Appendix B

APPENDIX B

RCPSA Paper on Restoration of Public Service Pensions 

Introduction

 

1.1       There are three principal matters of concern to RCPSA members and, no doubt, to the wider family of 150,000 public service pensioners, viz:

-   The restoration of pensions reduced under the Financial Emergency Measures in the Public Interest (FEMPI) Acts (including full restoration for post February 2012 pensioners who are being seriously discriminated against);

-    Provision for increases in pensions and

-  Access for retired public servants to State industrial relations machinery.  

1.2       The Alliance of Retired Public Servants represents public service pension organisations in discussions with the Minister and Department of Public Expenditure and Reform but has no access to independent mediation or arbitration.

The FEMPI Acts

 

2.1       The entitlement of public service pensioners to their pensions is a property right under Article 43 of the Constitution.   It is difficult to see how continuing public service pension deductions beyond 2018 would come within the constitutional framework under which such rights may safely be regulated by law.

2.2       The principal FEMPI Acts relating to public service pension reductions were the 2010 and 2013 Acts.  The main effect of these was to provide for:

-           reductions of between 6% and 28% on pensions above €12,000 p.a. of                 those who retired pre March 2012 and

-           reductions of between 2% and 8% in relation to annual pensions above    €32,500 of those who retired post February 2012.   FEMPI cuts from   salary had already been made from the post February 2012 retirees             generating an ongoing reduced pension.

The FEMPI Act, 2015 – Partial Restoration

 

3.1       The 2015 FEMPI Act provided for partial restoration of pay and pensions.  The position on pension restoration is set out in the Statement by the Minister for Public Expenditure and Reform dated 16th June 2015 (copy attached).

3.2       Briefly, the legislation provided for restoration for individual pensioners of up to €400 in 2016, €500 in 2017 and, if still within the deduction net, €780 in 2018.     

3.3       The cost of this restoration is €30m in each of the three years 2016 to 2018 and would at the end of 2018 leave approximately 25,000 public servants with pensions over €34,132 per annum still subject to emergency deductions initiated in 2011.  The annual pension deduction remaining at the end of 2018 is understood to be in the order of €45m (substantially less when net of tax).

Pension Restoration for Pre March, 2012 Public Service Retirees

 

4.1       The current position in relation to pension restoration under the 2015 FEMPI Act, for pensioners who retired pre March 2012, is outlined in Table 1.

 

Table 1   Pension Restoration of Pensioners who retired pre March 2012 1

 

 Pension

2009

 

Pension

Cuts

2011-2013

 Pension

restored by 2017

Pension

restoration

due 2018

Pension Cut

Remaining

2018

20,000

  480

19,922

-

-

30,000

1,260

29,142

360

-

40,000

2,880

 37,520

780

1,200

50,000

4,080

46,320

780

2,400

1 The pensions of those who retired between January 2010 and end February 2012 are based on pre-cut salaries with 2011 pension cut applied.

4.2       It should be noted that pay restoration under the 2015 FEMPI Act is on a basis agreed with public service unions under the Lansdowne Road Agreement and was brokered under the auspices of the WRC.  While the Alliance of Retired Public Servants made a submission in 2015 to the Minister for Public Expenditure and Reform on pension restoration and had consultations with his Department it did not have the option of a third-party intervention to facilitate agreement.

4.3       Furthermore pay restoration for serving public servants under the Lansdowne Road Agreement has recently been enhanced, following a Labour Court recommendation in relation to Gardai. The Alliance of Retired Public Servants is seeking an equivalent appropriate beneficial adjustment in the pension restoration schedule but this request has, so far, been rejected.

4.4       This is clearly inconsistent with the view expressed in Dail Eireann by the then Minister for Public Expenditure and Reform during the discussions on the 2015 Act and, subsequently in public, that priority should be given in future to the early restoration of pensions.

 

Grossly Unfair Treatment of Post February 2012 Public Service Retirees

 

5.1       The current position in relation to pension restoration under the 2015 FEMPI Act for Post February, 2012 retirees is set out in Table 2 below:

Table 2     Non Restoration of Pensions of Post February 2012 Retirees

 

Pre 2010 FEMPI Pension

Value1

 

POST MARCH 2012 FEMPI Salary Reduced  Pension2

July 2013 FEMPI  Pension

Reduction3

2016-2018

Restored Pension

 

Reduced Pension

 not Restored

 

20,000

18,875

-

-

1,125

30,000

28,125

-

-

1,875

40,000

37,250

638

638

2,750

50,000

46,250

908

908

3,750

 

1 Pension values here are based on final service salary (before cuts) and full service.

 

2 Pensions in this column are based on 2010 reduced salaries (under FEMPI Act, 2010).

 

3 Pension cuts in this column are in respect of pensioners who retired post February 2012 whose pensions were above €32,500 on 1 July 2013.

