Dan Neville (Limerick West, Fine Gael)
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Question 149: To ask the Minister for Finance if his attention has been drawn to the fact that employees working for the health board are being charged the new pension levy despite the fact that they will have no entitlement to a public service pension when they retire; and if, in these circumstances he will clarify whether this is a tax or a pension contribution. [19734/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Public servants who are members of public service pension schemes or are entitled to a benefit under such a scheme or receive a payment in lieu of membership in such a scheme are liable to pay the pension-related deduction legislated for in the Financial Emergency Measures in the Public Interest Act 2009. Any questions on the precise details of an employee's superannuation terms and conditions can be raised with the individual's employer.

In some areas of the public service employees outside the pension scheme receive a gratuity or other payment. Those public servants are in receipt of a payment in lieu of membership of a pension scheme and as such would be liable.

I would add that section 6 of the Act provides for a refund of the deduction in certain circumstances. This should reassure those on short-term non-renewable contracts who may be concerned about accruing no pension benefit at the expiry of their contract due to insufficient service. A deduction refund may be payable provided that the departing employee has accrued no benefits under any public service pension scheme, has not received a payment in lieu of scheme membership and has not transferred the service to another public service pension scheme.

Under section 7 of the Act, no additional pension benefit is conferred by the deduction and no option to join a scheme arises under the Act.

The pension-related deduction is required at a time of great pressure on the public finances and takes account of the valuable pension benefits available to public servants. In light of all the above factors, I am satisfied that it is fair and appropriate that public servants are subject to the pension-related deduction. In order to ameliorate the impact of the deduction (with a partial offset by an increase on earnings above €60,000) I announced, in the supplementary budget of 7 April 2009, a change to the structure of the deduction which exempts the first €15,000 of earnings.