At present, the position is that the Financial Emergency Measures in the Public Interest Act 2010 provides for an average public service pension reduction (PSPR) with effect from 1 January 2011 of about 4% of pension, calculated in line with the following rates and bands:
Annual Public Service Pension (€)
|
Reduction Rate
|
First 12,000
|
0%
|
Between 12,000 and 24,000
|
6%
|
Between 24,000 and 60,000
|
9%
|
Between 60,000 and 100,000
|
12%
|
Balance above 100,000
|
20%
|
The existing reduction is estimated to save €100 million in a full year. It applies to pensions paid to some 130,000 public service pensioners. Last year, arising from my concern about large public service pensions, I amended the legislation to increase the reduction on pension amounts over €100,000 by introducing the 20% rate on this band.
As I have explained many times, I have been legally advised that further public service pension cuts could only be justified in the broad public interest. They would therefore have to make a meaningful contribution to the fiscal adjustment and would have to be designed in a similar fashion to the existing reduction. For example, a move to introduce a 100% rate of pension reduction on pension amounts over €100,000 could immediately run up against the likelihood of the courts finding that such a complete restriction of property rights would give rise to legal difficulties. Like all expenditure issues this matter is subject to constant review.