5.2       Table 2 illustrates the extent to which post February 2012 public service pensioners will not return to full pension rates even when full pay has been restored to their serving counterparts. This group of pensioners will be in an extraordinary situation in that pre-March 2012 pensioner counterparts will return to full pension and serving staff to pre FEMPI pay levels (allowing them to retire with full pre FEMPI pensions).  

5.3       The pension of a public servant who retired post March 2012 was calculated on the FEMPI reduced salary of 2010 (column 2), which generated a significantly reduced pension compared to the pre FEMPI pension in (column1). Column 3 illustrates the impact of the 1 July 2013 FEMPI pension cut for this group. This is the only element of their emergency reduced pension, which benefitted from the 2016 to 2018 restoration measure (column 4 refers).

5.4       Column 5 highlights how the post February 2012 pensioners will, under present arrangements, continue as if they were in a bubble of their own condemned to exclusion from restoration of the bulk of their emergency induced cuts. This is a grossly unfair penal measure and should be reversed as a priority in forthcoming restoration talks.

 

 

Pension Restoration and Unwinding FEMPI

 

6.1       The financial emergency that gave rise to the use of emergency powers in relation to public service pensions is over, and a wide range of new services is increasingly being put in place.

6.2       The decreasing amount of pension deduction collected each year is no longer of significance in overall financial or budgetary terms.  The benefit to the State is no longer proportional to the continuing burden being suffered by individual pensioners who also have to deal with wider austerity measures.

6.3       Public service pensioners are private citizens who have completed their contract with government and are in a separate legal and practical situation from serving staff who are in continuing employment with government and who have access to the industrial relations machinery of the State and have a much wider range of income increase options open to them.

6.4       The age and health status of retired public servants and related financial liabilities arising in this regard are hugely important issues which, along with life expectancy, should be taken into account in relation to pension restoration.

 

6.5       Despite popular misconceptions that public service pensioners are privileged the reality is that the average public service pension is in the order of €20,000 per annum and that public service pensioners do not additionally receive the State pension.

6.6       Equally, the treatment of public service pensioners who are required to pay the Universal Social Charge on all their pension income is fundamentally unfair in comparison with their private sector counterparts who pay no USC on their State pensions.

6.7       The treatment of public service pensioners contrasts most unfairly with the approach adopted by government in 2011 when it recognised the property rights of AIB (99% State owned) private sector pensioners and authorised €1.1bn of State funds to be put into the AIB pension funds.

6.8       Responsibility for any new financial emergencies or the provision of increased services is a community responsibility and should be addressed in the context of general taxation and not visited on public service pensioners on foot of continuing use of emergency powers.

6.9       The justification, recognised by successive Ministers for Public Expenditure and Reform, and by the Public Service Committee of ICTU in its submission to the Pay Commission, for priority treatment in restoring public service pensions, should now be matched by full pension restoration not later than 2018.

Increases in Pension

 

7.1       The framework for increases in pension is a matter which is of great importance, not least because there were over 50,000 retired public servants on pensions of up to €12,000 who were never subject to pension reductions and who have received no increases in pension notwithstanding the fact that their equivalent serving public servants have received increases in pay.

7.2       The parity based framework, whereby pensions increased in line with pay, was, in effect, suspended during the emergency but, with the unwinding of the FEMPI legislation, the legitimate expectation of retired public servants is that custom and practice should be followed and the principle of parity restored.

7.3       Retired public servants contributed to their pension (which included a parity based approach to increases) at rates deemed appropriate by successive governments. Furthermore the value of pensions, based on the actuarially calculated pension costs of the Public Service Benchmarking Body in 2007 have reduced over the past ten years with substantial reductions in pay and pensions and given the absence of assumed pension increases based on CPI plus 2%, not to mention the reduced pension costs for newly recruited public servants. 

