Dáil Éireann Debate, Tuesday - 12 June 2018
281. Deputy Michael McGrath asked the Minister for Public Expenditure and Reform the position in respect of the retirement lump sum for public servants retiring after March 2019; the details of changes in the calculation of the lump sum; and if he will make a statement on the matter. [25254/18]
View answerI am taking it that the Deputy is referring to the consequences for the calculation of public service occupational pension benefits of the programmed expiry of the current 'grace period' at the end of March 2019 (in fact, the last day of the grace period is 1 April 2019).
The introduction of the ‘grace periods’ under FEMPI was to allow the pay rates that were in force prior to the implementation of pay cuts to be applied when calculating the pension entitlements of employees who were retiring and were affected by those pay cuts. Following the expiry of the first grace period in February 2012, those retiring after that date had their pension entitlements calculated on the basis of their actual final salary on the day of retirement.
The further pay reduction applied to the cohort of public servants earning more than €65,000 in June 2013 has also been subject to a similar grace period. Currently, the lump sum of a retiring public servant in that cohort is calculated on the basis of the pre-2013 pay cut rate of pay (adjusted for the general pay increase of 1% from 1 January 2018 under the Public Service Pay and Pensions Act 2017). Because of the expiration of the grace period and in the context of pay restoration, from 2 April 2019 onwards, pensions and lump sums will again be based on actual pay, not grace-period-protected pay. This will apply equally to individuals who are not at the top point of their pay scale and whose increments were paused under FEMPI 2013; the pension entitlements of such individuals will be calculated based on their current pay point at retirement rather than the pay point they would have been on had the increment pauses not occurred. Accordingly, individuals in that group retiring from 2 April 2019 onwards should have regard to their own particular salary point and current or future pay increments in their retirement planning.
