Robert Dowds (Dublin Mid West, Labour)
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Question 110: To ask the Minister for Public Expenditure and Reform the progress he is making in terms of curbing high public service pensions; and if he will make a statement on the matter. [38587/11]

Brendan Howlin (Wexford, Labour)
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As the Deputy will know, there have been several retrenchments in public service pension conditions which have applied to serving staff and current pensioners in recent years. The Financial Emergency in the Public Interest Act 2009 introduced a pension-related deduction amounting to some 7% of pay on average, while the Financial Emergency in the Public Interest (No.2) Act 2009 reduced pay by a similar proportion and legislated for a "grace period" within which pensions would not be affected by this cut. This period is due to expire on 29 February 2012.

In addition, the Financial Emergency in the Public Interest Act 2010, which is also part of the EU-IMF Programme, imposed a Public Service Pension Reduction on public service pensions in payment and for those who retire before the end of the "grace period", amounting to 4% on average. For those retiring after the "grace period", their pension calculation will be based on their actual pay at the time of retirement, i.e. the protection of the Financial Emergency Measures in the Public Interest (No.2) Act 2009 will not apply. There have also been taxation-related changes during this time, such as the reduction in the personal fund threshold and in the exemption for lump sum pension payments.

I recently announced the Government's intention to increase from 12% to 20% the top rate of Public Service Pension Reduction in respect of pension amounts over €100,000. This is to be given effect by way of an amendment to the Financial Emergency Measures in the Public Interest (Amendment) Bill 2011, which is currently before the Oireachtas.

In the longer-term, the Government is moving to secure substantial savings in the cost of public service pensions by way of the proposed introduction of a single public service pension scheme for all new entrants. This scheme, which is currently before the Oireachtas in the form of the Public Service Pensions (Single Scheme) and Remuneration Bill 2011, will feature a career-average (not final-salary) basis for pension awards, adjustment of accrued benefits and pensions in line with inflation, and an increased minimum pension age. The design of the new scheme is expected to impose an especially sharp reduction in the value of pensions for high-paid public service retirees, especially those who have enjoyed multiple or late-career promotions.