7.4       It should be further noted in this regard that there are scheduled increases in social protection payments (which are to be maintained above CPI rates) whereas the comparative position of the lowest paid public service pensioners, who have received no increases in pension, is further deteriorating.

Access to Industrial Relations Machinery

 

8.1       Serving public servants have both direct access and access through their unions to in house or ad hoc mediation or arbitration and through the formal industrial relations machinery of the State.

8.2       The Croke Park, Haddington Road and Lansdowne Road Agreements would not have been concluded without ad hoc involvement by the LRC/WRC nor would the recent Garda dispute have been resolved without the involvement of the Labour Court. These mechanisms have been an absolutely vital element for government and serving staff in the unwinding by agreement of the FEMPI legislation in relation to pay.

8.3       The unwinding of FEMPI in relation to pension deductions is of equal importance to retired public servants and it is difficult to comprehend the blank refusal by government to provide any form of third party mechanism to help resolve difficulties in this regard.

8.5       This question should now be addressed.  Public service pensions are deferred pay and arise directly from employment by the State. It is, in the Association's view, increasingly untenable and unjust for any government to continue to maintain that they will provide no third-party access for 150,000 retired public servants on any matter relating to pensions.

RCPSA 

  28 February 2017             

Statement by the Minister for Public Expenditure and Reform, Mr Brendan Howlin T.D., on Government agreement to reduce Public Service Pension Reductions

 

 

 

 

Government agrees to reduce Public Service Pension Reductions 

By 2018 65,000 lower paid pensioners to be removed from pension reduction

In January 2011, as part of the response to the fiscal crisis then faced by the country, an emergency measure to reduce public service pensions (Public Service Pension Reduction- PSPR) in payment was introduced. A further reduction for higher value pensions was introduced in July 2013.

In welcoming the proposals developed between public service employers and the representative associations and unions for an extension to the Haddington Road Agreement out to September 2018, I indicated that I intended to bring forward separate proposals to Government to provide for a commensurate reduction in the Public Service Pension Reduction as it applies to retired public servants

The proposals approved today deliver upon my stated commitment to move towards reducing the burden of public service pension reductions, with the initial focus on the people in receipt of low pensions, at the earliest date economic progress permits.

These proposals in respect of public service pensioners are prudent in the context of the fiscal space available to the Government and will not compromise the ongoing recovery in the Government finances.

The changes provide for a restoration of pension income subjected to the Public Service Pension Reduction on a phased basis over three years as follows,

  • 1 January 2016 – return of €400 to most PSPR-impacted pensioners
  • 1 January 2017 – return of €500 to most PSPR-impacted pensioners
  • 1 January 2018 – return of €780 to most PSPR-impacted pensioners

and/or removing pensioners from the PSPR “net” entirely;

Note to Editors:

The Public Service Pension Reduction (PSPR), commencing 1 January 2011, imposed reductions on annual public service pensions in payment in excess of €12,000, using a progressively tiered set of bands and rates with a top rate of 12% on any public service pension amount over €60,000. The legislation was amended from 1 January 2012 to increase the top rate of PSPR from 12% to 20% on the portion of any public service pension amount in excess of €100,000.

The Financial Emergency Measures in the Public Interest Act 2013 also provided for additional Public Service Pension Reduction rates ranging from 2% to 8% to be applied to all annual public service pensions in payment in excess of €32,500 from 1 July 2013.

Full-year savings from these pension measures is currently in excess of €125 million.

The cost of the measures is estimated at some €30m per annum or a cumulative cost of €90m over the three years to end 2018.

The number of pensioners affected by PSPR is 90,000.

PSPR Amelioration

On the proposal of the Minister for Public Expenditure and Reform, Mr Brendan Howlin TD, the Government has agreed to proceed with the necessary legislative amendments to ameliorate the effects of the “Public Service Pension Reduction” (PSPR), which reduces the pensions of many public service pensioners under the Financial Emergency Measures in the Public Interest Act 2010.

The agreed changes, which are to be implemented in three stages on 1 January 2016, 1 January 2017 and 1 January 2018, will deliver a significant income boost to many PSPR-affected pensioners.

The details of the changes for each year are set out below, along with tables which illustrate the effects on pensioners at different income levels.  Note that the changes impact on the following three pensioner groups (who are currently impacted by separate PSPR reduction tables under the legislation):

Group 1: Pensions (pre-PSPR) above €12,000 and below €34,132, retirements before March 2012.

