Seanad debates

Tuesday, 20 October 2015

Commencement Matters

Pensions Levy

2:30 pm

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank Senator Kelly, on behalf of my colleague, the Minister, Deputy Howlin, for raising this important matter. The public service pension-related deduction, sometimes referred to as the pension levy, applies to the pay of pensionable public servants. However, it is not a pension contribution. The measure was introduced as an emergency measure in 2009 to effect a reduction in the remuneration paid to public servants, including retained firefighters, as a contribution to the necessary reduction in public service expenditure brought about by the financial crisis at the time.The measure is progressive in that the reduction applied is directly related to the amount of remuneration paid, with those earning more being subject to the greater reduction. The first €15,000 of remuneration paid is currently exempt from reduction.

The specific law underpinning the PRD is the Financial Emergency Measures in the Public Interest Act 2009, as amended. That Act provides that PRD is to apply to the pay, including any non-pensionable pay elements, of public servants who are pensionable. In this connection, the term "pensionable" is defined in terms that give it a broad reach. It includes not just membership of a public service pension scheme but also any payment in lieu of such membership. I understand from the Minister for the Environment, Community and Local Government that retained fire-fighters have historically qualified on retirement for a one-off, non-recurring gratuity calculated at one eighth of their annual retainer payment multiplied by the number of years of actual service up to a maximum of four times the annual retainer. To qualify for the gratuity, a retained fire-fighter must have a minimum of two years service. The maximum gratuity payable is four times that of the annual retainer and retained fire-fighters do not pay any contribution to that gratuity.

Retained fire-fighters in place in 2008 and those hired thereafter until the end of 2012 were given the option of joining the local government superannuation scheme and receiving a pension and retirement lump sum based on their pensionable remuneration and length of service. All retained fire-fighters appointed after 1 January 2013 must join the single public service pension scheme. Section 2(1)(b) of the Financial Emergency Measures in the Public Interest Act 2009 provides that any public servant who is a member of a public service pension scheme or who is entitled to benefit under such a scheme or receives a payment in lieu of membership of such a scheme is subject to the deduction. The payment of the one-off gratuity at retirement to retained fire-fighters who are not members of the superannuation scheme constitutes a payment in lieu of membership of the pension scheme and, as such, all retained fire-fighters, regardless of whether they are members of the public service pension scheme, are subject to the deduction.

I will address the recently announced plans by the Minister for Public Expenditure and Reform for the reduction of the pension levy as it applies to all public servants, including retained fire-fighters - which, I am sure, will be good news and welcomed by the retained fire-fighters - when the Senator has had a chance to respond.


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