Tuesday, 1 April 2014

Questions (230)

Willie O'Dea

Question:

230. Deputy Willie O'Dea asked the Minister for Public Expenditure and Reform the amount of pension levy paid by public service pensioners who retired up to 29 February 2012 due to the impact of the public service pension reduction under the following bands for 2013: €12,000 - €24,000, €24,000 - €60,000, €60,000 - €100,000 and €100,000 upwards; the amount paid each month in 2014 in the above bands; the amount paid by the same pensioners who retired under PSPR after 29 February 2012 in the above bands; and if he will make a statement on the matter. [15325/14]

View answer

Written answers (Question to Public)

The Public Service Pension Reduction (PSPR), which affects certain public service pensions and which was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act 2010 is not a levy on pensions; instead it is an actual reduction of a public service pension, based on a progressively structured set of income bands and reduction rates. There are now a number of different rates of PSPR applicable, depending on the size of the pension and the pensioner's date of retirement relative to the applicable date of the various pay cuts that have applied to public servants in recent years.

Pensioners with public service pension income below €12,000 are in all cases exempt from PSPR. In respect of retirements up to 29 February 2012, PSPR reduces all affected public service pensions on the basis of either of two sets of rates. First, for pre-March 2012 retirement on pension up to €34,132, the following PSPR rates apply to the pension (these rates also applied to pre-March 2012 pensions above €34,132 prior to PSPR rate increases which took effect on 1 July 2013): Up to €12,000: Exempt - Any amount over €12,000 but not over €24,000: 6 per cent (€720) Any amount over €24,000 but not over €60,000: 9 per cent (€3,240) Any amount over €60,000 but not over €100,000: 12 per cent (€4,800) Any amount over €100,000: 20 per cent.

Second, for pre-March 2012 retirement on pension above €34,132, the following PSPR rates apply to the pension: Up to €12,000: Exempt - Any amount over €12,000 but not over €24,000: 8 per cent (€960) Any amount over €24,000 but not over €60,000: 12 per cent (€4,320) Any amount over €60,000 but not over €100,000: 17 per cent (€6,800) Any amount over €100,000: 28 per cent.

For pensioners who retired after 29 February 2012, and for public servants who retire up to the end of the "grace period" in respect of the pay reductions that applied to higher paid public servants on 1 July 2013, in each case on pensions in excess of €32,500 only, the following PSPR rates apply to the pension: Up to €12,000: Exempt - Any amount over €12,000 but not over €24,000: 2 per cent (€240) Any amount over €24,000 but not over €60,000: 3 per cent (€1,080) Any amount over €60,000 but not over €100,000: 5 per cent (€2,000) Any amount over €100,000: 8 per cent.

In respect of each of the three sets of PSPR rates, the reduction rates relate to the amount of pension income in each of the bands and are therefore progressive in its application. PSPR is estimated to yield some €125 million annually in support of the fiscal position, based on the foreseen full-year outcome associated with the PSPR rates in force following the PSPR rate adjustments on 1 July 2013, which were legislated under the Financial Emergency Measures in the Public Interest Act 2013. Prior to these rate adjustments, the full-year yield from PSPR is estimated to have been of the order of €100 million. However information on the amount arising from the reduction applied to those pensions falling into each band relative to each rate is not available in my Department.