Members will be aware that this legislation amends the Financial Emergency Measures in the Public Interest Act 2010, which reduced public service pensions in payment and for those who retire before the end of the so-called "grace period". I told the Dáil on Committee Stage that I would introduce an amendment in the Seanad to impose a higher reduction rate of 20% on public service pension amounts above €100,000. Pension amounts in excess of €60,000 are currently being reduced by 12%. An additional 8% reduction is being imposed on pensions above €100,000. It is estimated that the proposed higher reduction rate of 20% on public service pensions above €100,000 will affect pensioners who previously held office, including former Presidents, taoisigh, senior members of the Judiciary including chief justices and members of the High Court and Supreme Court, heads of universities, Civil Service Secretaries General, chief executives of non-commercial State bodies, some hospital consultants, Garda Commissioners and Chiefs of Staff of the Defence Forces.
I told the House previously that the Department of Public Expenditure and Reform initially estimated that this change would lead to a relatively modest saving of €400,000 in a full year. I can give some examples of how it might affect particular individuals. A person on an annual pension of €125,000 will see a total reduction in his or her pension, attributable to the public service pension reduction, of €13,760 or 11%. Someone on a very high pension of €150,000 will see a corresponding fall of approximately €18,760 or 12.5%. Of course that is on top of all the usual array of charges. My estimate is that for pensioners now earning more than €100,000 total deductions are in the order of 68%, the marginal rate.
My Department provided an estimate of the net income of a public service pensioner whose gross pension before tax or the public service pension reduction is €125,000. Under the amendment, the net income of a single pensioner over the age of 70 would be reduced to a net take-home amount of €71,000. I do not suggest this amount is not a substantial income, particularly when one considers that such individuals are unlikely to be obliged to shoulder the same costs as younger counterparts. However, the reduction in pension attributable to this amendment is significant.