Clare Daly (Dublin Fingal, Independent)
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131. To ask the Minister for Public Expenditure and Reform his views on the basic inequity of plans to apply the public sector pension levy at a higher rate to the pensions of persons that retired before 2012 from January 2018; his plans to address this; and if he will make a statement on the matter. [26349/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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There is no levy on public service pensions. It is assumed that the Deputy's question is concerned with the Public Service Pension Reduction (PSPR).

PSPR was introduced on 1 January 2011 under terms set out in the Financial Emergency Measures in the Public Interest Act 2010.  It applies as a progressively structured decrease in the value of affected public service pensions. PSPR has been formed an  important element of the pay and pension measures under the financial emergency legislation which have been critical to the stabilisation of the public finances.

Following its introduction on 1 January 2011, PSPR originally applied only to those public service pensions with values above €12,000 which were already in payment or which were afterwards awarded in respect of retirements up to end-February 2012.

Later-awarded public service pensions, that is to say pensions awarded in respect of retirements after end-February 2012, only became liable to PRD from 1 July 2013, under terms set out in the Financial Emergency Measures in the Public Interest Act 2013.

The PSPR burden on pensioners is now being significantly alleviated as provided for under the Financial Emergency Measures in the Public Interest Act 2015. This substantial part-reversal of PSPR, which is benefitting both pre- and post-2012 awarded pensions, is proceeding in three stages on 1 January 2016, 1 January 2017 and 1 January 2018. When complete in 2018, it will mean that most public service pensioners are not affected by PSPR.

The cost of this very substantial PSPR amelioration under FEMPI 2015 is estimated at about €90 million on a full-year basis from 2018.

PSPR has at all times had a greater impact, in terms of applicable exemption thresholds and reduction rates, on pensions awarded in respect of retirements before end-February 2012, by comparison with later retirements.  This difference in PSPR treatment is accounted for by the fact  that the later-awarded, post-February 2012, pensions 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 higher salary rates, being rates which do not take these 2010 pay cuts into account.

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.