Peter Mathews (Dublin South, Fine Gael)
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Question 244: To ask the Minister for Public Expenditure and Reform if he will respond to concerns raised by a person on the issue of public service pensions (details supplied); and if he will make a statement on the matter. [21946/11]

Brendan Howlin (Wexford, Labour)
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The last Government decided, in the context of the serious national budgetary position, that retired public service pensioners should make a contribution to the overall required fiscal adjustment. This decision was taken having regard to the gap between the burden being borne by those currently in public service employment (where the pension related deduction (PRD) and pay reduction have impacted) and their retired counterparts.

The measure concerned, known as the Public Service Pension Reduction, was legislated for in the Financial Emergency Measures in the Public Interest Act 2010, which was signed into law by the President on 22 December 2010. Section 2 of that Act provides that the public service pension of a pensioner will be reduced. This provision came into operation on 1 January 2011.

The reduction applies to all public service pensions above €12,000 payable to or in respect of persons retired from all parts of the public service including the civil service, local government, the Defence Forces, An Garda Síochána, non-commercial State Bodies and the health and education sectors.

The measure averages some 4% and is tapered and therefore makes a greater reduction from those with larger public service pensions. Former public servants in receipt of high pensions, including former members of the Government and the Oireachtas and other former office holders, including the Judiciary, will bear the highest reduction.

The reduction applies in a standard manner to public service pensions, whether those pensions are contributory or non-contributory, and whether or not the pensions have been boosted by purchase of added years and whether they are made to the public servant or former public servant or to a survivor. The amount of reduction in each case is determined by application of the following set of annual pension income bands and associated reduction rates:

First €12,000 0%

Between €12,000 and €24,000 6%

Between €24,000 and €60,000 9%

Above €60,000 12%

The reduction in public service pensions should be placed in the context of the general moderation in inflation, i.e. the CPI is now no more than about 1% above 2007 levels, whereas public service pensioners received general round increases linked to pay of 2% in June 2007, 2.5% from March 2008 and 2.5% in September 2008 – an increase of around 7%.

In all the circumstances, including in the context of the EU/IMF Programme of Support, of which the public service pension reduction is an element, the Government believes it is a painful but necessary measure which will help restore order to the public finances.