Tuesday, 25 October 2016
Department of Public Expenditure and Reform
Lansdowne Road Agreement
376. To ask the Minister for Public Expenditure and Reform if, in view of the fact that the FEMPI Act 2013 pay reductions for serving higher earners, over €65,000 per annum will be restored in two stages, the first half of the reduction will be restored on 1 April 2017, the second half of the reduction will be restored on 1 January 2018, the equivalent pensioner will receive an increase equivalent to that of serving peer on those dates; if by 2 January 2018 all public service pensioners with full service will have had their pensions restored to 50% of the salary of serving peer; if the traditional principle of parity of public service pension increases with pay increases of serving peer will be honoured by the Government into the future; his views on whether pension restorations are particularly urgent in view of the much reduced life expectancy of older persons; and if he will make a statement on the matter. [32140/16]
The Financial Emergency Measures in the Public Interest (FEMPI) 2013 Act provided for a "grace period" by which the retired counterparts of public servants in grades affected by the 2013 pay cuts already receive pensions unaffected by those pay cuts. This means that persons retiring since 1 July 2013 from grades affected by the pay cuts on that date were awarded, and are paid, pensions based on the higher "pre-cut" salaries; in like manner, the pensions of equivalent earlier retirees, who retired before 1 July 2013, are unaffected by those 2013 pay cuts. I should also point out that neither of the two direct salary reductions in the public service under the FEMPI legislation, occurring in 2010 and 2013, or the reduction effected under the FEMPI 2009 Act through the imposition of the Pension Related Deduction on remuneration of public servants were passed on to the pensions of same-grade retirees.
Public service pensioners have been impacted by another FEMPI measure, the Public Service Pension Reduction (PSPR). The PSPR reduces the pay-out value of pensions with pre-PSPR values above specified thresholds in a progressively structured way which has a proportionately greater effect on higher value pensions. At all times, public service pensions up to a value of €12,000 have been unaffected by PSPR, while a higher exemption threshold of €32,500 has applied to pensions awarded from 1 March 2012 onwards.
PSPR is being significantly reversed in three stages under FEMPI 2015, with PSPR-affected pensioners getting pension increases via substantial restoration of the PSPR cuts on 1 January 2016, 1 January 2017 and 1 January 2018. When fully rolled-out from 1 January 2018, the changes will mean that all public service pensions with pre-PSPR values of up to €34,132 will be fully exempt from PSPR, while those pensioners not fully removed from the reach of PSPR will, in the majority of cases, benefit by €1,680 per year. The cost of these changes is estimated at about €90 million on a full-year basis from 2018.
As we move beyond FEMPI and PSPR restoration towards more normal pay and pension setting conditions in the public service, the issue of how to adjust the post-award value of public service pensions through appropriate pay or other linkages will be considered by Government.