3. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform his plans to deal with pension restoration for retired public servants; and if he will make a statement on the matter. (Question 47438/17 asked on 09 Nov 2017)
Deputy Dara Calleary: While there has been an understandable focus on public service pay and I acknowledge the publication this week of the FEMPI legislation, this question focuses on public service pensioners, particularly those on lower pensions, and the timeline for recovery of their incomes in the course of the agreement and the legislation that we will discuss in the coming weeks.
(Deputy Paschal Donohoe): This question refers to the position on pensions and the status of the public service pension reduction, PSPR, which was introduced on 1 January 2011 under the terms set out in the Financial Emergency Measures in the Public Interest Act 2011. The PSPR reduces the value of those public service pensions which have pre-PSPR values above specified thresholds. It does so in a progressively structured way which has a proportionately greater effect on higher value pensions.
A very significant part-unwinding of the PSPR in three stages is taking place under the Financial Emergency Measures in the Public Interest Act 2015, with PSPR-affected pensioners getting pension increases via substantial reversal of the PSPR cuts on 1 January 2016, 1 January 2017 and 1 January 2018. On 1 January 2016 all pensions up to at least €18,700 became exempt from the PSPR. From 1 January 2017 all pensions up to at least €26,000 have been exempt from the PSPR. From 1 January 2018 all pensions up to at least €34,132 per year will be exempt from the PSPR. Those pensioners not fully removed from the reach of the PSPR by dint of these changes will, in the majority of cases, benefit by €1,680 per year from 2018. The cost of these changes is estimated at about €90 million on a full-year basis from 2018.
The Government published the Public Service Pay and Pensions Bill 2017. If the legislation is enacted, it will put in place further changes in 2019 and 2020, with the objective being that, by the beginning of 2020, anyone with a pension value of at least €54,000 will be entirely free of the PSPR. That will include the vast majority of pensioners.
Deputy Dara Calleary: While coverage of the issue of public service pensions tends to focus on the minority of high pensions, the majority of public service pensioners do not have alternative means to earn income. They are on relatively low incomes, considering the service they have given to the State. I welcome the proposed changes in the legislation. Will the Minister outline how many pensioners will be affected by his proposals within the legislation and the cost of those proposals? Will there be flexibility to bring forward dates if extra revenue becomes available, for instance during 2018?
Deputy Paschal Donohoe: I will return to the Deputy by the end of the week with the figure for how many pensioners will be affected, but the vast majority will have their pensions restored. On the costs that will be incurred in the period, I have announced that, on a full year basis from 2018 onwards, the figure will be €90 million. That will be the figure until the end of 2018. I will provide the Deputy with the figures after that date, if the legislation is enacted, as I hope it will be. I agree with him that when the issue of public service pensions is discussed much of the focus is on the few who have pensions with a particular value. In fact, the vast majority of pensioners are on pensions well below that the values that are well known..
Deputy Dara Calleary: I acknowledge the work done by the Alliance of Retired Public Servants. Public service pensioners endured substantial cuts to their incomes. As I noted, they have no other means to make up for the cuts, yet they have no negotiating rights. In the future we will need to examine how the alliance may become involved in some way. Rather than being merely an add-on in public service pay talks, we should ensure the alliance will have a role to play in representing public service pensioners, including on the matter of pensions policy. The management of pensions policy generally, not only public service pensions, is one of the biggest problems facing the State. It is important that the voice of public service pensioners be heard and some standing in future negotiations.
Deputy Paschal Donohoe: I met the Alliance of Retired Public Servants on a number of occasions, including immediately after the conclusion of the negotiations which led to ratification of the public service stability agreement. I do not believe it would be appropriate for it to be given union or formal status. As I said, I have met it and my Department has done its utmost to meet its representatives to hear their views and accommodate them, where possible. I always have to navigate a trade-off. The State has a clear obligation to restore pensions up to a certain point. We have done this by providing for a faster pace of pension restoration than wage restoration in recognition of the fact that their pension is their only source income for the people concerned after their working lives. They therefore have little opportunity to work more or to earn more. I will continue to meet them where important. I know that this is an issue which the Deputy has focused on and has raised with me a number of times.