Reply by Minister Paschal Donohoe TD Minister for Public Expenditure and Reform – Clare Branch GSRMA

Hi All, Please see email from Deputy Joe Carey with response from Pascal Donoghue in relation to our pension concerns. I don’t think there is anything new in this just confirming what we have heard or read already.

Regards Pat

Dear Pat,

I regret the delay in getting this response to you and your group. Further our meeting and discussion with regard to your groups concerns about public service pensions and in particular restoration of pension cuts, the preservation of parity between Serving Public Servants and Pensioners and the introduction of Negotiating Rights for the Alliance of Retired Public Servants, attached below please find detailed response which I received from Mr. Paschal Donohue TD, Minister for Public Expenditure & Reform. Perhaps you might revert to me with regard to this matter having considered the contents of the Minister’s reply.   Kind regards, Yours sincerely, Joe Carey _____________________________________  

Our Ref. 16/0070/PER   11 May 2017   Mr Joe Carey TD Joe.Carey@oir.ie

Dear Joe

I write in reply to your email dated 7 December 2016 and your further email of 3 April 2017 on behalf of a County Clare Pensioner Group in relation to their concerns about public service pensions. I am so sorry for the delay in responding.

Firstly, with regard to the restoration of pension cuts, the Public Service Pension Reduction (PSPR), which was introduced on 1 January 2011, is the only measure which has decreased the pay-out value of public service pensions since 2008. I am glad to say that PSPR is being significantly reversed under the Financial Emergency Measures in the Public Interest (FEMPI) Act 2015. This reversal is proceeding in three stages over the 2016 to 2018 period as follows:

  •     On 1 January 2016, increases in the annual pension thresholds for PSPR application commenced. These exemption threshold increases fully removed PSPR from a significant number of pensions with relatively lower values, while those pensions which continued to be impacted by PSPR received a boost of €400 per year.
  •     On 1 January 2017, additional PSPR amelioration, acting principally via further exemption threshold increases, fully removed PSPR from another significant tranche of public service pensioners, while at the same time boosting those pensions which remain affected by PSPR, in most cases, by up to €500 per year.
  •     On 1 January 2018, the third phase of PSPR amelioration will ensure that all PSPR-impacted pensions with values up to €34,132 will be fully restored, meaning that PSPR will no longer affect such pensions, while those pensions which continue to be impacted by PSPR will get a boost of, in most cases, €780 per year.

This means that, when fully rolled-out from 1 January 2018, these PSPR amelioration steps will ensure that most public service pensioners are not affected by PSPR.  All public service pensions with pre-PSPR values of up to €34,132 will be fully exempt from PSPR from then on, while those pensioners not fully removed from the reach of PSPR will, in the majority of cases, benefit by €1,680 per year. The cost of these changes is estimated at about €90 million on a full-year basis from 2018.

Secondly, in relation to “preservation of parity between serving public servants and pensioners”, it is true that in the past, the occupational pensions received by public service pensioners were generally adjusted in line with changes in the wages or salary of the pensioner’s grade at retirement. Sometimes referred to as “pay parity”, this non-statutory linkage lapsed in 2010 when pensions were left unchanged notwithstanding salary cuts at the beginning of that year affecting all public servants. This pension protection, albeit tempered from 2011 in some cases by the imposition of PSPR, has worked to the benefit of pensioners, as indeed have the “grace periods” in respect of new-award pensions which accompanied the public service salary cuts in 2010 and 2013. PSPR is also being lessened at a faster pace and to a greater degree than applies in the case of the amelioration of the FEMPI pay reduction measures—Pension-Related Deduction (PRD) and actual salary cuts—affecting serving public servants.

Thirdly, in relation to the pensioner group’s request for ‘negotiating rights’, as you are aware, there is no legislative provision for access to third-party adjudication in respect of pension increases for recipients of public service pensions. Indeed there is no such facility for recipients of the Contributory State Pension. However, the interests and concerns of public service pensioners in relation to public service pension issues have been regularly articulated in meetings between the Alliance of Retired Public Servants and my Department. This engagement has also included meetings between the Alliance, myself and my predecessor. Through that process of engagement with the Alliance, I believe that public service pensioners have had, and continue to be afforded, a meaningful and direct means of articulating their concerns in relation to pensions and related issues.

The period since the Alliance’s engagement with my Department commenced in 2013 has been marked by notable legislated pension improvements for many public service pensioners. Specifically, many such pensioners are benefitting significantly from the substantial reversal of cuts to public service pensions imposed by way of the Public Service Pension Reduction (PSPR) under the FEMPI legislation, as I mentioned previously.

All that being said, I am very conscious of the impact of pension reductions on affected public servants, and would of course wish to do more for public service pensioners if and when possible. A commitment to reverse the public service pension reductions by 2021 is provided for in the Programme for a Partnership Government.

As we move beyond FEMPI and PSPR restoration towards more normal pay and pension setting conditions in the public service, the issue of how to adjust the post-award value of public service pensions through appropriate pay or other linkages will, as I have previously indicated, be considered by Government in due course.

I trust the above information is satisfactory in relation to your correspondence. Yours sincerely   Paschal Donohoe TD Minister for Public Expenditure and Reform

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