Jim Daly (Cork South West, Fine Gael)
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223. To ask the Minister for Public Expenditure and Reform his views on correspondence (details supplied) regarding the public sector pension levy; and if he will make a statement on the matter. [3617/15]

Brendan Howlin (Wexford, Labour)
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The public service Pension-Related Deduction (PRD), which applies to the pay of pensionable public servants, was introduced in March 2009 under the Financial Emergency Measures in the Public Interest Act 2009. It continues to provide very important revenue to the State, and as such remains a key constituent of the suite of financial emergency measures affecting public service pay and pensions which have been adopted in response to the financial crisis. 

For information, I would point out that in relation to public service pension arrangements a succession of cost containment measures have been put in place over recent years affecting existing pensioners, serving staff and new recruits in the public service.

The most significant cost-saving reform has been the introduction in January 2013 of the Single Public Service Pension Scheme, also known as the Single Scheme, which is the default pension scheme for new-hire workers across the entire public service. This landmark reform targets very substantial long-run savings of about one third of pension outgoing, with those savings deriving mainly from career-average (not final-salary) pension accrual, inflation (not pay) linkage of benefits, and higher minimum pension age (effectively 68 years for most new joiners).

Several other measures have also been taken over recent years which help to curb public service pension costs as follows:

- In 2004 minimum pension age for new-joiner public service workers was raised from 60 to 65 years.

- In 2010 public service pay cuts averaging approximately 7% were applied. Further pay cuts affecting public servants with annual earnings above €65,000 were applied in July 2013. In general, these various pay reductions act to reduce individual pension and lump sum awards to persons retiring from the public service.

- In January 2011 public service pensions in payment above €12,000 were reduced via a multi-band progressively structured Public Service Pension Reduction (PSPR), which had an average impact of 4% on pensions.

- In July 2013, further cuts in public service pension payment rates, via adjustments to the rates and scope of the PSPR, and amounting to between 2% and 5%, were imposed on pensions in excess of €32,500.

It should also be noted that the great majority of public servants hired since 1995 make an explicit contribution to their pensions, comprised of 3% of pay and an additional 3.5% of net pay, where net pay is defined as salary less twice the rate of Contributory State Pension.

With regard to the future of PRD, I have already put on record my view that, subject to a continuation of our fiscal recovery and to the necessary economic conditions being in place, I envisage a future orderly wind-down of the financial emergency measures legislation. In planning for the eventual ending of the financial emergency and for addressing the related legislative position, the Government will be concerned to ensure that a return to more normal pay setting arrangements in the public service is accompanied by pension arrangements which are clearly seen to be sustainable in the long term.