Wednesday, 9 October 2013

Questions (18)

Seamus Kirk

Question:

18. Deputy Seamus Kirk asked the Minister for Public Expenditure and Reform his plans to review the cost of lump sum payments to senior public servants; and if he will make a statement on the matter. [42490/13]

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Written answers (Question to Public)

Retirement lump sums are payable to Public Servants in accordance with the terms of relevant legislation and Superannuation Schemes. Lump sum benefits on retirement were introduced in the Civil Service in 1909 with a commensurate reduction in the accrual rate for actual pension from 60ths to 80ths – most pension schemes in the Public Service now provide benefits on the same basis.

It is to be noted that the substantial pay reductions applied to date under the Financial Emergency Measures in the Public Interest (FEMPI) Acts have the effect of reducing the cost of retirement lump sums throughout the Public Service. It should also be noted that retirement lump sums in excess of €200,000 are subject to tax on the excess amount while the Standard Fund Threshold for an individual's overall pension benefits is now €2.3 million, reduced from the previous level of €5.4 million.

The Public Service Pensions (Single Scheme and Other Provisions) Act 2012 introduced a new Single Public Service Pension Scheme which commenced on 1 January of this year. The Single Scheme provides that new entrant Public Servants appointed on or after that date, including Members of the Oireachtas, will be members of the Scheme and will have their pension benefits based on career average earnings as opposed to the current final salary basis. The Scheme also provides for a new minimum pension age of 66, rising to age 67 in 2021 and age 68 in 2028 in line with changes to the age at which the State Pension (Contributory) will become payable. These changes will lead to a substantial reduction in the cost of overall superannuation benefits, including lump sum payments, in the Public Service into the future.

I assure the Deputy that Public Service pay and pension costs will be kept under review as part of the Government's ongoing strategy to bring the public finances to a sustainable level.