Group 2: Pensions (pre-PSPR) above €34,132, retirements before March 2012.

Group 3: Pensions (pre-PSPR) above €32,500, retirements from March 2012.

 

 

2016 PSPR Changes

Group 1: Increase exemption threshold (0% band) from €12,000 to €18,700.

Group 2: Increase 0% band upper limit from €12,000 to €17,000.

Group 3: Increase 0% band upper limit from €12,000 to €29,300.

 

 

 

 

 

 

2016 Annualised Benefit of PSPR amendments

Gross Pension

Retired before 1 March 2012

Retired after 1 March 2012

 

%

%

     14,000

120

0.9%

   

     16,000

240

1.5%

   

     18,000

360

2.0%

   

     20,000

402

2.0%

   

     25,000

402

1.6%

   

     30,000

402

1.3%

   

     32,000

402

1.3%

   

     35,000

400

1.1%

399

1.1%

     40,000

400

1.0%

399

1.0%

     50,000

400

0.8%

399

0.8%

     60,000

400

0.7%

399

0.7%

     70,000

400

0.6%

399

0.6%

     80,000

400

0.5%

399

0.5%

   100,000

400

0.4%

399

0.4%

2017 PSPR Changes

Group 1: Increase exemption threshold (0% band) from €18,700 to €26,000.

Group 2: Increase 0% band upper limit from €17,000 to €22,000;

Reduce rate on pension amount between €22,000 and €24,000 from 8% to 3%.

Group 3: Increase 0% band upper limit from €29,300 to €39,000;

Reduce rate on pension amount between €39,000 and €60,000 from 3% to 2%.

 

2017 Annualised Benefit of PSPR amendments

Gross Pension

Retired before 1 March 2012

Retired after 1 March 2012

 

%

%

     14,000

0.0%

   

     16,000

0.0%

   

     18,000

0.0%

   

     20,000

78

0.4%

   

     25,000

408

1.6%

   

     30,000

498

1.7%

   

     32,000

498

1.6%

   

     35,000

500

1.4%

171

0.5%

     40,000

500

1.3%

301

0.8%

     50,000

500

1.0%

401

0.8%

     60,000

500

0.8%

501

0.8%

     70,000

500

0.7%

501

0.7%

     80,000

500

0.6%

501

0.6%

   100,000

500

0.5%

501

0.5%

 2018 PSPR Changes

Group 1: Increase exemption threshold (0% band) from €26,000 to €34,132, thereby removing PSPR from this Group entirely.

Group 2: Increase 0% band upper limit from €22,000 to €30,000.

Group 3: Increase 0% band upper limit from €39,000 to €60,000.

2018 Annualised Benefit of PSPR amendments

Gross Pension

Retired before 1 March 2012

Retired after 1 March 2012

 

%

%

     14,000

0.0%

   

     16,000

0.0%

   

     18,000

0.0%

   

     20,000

0.0%

   

     25,000

0.0%

   

     30,000

360

1.2%

   

     32,000

540

1.7%

   

     35,000

780

2.2%

0

0.0%

     40,000

780

2.0%

20

0.1%

     50,000

780

1.6%

220

0.4%

     60,000

780

1.3%

420

0.7%

     70,000

780

1.1%

420

0.6%

     80,000

780

1.0%

420

0.5%

   100,000

780

0.8%

420

0.4%

 

PSPR Changes – Cumulative Annual Benefit from January 2018

3 Year Cumulative Annualised Benefit of PSPR amendments

Gross Pension

Retired before 1 March 2012

Retired after 1 March 2012

 

%

%

     14,000

           120

0.9%

   

     16,000

           240

1.5%

   

     18,000

           360

2.0%

   

     20,000

           480

2.4%

   

     25,000

           810

3.2%

   

     30,000

        1,260

4.2%

   

     32,000

        1,440

4.5%

   

     35,000

        1,680

4.8%

570

1.6%

     40,000

        1,680

4.2%

720

1.8%

     50,000

        1,680

3.4%

1,020

2.0%

     60,000

        1,680

2.8%

1,320

2.2%

     70,000

        1,680

2.4%

1,320

1.9%

     80,000

        1,680

2.1%

1,320

1.7%

   100,000

        1,680

1.7%

1,320

1.3%

 June 16th, 2015|Press Releases 

APPENDIX B

 

 

 

RCPSA Paper on Restoration of Public Service Pensions

 

 

 

Introduction

 

1.1       There are three principal matters of concern to RCPSA members and, no doubt, to the wider family of 150,000 public service pensioners, viz:

-   The restoration of pensions reduced under the Financial Emergency Measures in the Public Interest (FEMPI) Acts (including full restoration for post February 2012 pensioners who are being seriously discriminated against);

-    Provision for increases in pensions and

-  Access for retired public servants to State industrial relations machinery.  

