Dáil Éireann Debate, Tuesday - 27 November 2018
213. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform the estimated cost of removing the public service pension deduction in 2020 for public service pensioners that retired pre-March 2012; the estimated cost of removing the public service pension reduction in 2020 for public service pensioners that have retired post-March 2012; and if he will make a statement on the matter. [49580/18]
View answerSection 24 of the Public service Pay and pensions Act, 2017 will raise the PSPR exemption threshold from €34,132 to €39,000 per annum.
This change means that all pensions up to €39,000 per annum will be exempt from PSPR in 2019, while those higher-value pensions still affected will benefit from a gain of €1,080 per annum.
This significant change in 2019 will reduce the overall PSPR yield by approx. 50% (from c. €48 million to c. €24 million), and will remove approx. 12,000 pensioners from the impact of PSPR.
From 1 January 2020, the PSPR exemption threshold will be raised from €39,000 to €54,000 per annum.
This change means that all pensions up to €54,000 per annum will be exempt from PSPR from the beginning of 2020, while those pensions still affected will benefit from a gain of €1,800 per annum.
This change in 2020 will reduce the residual PSPR yield by 50% (from c. €24 million to c. €12 million), and will remove an additional 10,500 pensioners from the impact of PSPR.
Taken together, these changes in 2019 and 2020 will mean that, from 1 January 2020 the vast majority of pre-March 2012 pensions will be exempt from PSPR. In the region of 3,500 of the highest value pre-March 2012 pensions will continue to be subjected to PSPR from then onwards. In addition to the currently legislated reduction in PSPR yield for 2020, the estimated additional cost of full abolition of PSPR in 2020 is €12m and while the bulk of this cost would relate to pre-March 2012 pensioners, a disaggregated estimate between pre and post-2012 pensioners is not currently available.
In addition to the PSPR amelioration, many public service pensioners stand to benefit from the public service pension increase policy which Government has agreed to as part of the PSSA 2018-2020.
For the duration of the Agreement, i.e. until end-2020, that policy means that there will be an effective limited return to the traditional “pay parity” link, whereby pay increases awarded to public servants are passed on proportionately to the pensions of retired public servants:
- For post-February 2012 retirees, this means that that they will receive pension increases in line with the pay increases due to their peers currently in employment over the three-year lifetime of the PSSA to end-2020.
- Pre-2012 retirees, whose pensions are already based on superior (pre-2010 salary level), will see their pensions likewise boosted during the 2018-2020 period where that is necessary to keep pace with the value of a pension awarded to a same-profile person retiring just after each particular pay increase.
