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Pension Provisions

Dáil Éireann Debate, Tuesday - 17 September 2019

Tuesday, 17 September 2019

Questions (151, 152)

Michael McGrath


151. Deputy Michael McGrath asked the Minister for Public Expenditure and Reform if he will address a matter raised in correspondence (details supplied); and if he will make a statement on the matter. [37471/19]

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Barry Cowen


152. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform if increases in basic pay between 2018 and 2020 have been passed on to the pensions of persons who retired on or after 1 March 2012 as specified in paragraph 2 of circular 02/2018; if there are exceptions to this; if so, the retired public servants that will not avail of this pension restoration; if retired members of An Garda Síochána are exempt from this paragraph as suggested (details supplied); if so, the reason for this decision; and if he will make a statement on the matter. [37650/19]

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Written answers (Question to Public)

I propose to take Questions Nos. 151 and 152 together.

I would advise both Deputies that pensions for An Garda Síochána are a matter for the Minister for Justice and Equality. However, as the matter raised relates to pension policy for the public service generally, I will address the questions raised.

Firstly, I should clarify that retirement lump sum payments made under public service pension schemes were not directly reduced by the Financial Emergency Measure in the Public Interest (FEMPI) legislation. The FEMPI legislation implemented measures that directly reduced the pay of serving staff and introduced a Public Service Pension Reduction for pensions in payment, subject to certain rates, thresholds and exemptions. As both the annual pensions and lump sum payments of members of pre-existing public service pension schemes (i.e. excluding the Single Public Service Pension Scheme) are directly linked to salary at retirement, the reductions to the pay of public servants would have had a knock on impact on the lump sum payment they received at retirement.

However, because of what is known as the first ‘grace period’, those who retired between 1 January 2010 and 29 February 2012 did not have the first FEMPI pay reduction (imposed 1 January 2010) reflected in the salary rate used to calculate their annual pension or their lump sum. A second round of FEMPI reductions was imposed in 2013 (imposed on 1 July on public servants with an annual remuneration above €65,000). The second ‘grace period’ meant that those who retired from that point onwards (assuming their pay was affected by those reductions while still serving) did not have those reductions reflected in the salary rate used to calculate their annual pension or lump sum.

In the cases referred to by the Deputies, retirement occurred after 1 March 2012 and so the retirement lump sum was calculated by reference to the salary rates in payment on 1 January 2010 (i.e. following the first FEMPI pay reduction). If the salary at retirement was subject to the second FEMPI reduction on 1 July 2013, the operation of the second grace period would mean that the lump sum would still have been calculated by reference to the 1 January 2010 rate.

The two grace periods were the only protections given in relation to the calculation and payment of retirement lump sums in the context of the FEMPI legislation, and I have no proposals to make any change in this regard.

As regards pension increases, the current pension increase policy for pre-existing pension schemes was agreed by the Government as part of the Public Service Stability Agreement 2018-2020 (PSSA). 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 annual pensions where the salary on which the annual 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 annual pension is eligible for an increase to the extent that this will ensure alignment with the pay of serving staff.

The guidance on operation of the pension increase policy is set out in my Department’s Circular 02/2018, while further instructions have recently been issued in Circular 19/2019. This guidance is directed to all public service employers including the Department of Justice and Equality as administrators of the pension schemes of retired members of An Garda Síochána.