As part of the general examination of budgetary policy in Ireland, the discussions with the EU-IMF and ECB have reviewed the main aspects of pay, pensions and numbers policy in the civil and public service.
The discussions have covered developments in these areas in the recent past and the prospects for the medium and longer term. The Troika reports set out their views on these and other issues. The Deputy will note that the assessments issued from time to time by these bodies of the Government's implementation of the Programme have been very positive.
The Deputy will be aware that a number of measures have been taken to reduce the pay and pensions bill. These measures have applied to serving staff and current pensioners in recent years. The Financial Emergency in the Public Interest Act 2009 introduced a pension-related deduction amounting to some 7% of pay on average, the Financial Emergency in the Public Interest (No. 2) Act 2009 reduced pay by a similar proportion and legislated for a "grace period" within which pensions would not be affected by this cut. This period is due to expire on 29 February 2012.
In addition the Financial Emergency in the Public Interest Act 2010, which is part of the EU-IMF Programme, reduces public service pensions in payment and for those who retire before the end of the "grace period" by 4% on average. For those retiring after the "grace period", their pension calculation will be based on their actual pay at the time of retirement, i.e. the protection of the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 will not apply. There have also been taxation-related changes during this time, such as the reduction in the personal fund threshold and in the exemption for lump sum pension payments.
With regard to the costs of civil and public service pensions, I have recently brought forward the Public Service Pensions (Single Scheme) and Remuneration Bill 2011 which provides for far-reaching reform of public service pensions. The Bill's principal purpose is to introduce a new single pension scheme for all new entrants to the public service. The Bill will ensure that public service workers continue to have access to good pensions and a reasonable standard of living in retirement, while the Exchequer benefits from greater control over the costs and the future burden on taxpayers is reduced. The new scheme is a commitment under the EU-IMF Programme of Financial Support for Ireland.