Dáil Éireann Debate, Tuesday - 22 October 2019
178. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform the estimated cost of fully removing the public service pension reduction ahead of schedule; and if he will make a statement on the matter. [43647/19]
Amharc ar fhreagraThe Public Service Pension Reduction (PSPR) was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act (FEMPI) 2010.
A three-stage partial reversal of PSPR was provided for in the FEMPI Act 2015, with rate reductions (via revised PSPR tables) occurring on 1 January in each of the years 2016, 2017 and 2018. The cost of these FEMPI 2015 changes is estimated at about €90 million on a full-year basis from 2018, or €30 million in each of the years 2016, 2017 and 2018.
The Public Service Pay and Pensions Act 2017 provided for the substantial further lessening of the impact of PSPR by way of rate and/or threshold in each of the years 2019 and 2020. The significant further lessening of PSPR occurring under the 2017 Act means that:
- as of 1 January 2019 all pensions up to €39,000 per annum are exempt from PSPR, and
- from 1 January 2020, all pensions up to €54,000 per annum will be exempt from PSPR.
When fully in place from the beginning of 2020, these changes will mean that the vast majority of public service retirees - approximately 97% - will be entirely free from PSPR. For those who retired since end-February 2012 that threshold is even higher at €60,000. Additionally, pensions awarded in respect of retirements after the FEMPI 2013 grace period, which expired on 1 April 2019, are not subject to PSPR. The cost to the Exchequer of these changes is estimated at €24 million in 2019 and €12 million in 2020.
Section 27 of the Public Service Pay and Pensions Act 2017 Act states that the Minister for Public Expenditure and Reform will, no later than 31 December 2020, make an order which will specify a date for the full removal of PSPR from that residual group of PSPR-affected pensions. The date specified in the order will effectively be the date for the complete abolition of the PSPR. The cost of fully removing this residual PSPR from pensions which remain affected from 1 January 2020 is estimated at €12 million.