1.2       The Alliance of Retired Public Servants represents public service pension organisations in discussions with the Minister and Department of Public Expenditure and Reform but has no access to independent mediation or arbitration.

The FEMPI Acts

 

2.1       The entitlement of public service pensioners to their pensions is a property right under Article 43 of the Constitution.   It is difficult to see how continuing public service pension deductions beyond 2018 would come within the constitutional framework under which such rights may safely be regulated by law.

2.2       The principal FEMPI Acts relating to public service pension reductions were the 2010 and 2013 Acts.  The main effect of these was to provide for:

-           reductions of between 6% and 28% on pensions above €12,000 p.a. of                 those who retired pre March 2012 and

-           reductions of between 2% and 8% in relation to annual pensions above    €32,500 of those who retired post February 2012.   FEMPI cuts from   salary had already been made from the post February 2012 retirees             generating an ongoing reduced pension.

The FEMPI Act, 2015 – Partial Restoration

 

3.1       The 2015 FEMPI Act provided for partial restoration of pay and pensions.  The position on pension restoration is set out in the Statement by the Minister for Public Expenditure and Reform dated 16th June 2015 (copy attached).

3.2       Briefly, the legislation provided for restoration for individual pensioners of up to €400 in 2016, €500 in 2017 and, if still within the deduction net, €780 in 2018.     

3.3       The cost of this restoration is €30m in each of the three years 2016 to 2018 and would at the end of 2018 leave approximately 25,000 public servants with pensions over €34,132 per annum still subject to emergency deductions initiated in 2011.  The annual pension deduction remaining at the end of 2018 is understood to be in the order of €45m (substantially less when net of tax).

Pension Restoration for Pre March, 2012 Public Service Retirees

 

4.1       The current position in relation to pension restoration under the 2015 FEMPI Act, for pensioners who retired pre March 2012, is outlined in Table 1.

 

Table 1   Pension Restoration of Pensioners who retired pre March 2012 1

 

 Pension

2009

 

Pension

Cuts

2011-2013

 Pension

restored by 2017

Pension

restoration

due 2018

Pension Cut

Remaining

2018

20,000

  480

19,922

-

-

30,000

1,260

29,142

360

-

40,000

2,880

 37,520

780

1,200

50,000

4,080

46,320

780

2,400

1 The pensions of those who retired between January 2010 and end February 2012 are based on pre-cut salaries with 2011 pension cut applied.

4.2       It should be noted that pay restoration under the 2015 FEMPI Act is on a basis agreed with public service unions under the Lansdowne Road Agreement and was brokered under the auspices of the WRC.  While the Alliance of Retired Public Servants made a submission in 2015 to the Minister for Public Expenditure and Reform on pension restoration and had consultations with his Department it did not have the option of a third-party intervention to facilitate agreement.

4.3       Furthermore pay restoration for serving public servants under the Lansdowne Road Agreement has recently been enhanced, following a Labour Court recommendation in relation to Gardai. The Alliance of Retired Public Servants is seeking an equivalent appropriate beneficial adjustment in the pension restoration schedule but this request has, so far, been rejected.

4.4       This is clearly inconsistent with the view expressed in Dail Eireann by the then Minister for Public Expenditure and Reform during the discussions on the 2015 Act and, subsequently in public, that priority should be given in future to the early restoration of pensions.

