Wednesday, 8 May 2019

Questions (245)

Jackie Cahill


245. Deputy Jackie Cahill asked the Minister for Public Expenditure and Reform the reason public service retirees who retired after 28 February 2012 have their pension increases linked to the pay restoration timetable of their serving colleagues (details supplied); if their pension rights will be restored; and if he will make a statement on the matter. [20083/19]

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Written answers (Question to Public)

The Deputy will appreciate that it is necessary to distinguish between pension restoration, which refers to the amelioration and eventual abolition of the Public Service Pension Reduction (PSPR), and the pension increase policy agreed as part of the Public Service Stability Agreement 2018 – 2020 (PSSA).

Regarding the first of these, the Deputy will be aware that the FEMPI cuts imposed on salaries were not passed on to pensions in payment, but rather the PSPR, governed by the FEMPI 2010 Act (as amended), imposed a reduction on certain public service pensions from 1 January 2011, subject to various exemption thresholds and rate bands. The FEMPI 2015 Act and the Public Service Pay and Pensions Act 2017 Act substantially lessened both the impact of PSPR and the numbers of pension recipients affected by it in 2018 and 2019, and the effects will extend even further in 2020. Since 1 January 2018, the majority of public service pensions have not been subject to PSPR.

On the other hand, the majority of the salaries of serving staff have not yet been restored to the levels in payment prior to the first round of FEMPI cuts in January 2010.

As regards the pension increase policy for pre-existing pension schemes agreed as part of the PSSA, I would note that this policy is essentially a time-limited (expires end-2020) resumption of the non-statutory pension increase arrangements, sometimes known as pay parity, which formerly prevailed, but which lapsed in 2010. Under that policy, pay increases applied to serving staff over the course of the PSSA are passed on to those pensions where the salary on which the pension is based, in any case, does not exceed the salary of a serving staff member with the same grade and scale point, after the pay increase has been applied. If it qualifies, the pension is eligible for an increase to the extent that this will ensure alignment with the pay of serving staff.

For former public servants who retired before March 2012, their pension was calculated on the higher salary rates that were in payment prior to imposition of the FEMPI cuts. As the salary rates of the majority of serving public servants have not yet been restored to those levels, in the main, this cohort of pension recipients have not yet qualified for increases. By contrast, former public servants who retired from March 2012 onwards had the 2010 FEMPI cut reflected in the salary used to calculate their pension. Accordingly, as PSSA pay increases are granted to serving staff, bringing their pay rates closer to pre-FEMPI levels, this cohort of pension recipients will benefit, over the course of the PSSA, from consequential increases to their pensions with the same effective date as the pay increases applied to their colleagues still in service.