Written answers

Tuesday, 30 May 2017

Department of Public Expenditure and Reform

Public Sector Pensions

Photo of Caoimhghín Ó CaoláinCaoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

366. To ask the Minister for Public Expenditure and Reform his plans regarding the restoration in full of all State employee pension entitlements cut under the FEMPI measures; the full impact of the cuts that applied; the partial restoration which has taken place to date; the timeframe for full restoration across all State employee sectors; and if he will make a statement on the matter. [25576/17]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The particular measure affecting public service pensions under the financial emergency legislation is the Public Service Pension Reduction (PSPR), which was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act 2010.

PSPR reduces the value of those public service pensions which have pre-PSPR values above specified thresholds. It does so 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 at least €12,000 have been exempt from PSPR, while a higher exemption threshold of at least €32,500 has applied to pensions awarded to persons who retire from 1 March 2012 onwards.

The full maximum impact of the PSPR cuts was imposed by the reduction rates which applied from 1 July 2013 and which remained in force until end-2015. Three separate tables of rates applied over that period.

For persons who retired up to end-February 2012, and whose pensions before application of PSPR had a value of up to €34,132, the PSPR rates applying from 1 July 2013 to 31 December 2015 were as follows:

Up to €12,000Exempt
Any amount over €12,000 but not over €24,0006%
Any amount over €24,0009%

For persons who retired up to end-February 2012, and whose pensions before application of PSPR had a value of greater than €34,132, the PSPR rates applying from 1 July 2013 to 31 December 2015 were as follows:

Up to €12,000Exempt
Any amount over €12,000 but not over €24,0008%
Any amount over €24,000 but not over €60,00012%
Any amount over €60,000 but not over €100,00017%
Any amount over €100,00028%

For persons who retired after end-February 2012, and whose pensions before application of PSPR had a value of greater than €32,500, the PSPR rates applying from 1 July 2013 to 31 December 2015 were as follows:

Up to €12,000 Exempt
Any amount over €12,000 but not over €24,0002%
Any amount over €24,000 but not over €60,0003%
Any amount over €60,000 but not over €100,0005%
Any amount over €100,0008%

PSPR has been less severe on the pensions awarded to persons retiring after end-February 2012, with higher exemption thresholds and lower percentage decreases applying to such pensions. The particular PSPR treatment of these later-awarded pensions reflects the fact that they are based on salary rates which have been affected by the public service pay cuts of 1 January 2010; earlier-awarded pensions, by contrast, are effectively based on salary rates which do not take these 2010 pay cuts into account.

A very significant part-unwinding of PSPR in three stages is taking place under the Financial Emergency Measures in the Public Interest Act 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 as follows:

- On 1 January 2016, increases in the annual pension thresholds for PSPR application were activated. These exemption threshold increases fully removed PSPR from a significant number of pensions with relatively lower values, while those pensions which continued to be impacted by PSPR received a boost of €400 per year.

- On 1 January 2017, additional PSPR amelioration, acting principally via further exemption threshold increases, fully removed PSPR from another significant tranche of public service pensioners, while at the same time boosting those pensions which remain affected by PSPR by up to €500 per year.

- On 1 January 2018, the third phase of PSPR amelioration will ensure that all PSPR-impacted pensions with values up to €34,132 will be fully restored, meaning that PSPR will no longer affect such pensions, while those pensions which continue to be impacted by PSPR will get a boost of, in most cases, €780 per year.

At 2015 year-end, public service pensions with annual pre-PSPR values up to at least €12,000 were exempt from PSPR. Under the FEMPI 2015 three-stage part-unwinding which I have referred to, on 1 January 2016, all pensions of up to at least €18,700 became exempt from PSPR; from 1 January 2017, all pensions of up to at least €26,000 are now exempt from PSPR, and from 1 January 2018 all pensions of up to at least €34,132 per year will be exempt from PSPR. Those pensioners not fully removed from the reach of PSPR by dint of these changes will, in the majority of cases, benefit by €1,680 per year from 2018 . The cost of these changes is estimated at about €90 million on a full-year basis from 2018.

Under section 12 of the Financial Emergency Measures in the Public Interest Act 2013, I as Minister for Public Expenditure and Reform am required to review the necessity of the FEMPI legislation annually and cause a written report my findings to be laid before each House of the Oireachtas. The next report is due by end June 2017 and in the context of that report, I shall review the scope of the existing financial emergency measures and the possible further scale-back of those measures, including the PSPR.

Comments

No comments

Log in or join to post a public comment.