 

Grossly Unfair Treatment of Post February 2012 Public Service Retirees

 

5.1       The current position in relation to pension restoration under the 2015 FEMPI Act for Post February, 2012 retirees is set out in Table 2 below:

Table 2     Non Restoration of Pensions of Post February 2012 Retirees

 

Pre 2010 FEMPI Pension

Value1

 

POST MARCH 2012 FEMPI Salary Reduced  Pension2

July 2013 FEMPI  Pension

Reduction3

2016-2018

Restored Pension

 

Reduced Pension

 not Restored

 

20,000

18,875

-

-

1,125

30,000

28,125

-

-

1,875

40,000

37,250

638

638

2,750

50,000

46,250

908

908

3,750

 

1 Pension values here are based on final service salary (before cuts) and full service.

 

2 Pensions in this column are based on 2010 reduced salaries (under FEMPI Act, 2010).

 

3 Pension cuts in this column are in respect of pensioners who retired post February 2012 whose pensions were above €32,500 on 1 July 2013.

5.2       Table 2 illustrates the extent to which post February 2012 public service pensioners will not return to full pension rates even when full pay has been restored to their serving counterparts. This group of pensioners will be in an extraordinary situation in that pre-March 2012 pensioner counterparts will return to full pension and serving staff to pre FEMPI pay levels (allowing them to retire with full pre FEMPI pensions).  

5.3       The pension of a public servant who retired post March 2012 was calculated on the FEMPI reduced salary of 2010 (column 2), which generated a significantly reduced pension compared to the pre FEMPI pension in (column1). Column 3 illustrates the impact of the 1 July 2013 FEMPI pension cut for this group. This is the only element of their emergency reduced pension, which benefitted from the 2016 to 2018 restoration measure (column 4 refers).

5.4       Column 5 highlights how the post February 2012 pensioners will, under present arrangements, continue as if they were in a bubble of their own condemned to exclusion from restoration of the bulk of their emergency induced cuts. This is a grossly unfair penal measure and should be reversed as a priority in forthcoming restoration talks.

 

 

Pension Restoration and Unwinding FEMPI

 

6.1       The financial emergency that gave rise to the use of emergency powers in relation to public service pensions is over, and a wide range of new services is increasingly being put in place.

6.2       The decreasing amount of pension deduction collected each year is no longer of significance in overall financial or budgetary terms.  The benefit to the State is no longer proportional to the continuing burden being suffered by individual pensioners who also have to deal with wider austerity measures.

6.3       Public service pensioners are private citizens who have completed their contract with government and are in a separate legal and practical situation from serving staff who are in continuing employment with government and who have access to the industrial relations machinery of the State and have a much wider range of income increase options open to them.

6.4       The age and health status of retired public servants and related financial liabilities arising in this regard are hugely important issues which, along with life expectancy, should be taken into account in relation to pension restoration.

 

6.5       Despite popular misconceptions that public service pensioners are privileged the reality is that the average public service pension is in the order of €20,000 per annum and that public service pensioners do not additionally receive the State pension.

6.6       Equally, the treatment of public service pensioners who are required to pay the Universal Social Charge on all their pension income is fundamentally unfair in comparison with their private sector counterparts who pay no USC on their State pensions.

6.7       The treatment of public service pensioners contrasts most unfairly with the approach adopted by government in 2011 when it recognised the property rights of AIB (99% State owned) private sector pensioners and authorised €1.1bn of State funds to be put into the AIB pension funds.

6.8       Responsibility for any new financial emergencies or the provision of increased services is a community responsibility and should be addressed in the context of general taxation and not visited on public service pensioners on foot of continuing use of emergency powers.

6.9       The justification, recognised by successive Ministers for Public Expenditure and Reform, and by the Public Service Committee of ICTU in its submission to the Pay Commission, for priority treatment in restoring public service pensions, should now be matched by full pension restoration not later than 2018.

Increases in Pension

 

7.1       The framework for increases in pension is a matter which is of great importance, not least because there were over 50,000 retired public servants on pensions of up to €12,000 who were never subject to pension reductions and who have received no increases in pension notwithstanding the fact that their equivalent serving public servants have received increases in pay.

7.2       The parity based framework, whereby pensions increased in line with pay, was, in effect, suspended during the emergency but, with the unwinding of the FEMPI legislation, the legitimate expectation of retired public servants is that custom and practice should be followed and the principle of parity restored.

7.3       Retired public servants contributed to their pension (which included a parity based approach to increases) at rates deemed appropriate by successive governments. Furthermore the value of pensions, based on the actuarially calculated pension costs of the Public Service Benchmarking Body in 2007 have reduced over the past ten years with substantial reductions in pay and pensions and given the absence of assumed pension increases based on CPI plus 2%, not to mention the reduced pension costs for newly recruited public servants. 

