Thursday, 17 December 2020
Department of Public Expenditure and Reform
309. To ask the Minister for Public Expenditure and Reform the timeline for the full unwinding of the Financial Emergency Measures in the Public Interest, FEMPI, legislation in relation to public service pensions by pension rate and band; and the timelines for unwinding the FEMPI Acts in tabular form. [44274/20]
I am assuming the deputy is referring to the public service pension reduction (PSPR) - a reduction imposed on the public service occupational pensions of retired public servants. It came into effect on 1 January 2011 on foot of the Financial Emergency Measures in the Public Interest Act 2010, as part of the Government’s programme of financial emergency measures.
PSPR was designed in a progressive manner. This was achieved through bands and rates i.e. a pension is not subject to a single PSPR rate, but rather a pension is divided into bands and each band is subject to a particular rate.
The PSPR rates and exemption thresholds have always distinguished between those who retired before March 2012 and those who retired between 1 March 2012 and 1 April 2019, with the latter group’s PSPR measures being less punitive. This is on the basis that the latter group retired with FEMPI reduced salaries reflected in the salary rates used to calculate their pensions, while the former group did not.
The key points regarding the timing of unwinding of PSPR since 2015 are set out below:
- A three-stage partial reversal of PSPR was provided for in the FEMPI Act 2015, largely by increases in the exemption thresholds occurring on 1 January in each of the years 2016, 2017 and 2018.
- The Public Service Pay and Pensions Act 2017 provided for the further lessening of the impact of PSPR from 1 January in each of the years 2019 and 2020, by way of either increases in the PSPR exemption threshold (for the pre-March 2012 retiree group) or a lessening of the percentage reduction rates (for the 1 March 20120 – 1 April 2019 retiree group).
Finally, section 27 of the Public Service Pay and Pensions Act 2017 required that no later than 31 December 2020, the Minister for Public Expenditure and Reform would issue an order that would specify a date for the completion of the operation of PSPR from that residual group of PSPR-affected pensions. The Government recently decided, taking into account legal advice, that the operation of PSPR will be completed from 1 July 2021 on the basis that the reduction was required to be restored within a reasonable time, based on the provisions of the 2017 Act, and not later than this date. This means that PSPR will cease to apply to any public service pensions from 1 July next year. The related order has been signed and laid before the Houses of the Oireachtas.
A more detailed schedule showing the timeline for the evolution and unwinding of PSPR in tabular form, as requested, is provided in the attached document.