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The Four Year Plan sets out the following:
- Extension of the "grace period"
under which pensions are calculated by reference to pre - cuts rates of public service pay until the end of February 2012
- Average reduction of 4% in Pensions of existing Public Service Pensioners
and those Public Servants who retire prior to end February 2012
- As a result, a built-in reduction in Pension on an ongoing basis for Public Servants who retire after end February 2012, as compared to
those who retire before then (this is in addition to a reduction in Gratuity for those who retire after 1st March 2012).
- Setting a maximum number of members of an Garda Síochána of 13,000 to be attained
by 2014 under the Employment Control Framework. This is an effective reduction of 1,500 in Garda numbers from 2010 levels, as follows - 2010 - 14,500; 2011 - 13,500; 2012 - 13,350; 2013 - 13,150; 2014 -
13,000
- A reduction of 10% on the starting pay levels and New (reduced) Pension Scheme terms for all new entrants to the Public Service after 1st January 2011.
- Pension lump-sum payments in
excess of €200,000 to be taxed
- Elimination of employee PRSI & Health Levy Relief on pension contributions in 2011
- Rate of income tax relief on pension contributions to be reduced from
41% to 34% in 2012; to 27% in 2013 and to 20% in 2014.
EXTRACT FROM NATIONAL RECOVERY PLAN RE REDUCTION IN PENSION FOR EXISTING RETIRED PUBLIC SERVANTS (Page 72)
“The Government has therefore
decided on a reduction of €100 million or about 4% in the annual cost of Public Service pensions paid to some pensioners in 2011. The reduction will require legislation to be passed before the end of the
year.
In order to avoid a destabilizing
rate of retirements in 2011 and to manage the cost in both 2011 and 2012, the Government has decided to extend the "grace period" under which pensions are calculated by reference to the pre-cut rates
of public service pay to end-February 2012. This decision has been taken into account in the pay and pensions figures presented.
The reduction will apply to existing
Public Service pensioners, former office holders, retired members of the Judiciary, and their survivors. For existing public service pensioners and those public servants who retire before the ending of the
‘grace period’ at end-February 2012, the legislation will provide for an average reduction of some 4% in pensions in line with the following rates and bands:
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Annual Public Service Pension (€)
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Reduction Rate
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First 12,000
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0%
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Between 12,001 and 24,000
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6%
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Between 24,001 and 60,000
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9%
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Balance above 60,001
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12%
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There is no change in public service pension scheme terms. Pensions will be calculated in the usual way according to those terms. In the case of existing
public service pensioners and those public servants who retire before the ending of the ‘grace period’ at end-February 2012, there will be an average
reduction of some 4% in pensions with the application of the above rates. As those who retire after this date are subject to the pay reduction of 7% on
average, which will reduce the pension and lump sum to be paid, the Government has decided that it would not be appropriate to also apply the pension reduction to this group.”
It is clear from the above extract that it is envisioned that a different set of circumstances will apply in calculating pensions on an ongoing basis for Public
Servants who retire prior to end February 2012 and to Public Servants who retire after end February 2012.
In the case of existing Public Servants (including Gardaí) who are already retired and those who retire prior to end February 2012, their pension payment
will be based on 2009 pay rates (i.e. pre pay cuts) less a reduction based on the “reduction rate” set out above.
Those Public Servants (including Gardaí) who retire from 1st March 2012 onwards will have their lump-sum gratuities
and ongoing pension payments calculated at post pay-cut rates.
EXAMPLES OF PENSIONS PRE / POST 29 FEBRUARY 2012
The following examples are based on a notional annual final pre-retirement salary of €55,000 / €60,000 and show a
significant gross reduced on-going pension for those retiring after 1 March 2012, as opposed to those who retired prior to that date, particularly for Widow / Widowers of retired Public Servants:
Pre February 2012 - €55,000 final pre-retirement Salary
€27,500 pension: first €12,000 - no reduction; €12,000 x 6% = €720; €3,500 x 9% = €315
Total Reduction: €1,035 per annum (Widow: Less €105 p.a.)
Post February 2012 - €55,000 final pre-retirement Salary
(Pay Cut on amounts under €30,000 @ 5% = €1,500. Next €25,000 @ 7.5% = €1,875)
€55,000 – (€1500 + €1,875) = €51,625 - post-paycut final pre-retirement Salary
Pension = €25,812.50
Total Reduction: €1688 per annum (Widow; Less €844 p.a.)
Difference pre / post February 2012 = €653
Gratuity: €82,000
€30,000 x 5% = €1500; €25,000 x 7.5%= €1875. €3,375 x 1 ½ = Total Reduction: €5,062.50
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Pre February 2012 - €60,000 final pre-retirement Salary
€30,000 pension: first €12,000 - no reduction; €12,000 x 6% = €720; €6,000 x 9% = €540
TOTAL REDUCTION: €1,260 per annum (Widow: Less €180 p.a.)
Post February 2012 - €60,000 final pre-retirement Salary
(Pay Cut on amounts under €30,000 @ 5% = €1,500. Next €30,000 @ 7.5% = €2,250)
€60,000 – (€1,500 + €2,250) = €56,250
Pension = €28,125
TOTAL REDUCTION: €1875 per annum (Widow; Less €937.50 p.a.)
Difference pre / post February 2012 = €615
Gratuity: €90,000
€30,000 x 5% = €1500; €30,000 x 7.5%= €2250. €3,750 x 1 ½ = Total Reduction: €5,625
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