Written answers

Wednesday, 21 November 2012

Department of Public Expenditure and Reform

Public Sector Pensions

Photo of Mary Lou McDonaldMary 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]

Photo of Brendan HowlinBrendan 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 12,0000%
Between 12,000 and 24,0006%
Between 24,000 and 60,0009%
Between 60,000 and 100,00012%
Balance above 100,00020%

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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