Tuesday, 19 February 2013

Questions (368)

Mary Lou McDonald

Question:

368. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform further to the passing of the Irish Bank Resolution Corporation Bill 2013, if it is still his view that former Taoisigh, Ministers, office holders and senior civil servants' pensions cannot be reduced on the basis that he considers such payments to be vested property rights. [8651/13]

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Written answers (Question to Public)

Actions undertaken in Ireland must be in accordance with constitutional/legislative requirements in this jurisdiction where a pension is generally taken to be deferred income and covered by the constitutional protections that apply to property. Against this background, proportionate reductions to existing public service pensions have been given effect through legislation passed by the Houses of the Oireachtas. The current situation regarding public service pensions is as follows:

- Public service pensioners (including retired politicians) in Ireland have had their pensions cut.

- The Financial Emergency Measures in the Public Interest Act 2010 provided for the Public Service Pension Reduction (PSPR). The PSPR, commencing 1 January 2011, imposed significant reductions on public service pensions in payment, using a progressively tiered set of bands and rates with a top rate of 12% on any public service pension amount over €60,000.

- I have, acting on foot of my concern about large public service pensions, amended the legislation to increase the top rate of PSPR to 20% on any public service pension amount over €100,000 (aside from other taxes and deductions). Initially the PSPR was imposed separately on each public service pension. However, following an amendment introduced in the Public Service Pensions (Single Scheme and Other Provisions) Act 2012, the PSPR will be imposed on the aggregated value of all public service pensions held by a person who has more than one such pension.

- Public service pay cuts under the FEMPI legislation, including those made by this Government, have impacted progressively so that higher earners have taken the hardest hit. These pay cuts have been fully reflected in the pensions of persons who retired from 1 March 2012 onward. The average pay cut imposed has been around 7%, but this extends to more than 20% for the highest earners, of whom senior officer holders are clearly one part.

- The new Single Public Service Pension Scheme will deliver pensions to future public servants on the basis of career-average earnings rather than final salary; this will impose (by comparison with pre-Single Scheme "final salary" norms) a particularly significant moderation in the level of pension awarded to higher paid public servants.