7.4       It should be further noted in this regard that there are scheduled increases in social protection payments (which are to be maintained above CPI rates) whereas the comparative position of the lowest paid public service pensioners, who have received no increases in pension, is further deteriorating.

Access to Industrial Relations Machinery

 

8.1       Serving public servants have both direct access and access through their unions to in house or ad hoc mediation or arbitration and through the formal industrial relations machinery of the State.

8.2       The Croke Park, Haddington Road and Lansdowne Road Agreements would not have been concluded without ad hoc involvement by the LRC/WRC nor would the recent Garda dispute have been resolved without the involvement of the Labour Court. These mechanisms have been an absolutely vital element for government and serving staff in the unwinding by agreement of the FEMPI legislation in relation to pay.

8.3       The unwinding of FEMPI in relation to pension deductions is of equal importance to retired public servants and it is difficult to comprehend the blank refusal by government to provide any form of third party mechanism to help resolve difficulties in this regard.

8.5       This question should now be addressed.  Public service pensions are deferred pay and arise directly from employment by the State. It is, in the Association's view, increasingly untenable and unjust for any government to continue to maintain that they will provide no third-party access for 150,000 retired public servants on any matter relating to pensions.

RCPSA 

  28 February 2017             

Statement by the Minister for Public Expenditure and Reform, Mr Brendan Howlin T.D., on Government agreement to reduce Public Service Pension Reductions

 

 

 

 

Government agrees to reduce Public Service Pension Reductions 

By 2018 65,000 lower paid pensioners to be removed from pension reduction

In January 2011, as part of the response to the fiscal crisis then faced by the country, an emergency measure to reduce public service pensions (Public Service Pension Reduction- PSPR) in payment was introduced. A further reduction for higher value pensions was introduced in July 2013.

In welcoming the proposals developed between public service employers and the representative associations and unions for an extension to the Haddington Road Agreement out to September 2018, I indicated that I intended to bring forward separate proposals to Government to provide for a commensurate reduction in the Public Service Pension Reduction as it applies to retired public servants

The proposals approved today deliver upon my stated commitment to move towards reducing the burden of public service pension reductions, with the initial focus on the people in receipt of low pensions, at the earliest date economic progress permits.

These proposals in respect of public service pensioners are prudent in the context of the fiscal space available to the Government and will not compromise the ongoing recovery in the Government finances.

The changes provide for a restoration of pension income subjected to the Public Service Pension Reduction on a phased basis over three years as follows,

  • 1 January 2016 – return of €400 to most PSPR-impacted pensioners
  • 1 January 2017 – return of €500 to most PSPR-impacted pensioners
  • 1 January 2018 – return of €780 to most PSPR-impacted pensioners

and/or removing pensioners from the PSPR “net” entirely;

Note to Editors:

The Public Service Pension Reduction (PSPR), commencing 1 January 2011, imposed reductions on annual public service pensions in payment in excess of €12,000, using a progressively tiered set of bands and rates with a top rate of 12% on any public service pension amount over €60,000. The legislation was amended from 1 January 2012 to increase the top rate of PSPR from 12% to 20% on the portion of any public service pension amount in excess of €100,000.

The Financial Emergency Measures in the Public Interest Act 2013 also provided for additional Public Service Pension Reduction rates ranging from 2% to 8% to be applied to all annual public service pensions in payment in excess of €32,500 from 1 July 2013.

Full-year savings from these pension measures is currently in excess of €125 million.

The cost of the measures is estimated at some €30m per annum or a cumulative cost of €90m over the three years to end 2018.

The number of pensioners affected by PSPR is 90,000.

PSPR Amelioration

On the proposal of the Minister for Public Expenditure and Reform, Mr Brendan Howlin TD, the Government has agreed to proceed with the necessary legislative amendments to ameliorate the effects of the “Public Service Pension Reduction” (PSPR), which reduces the pensions of many public service pensioners under the Financial Emergency Measures in the Public Interest Act 2010.

The agreed changes, which are to be implemented in three stages on 1 January 2016, 1 January 2017 and 1 January 2018, will deliver a significant income boost to many PSPR-affected pensioners.

The details of the changes for each year are set out below, along with tables which illustrate the effects on pensioners at different income levels.  Note that the changes impact on the following three pensioner groups (who are currently impacted by separate PSPR reduction tables under the legislation):

Group 1: Pensions (pre-PSPR) above €12,000 and below €34,132, retirements before March 2012.

