with bigger amounts and who could be in receipt of pensions above that figure.
Will the Minister provide the cost of the reductions on an annualised basis? Will he then provide the cost of taking in the extra 15,000 or 20,000 people by increasing the threshold to €50,000? Those on a pension of €34,132 who have worked all of their lives are only marginally better off than those in receipt of the State pension, which is approximately €400 per week. I know that we discussed this issue at length during the discussions on the FEMPI legislation. I detect a glimmer of a possibility that the Minister might revisit it, subject to the finances allowing it. It is on that basis that it should be re-examined. The issue is whether the Minister wishes to support Fine Gael and tax cuts or to look after the people in question.
One cannot spend money and not have the wherewithal to do so. As a general principle, I would like to be able to deploy more resources to improve public services. I agree with the Deputy. I have had a number of meetings with the representatives of public sector pensioners and I am conscious, as I said to the Deputy during the debate on the FEMPI 2015 legislation, that, unlike pay restoration for those who have 30 or 40 years of work ahead of them, it is different if one is facing, if one likes, a more limited time horizon because one is elderly. I wish to ensure pension restoration will happen as quickly as economic circumstances allow. We will give back €1,680 to each pensioner under the proposals we enacted last year. Could we go further and move quicker? We will see what economic progress will allow us to do in the coming months. If we can sustain economic progress, this will be a priority for me personally.
I am pleased that the Minister is coming round to the point of view I expressed consistently during that debate. I know that his senior partner in government has given big commitments on tax cuts, if it is back in government. I hope the other party in government will give equally strong commitments to look after people who are, as the Minister said, elderly; some of whom may not be around in 2018. They were looking for a quicker restoration and I understand their point. I think the Minister also understands it. Those who are marginally above the limit to qualify for a medical card should be allowed pension restoration in full in as short a period as possible. Outside the departmental official-speak, when we get out on the hustings, I hope the Minister will agree and that there will be a sentence in his policy document on the lines of what has been suggested.
All of our focus on pay and pensions restoration has been on the lowest paid first. As I said it would be, that is and was the hallmark of the FEMPI legislation. We are providing for full pensions restoration for people who would have been on a salary of roughly €68,000 when they were working, which is the case for 80% of public servants. They will see full restoration of their pensions under the provisions we have enacted. Increasing the threshold to €50,000 would mean that we would be providing for full restoration for people whose salary would have been €100,000. We will need to go there eventually, but I did not set it as a priority in terms of the scarce resources I had available last year. As more resources become available, people are entitled to have their pensions restored as quickly as I can manage it.