Written answers
Wednesday, 21 November 2012
Department of Public Expenditure and Reform
Public Sector Pensions
Mary Lou McDonald (Dublin Central, Sinn Fein)
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To ask the Minister for Public Expenditure and Reform if he intends to increase the public service pension reduction bands applied to high paid public sector pensions. [51542/12]
Brendan Howlin (Wexford, Labour)
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At present, the position is that the Financial Emergency Measures in the Public Interest Act 2010 provides for an average public service pension reduction (PSPR) with effect from 1 January 2011 of about 4% of pension, calculated in line with the following rates and bands:
Annual Public Service Pension (€) | Reduction Rate |
---|---|
First 12,000 | 0% |
Between 12,000 and 24,000 | 6% |
Between 24,000 and 60,000 | 9% |
Between 60,000 and 100,000 | 12% |
Balance above 100,000 | 20% |
The existing reduction is estimated to save €100 million in a full year. It applies to pensions paid to some 130,000 public service pensioners. Last year, arising from my concern about large public service pensions, I amended the legislation to increase the reduction on pension amounts over €100,000 by introducing the 20% rate on this band.
As I have explained many times, I have been legally advised that further public service pension cuts could only be justified in the broad public interest. They would therefore have to make a meaningful contribution to the fiscal adjustment and would have to be designed in a similar fashion to the existing reduction. For example, a move to introduce a 100% rate of pension reduction on pension amounts over €100,000 could immediately run up against the likelihood of the courts finding that such a complete restriction of property rights would give rise to legal difficulties. Like all expenditure issues this matter is subject to constant review.
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