Group 2: Pensions (pre-PSPR) above €34,132, retirements before March 2012.

Group 3: Pensions (pre-PSPR) above €32,500, retirements from March 2012.

 

 

2016 PSPR Changes

Group 1: Increase exemption threshold (0% band) from €12,000 to €18,700.

Group 2: Increase 0% band upper limit from €12,000 to €17,000.

Group 3: Increase 0% band upper limit from €12,000 to €29,300.

 

 

 

 

 

 

2016 Annualised Benefit of PSPR amendments

Gross Pension

Retired before 1 March 2012

Retired after 1 March 2012

 

%

%

     14,000

120

0.9%

   

     16,000

240

1.5%

   

     18,000

360

2.0%

   

     20,000

402

2.0%

   

     25,000

402

1.6%

   

     30,000

402

1.3%

   

     32,000

402

1.3%

   

     35,000

400

1.1%

399

1.1%

     40,000

400

1.0%

399

1.0%

     50,000

400

0.8%

399

0.8%

     60,000

400

0.7%

399

0.7%

     70,000

400

0.6%

399

0.6%

     80,000

400

0.5%

399

0.5%

   100,000

400

0.4%

399

0.4%

2017 PSPR Changes

Group 1: Increase exemption threshold (0% band) from €18,700 to €26,000.

Group 2: Increase 0% band upper limit from €17,000 to €22,000;

Reduce rate on pension amount between €22,000 and €24,000 from 8% to 3%.

Group 3: Increase 0% band upper limit from €29,300 to €39,000;

Reduce rate on pension amount between €39,000 and €60,000 from 3% to 2%.

 

2017 Annualised Benefit of PSPR amendments

Gross Pension

Retired before 1 March 2012

Retired after 1 March 2012

 

%

%

     14,000

0.0%

   

     16,000

0.0%

   

     18,000

0.0%

   

     20,000

78

0.4%

   

     25,000

408

1.6%

   

     30,000

498

1.7%

   

     32,000

498

1.6%

   

     35,000

500

1.4%

171

0.5%

     40,000

500

1.3%

301

0.8%

     50,000

500

1.0%

401

0.8%

     60,000

500

0.8%

501

0.8%

     70,000

500

0.7%

501

0.7%

     80,000

500

0.6%

501

0.6%

   100,000

500

0.5%

501

0.5%

 2018 PSPR Changes

Group 1: Increase exemption threshold (0% band) from €26,000 to €34,132, thereby removing PSPR from this Group entirely.

Group 2: Increase 0% band upper limit from €22,000 to €30,000.

Group 3: Increase 0% band upper limit from €39,000 to €60,000.

2018 Annualised Benefit of PSPR amendments

Gross Pension

Retired before 1 March 2012

Retired after 1 March 2012

 

%

%

     14,000

0.0%

   

     16,000

0.0%

   

     18,000

0.0%

   

     20,000

0.0%

   

     25,000

0.0%

   

     30,000

360

1.2%

   

     32,000

540

1.7%

   

     35,000

780

2.2%

0

0.0%

     40,000

780

2.0%

20

0.1%

     50,000

780

1.6%

220

0.4%

     60,000

780

1.3%

420

0.7%

     70,000

780

1.1%

420

0.6%

     80,000

780

1.0%

420

0.5%

   100,000

780

0.8%

420

0.4%

 

PSPR Changes – Cumulative Annual Benefit from January 2018

3 Year Cumulative Annualised Benefit of PSPR amendments

Gross Pension

Retired before 1 March 2012

Retired after 1 March 2012

 

%

%

     14,000

           120

0.9%

   

     16,000

           240

1.5%

   

     18,000

           360

2.0%

   

     20,000

           480

2.4%

   

     25,000

           810

3.2%

   

     30,000

        1,260

4.2%

   

     32,000

        1,440

4.5%

   

     35,000

        1,680

4.8%

570

1.6%

     40,000

        1,680

4.2%

720

1.8%

     50,000

        1,680

3.4%

1,020

2.0%

     60,000

        1,680

2.8%

1,320

2.2%

     70,000

        1,680

2.4%

1,320

1.9%

     80,000

        1,680

2.1%

1,320

1.7%

   100,000

        1,680

1.7%

1,320

1.3%

 June 16th, 2015|Press Releases