Thursday, 20 June 2013

Questions (45)

Pearse Doherty

Question:

45. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the annual monetary reduction to former office holders' pensions in payment to the value of the following amounts when the Haddington Road agreement reductions are applied from July 2013. [29560/13]

View answer

Written answers (Question to Public)

The Haddington Road Agreement (HRA) does not contain any pension reduction measure.

In drawing up the HRA, the Labour Relations Commission expressly recognised that Government plans for certain public service pension reductions did not form part of the proposals which comprise the HRA. The relevant paragraph in the HRA, headed "Public Service Pensions", reads as follows:

“Separately to this Agreement, the Parties note that the Government intends to align the reductions in public service pensions in payment with the reductions applied to serving staff. The Parties note that this measure will apply to pensions in payment greater than €32,500 only”

Reductions in those public service pensions valued in excess of €32,500 are due to occur next month, on foot of provisions in the Financial Emergency Measures in the Public Interest Act 2013. With effect from 1 July 2013, the Act reduces those public service pensions valued at €32,500 or greater, affecting all such pensions, including Office holder pensions, already payable on that date or awarded up to end-August 2014. The reductions range from about 2% near the €32,500 threshold level (subject to no pension falling below €32,500), to 5% in respect of the highest pensions.

In order to secure these pension reductions, the 2013 Act increases and extends the existing Public Service Pension Reduction (PSPR). The PSPR is a tiered reduction of certain public service pensions which has been in place since 1 January 2011, and which features five increasing bands of pension income, with rising reduction percentages associated with each band. Specifically, the 2013 Act changes the PSPR with effect from 1 July 2013 to provide separately, in respect of two groups of pensioners, as follows:

In the case of the first pensioner group, revised higher rates of PSPR will apply to pensions above €32,500 which have been subject to PSPR before July 2013, largely comprising pensions awarded up to end-February 2012. Table A illustrates the monetary effects of the July 2013 adjustment on this group at representative pension income levels.

Revised PSPR rates – impact at various pension levels

Pension before PSPR

Total PSPR

…of which “extra” PSPR imposed from 1 July 2013

Pension after PSPR

12,000

0

% of pension

0%

0

% of pension

0%

12,000

15,000

180

1.2%

0

0%

14,820

20,000

480

2.4%

0

0%

19,520

25,000

810

3.2%

0

0%

24,190

30,000

1,260

4.2%

0

0%

28,740

35,000

2,280

6.5%

570

1.6%

32,720

40,000

2,880

7.2%

720

1.8%

37,120

45,000

3,480

7.7%

870

1.9%

41,520

50,000

4,080

8.2%

1,020

2.0%

45,920

55,000

4,680

8.5%

1,170

2.1%

50,320

60,000

5,280

8.8%

1,320

2.2%

54,720

70,000

6,980

10.0%

1,820

2.6%

63,020

80,000

8,680

10.9%

2,320

2.9%

71,320

90,000

10,380

11.5%

2,820

3.1%

79,620

100,000

12,080

12.1%

3,320

3.3%

87,920

125,000

19,080

15.3%

5,320

4.3%

105,920

150,000

26,080

17.4%

7,320

4.9%

123,920

In the case of the second pensioner group, PSPR will be introduced for the first time at special rates on those pensions above €32,500 not previously subject to PSPR, largely comprising pensions awarded after February 2012, and up to end-August 2014. Although not subject to PSPR before 1 July 2013, these pensions do reflect the 2010 public service pay cuts. Table A illustrates the monetary effects of the July 2013 adjustment on this group at representative pension income levels.

Table B: New PSPR rates – impact at various pension levels

Pension before PSPR

PSPR

Pension after PSPR

% of pension

30,000

No liability to PSPR below €32,500

if retiring on or after 1 March 2012.

35,000

570

1.6%

34,430

40,000

720

1.8%

39,280

45,000

870

1.9%

44,130

50,000

1,020

2.0%

48,980

55,000

1,170

2.1%

53,830

60,000

1,320

2.2%

58,680

70,000

1,820

2.6%

68,180

80,000

2,320

2.9%

77,680

90,000

2,820

3.1%

87,180

100,000

3,320

3.3%

96,680

125,000

5,320

4.3%

119,680

150,000

7,320

4.9%

142,680