Dáil Éireann Debate, Thursday - 11 December 2014
84. Deputy Michael McGrath asked the Minister for Public Expenditure and Reform his plans to lay out a plan for the unwinding of the public service pension deduction over time; and if he will make a statement on the matter. [47502/14]
View answerThe Deputy will be aware that the Pension-Related Deduction (PRD) is an important component of the Financial Emergency Measures in the Public Interest Acts (FEMPI). Since it was introduced in March 2009 under the Financial Emergency Measures in the Public Interest Act 2009, the PRD has reduced the public sector pay bill by an estimated €5.5 billion. In 2014 the PRD reduced the cost of the public service pay bill by an estimated 6.1%.
The nature of the Financial Emergency Measures legislation is that the powers granted by the Oireachtas under the legislation are temporary in nature and are predicated on the continuing financial emergency in the State. As provided for under section 12 of the FEMPI Act 2013, I am required to review annually the Acts, and a written report of my findings is laid before each House of the Oireachtas. My last review was laid before the Houses of the Oireachtas on 29 June 2014. In that review I concluded that there is a need to continue to apply the PRD to meet the required public expenditure targets. It is worth restating that the expenditure proposals as set out in Budget 2015 are based, in part, on the revenue accruing from the PRD.
However, it should be noted that a start has already been made in ameliorating the impact of PRD on public servants. As legislated for in the Financial Emergency Measures in the Public Interest Act 2013, and as provided for in the Haddington Road Agreement, the rate of PRD on the €15,000 to €20,000 band of pay received in a year fell from 5% to 2.5% on 1 January 2014. This cut is worth €125 annually in gross terms to most public servants, with those taxed at the standard rate enjoying the greater gain in terms of take-home pay boost.
As the country moves, thankfully, into a more normal economic environment, a change we can already see is underway, I believe it is important that I as Minister for Public Expenditure and Reform give consideration as to how, over the medium term, pay policy needs to develop in the public service to ensure that overall fiscal targets will be met. When my consideration is more advanced, I will of course bring proposals to Government in the first instance. Any proposals to amend the FEMPI Acts will require primary legislation to be brought before the Oireachtas.
