Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

190. To ask the Minister for Housing, Planning, Community and Local Government the treatment of pension related deductions from local authority staff with regard to the funding of local authorities; the changes that have taken place in this treatment; and if he will make a statement on the matter. [38494/16]

Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Financial Emergency Measures in the Public Interest Act 2009 (FEMPI) introduced the pension related deduction (PRD) for public servants. Local authorities deduct PRD from the salaries of their employees and to date have retained the amounts collected as part of their income, using this income to help fund the services they provide. This approach was adopted by agreement in the interests of administrative efficiency and to avoid creating a circular flow of funds to and from the Exchequer.

The Lansdowne Road Agreement introduced changes to the PRD exemption thresholds, resulting in a reduction in PRD income being retained by local authorities and, therefore, impacting the overall level of funding available to the local government sector. It is expected that €18.6m in dedicated funding will be paid to the local government sector in 2016 as a once-off measure to mitigate the impact of reduced PRD income.

For 2017 onwards, an adjustment is being made to the Local Property Tax (LPT) baseline of each local authority, which will now include an additional amount equivalent to the PRD income retained by local authorities in 2014. The inclusion of PRD in increased LPT funding baselines helps protects local authority income in the future. It means that, from 2017 onwards, local authorities will no longer retain PRD locally, thus reversing the previous approach. I am satisfied that this decision reduces the risk to local government funding that would otherwise arise from declining PRD income.