merrion street

The Minister for Finance & Public Expenditure and Reform, Paschal Donohoe T.D., has today (Thursday) laid his Annual Review of the operation and effectiveness of the Financial Emergency Measures in the Public Interest (FEMPI) legislation before the Houses of the Oireachtas (see full opening speech below).
The report concluded that while immediate repeal of the FEMPI legislation is unaffordable, the proposed Public Service Stability Agreement 2018-2020 represents a negotiated solution for dismantling the emergency legislation over the coming years.
Speaking to the Dáil, the Minister said: ‘I believe that in the new Public Service Stability Agreement 2018-2020, or Lansdowne Road II, we have achieved a balanced approach to public service pay that is compatible with the economic conditions of the State, national competitiveness and available revenues. The proposed Agreement provides a series of affordable pay increases which will unwind FEMPI pay reductions for all public servants earning up to €70,000, which is equal to almost 90% of public servants over the period to 2020. As such, this provides a clear and realistic route out of FEMPI’. In total the benefits under the Agreement range from 6.2% to 7.4% and again we have weighted these benefits towards those on lower pay. As well as being fair to public servants it is also fair to those who rely on public services and to the exchequer. Under the proposed terms of the Agreement, public servants will make an additional contribution to their pensions, which is reasonable and reflects the higher value of these pension terms compared to the private sector. Crucially, this will place public service pensions on a more sustainable long-term footing.’
ENDS

Notes to Editors:
1. The pay cuts (2010 and 2013), pension levy (PRD) and reduction in public service pensions (PSPR) are measures provided for under the Financial Emergency Measures in the Public Interest (FEMPI) Acts 2009 – 2013.
2. Collectively, the saving from these measures amount to approximately €2.2 billion annually and have been a crucial part of the stabilisation of the public finances.
3. The impact of these measures is being ameliorated by the FEMPI Act 2015, which amends the previous Acts and gives effect to the terms of the Lansdowne Road Agreement (LRA). Upon full implementation of the Lansdowne Road Agreement, there will be approximately €1.4 billion in savings still underpinned by the financial emergency legislation.
4. Under the Acts, the Minister for Public Expenditure and Reform is required to undertake a review of the operation and effectiveness of the Acts and consider whether the measures implemented by the Acts are still required.
5. The Review has been laid before both Houses of the Oireachtas and will be published on the Department of Public Expenditure and Reform website in the coming days.

Public Service Stability Agreement 2018-2020
6. The proposed Agreement runs from 2018- 2020 and has a cost over that period of €887 million – (this is approximately equivalent to the cost of the LRA 2015-2018 at €844 million).
7. The benefits to different income groups range from 7.4 per cent to 6.2 per cent over three years, and up to 10 per cent for new entrant members of the Single Public Service Pension Scheme. Once again these proposals are progressive.
8. Proposals include the restoration of pay cuts and the conversion of the existing FEMPI Pension Related Deduction (PRD) into a permanent Additional Superannuation Contribution, while providing for modest increases in the threshold, thereby providing some relief.
9. At the end of this Agreement pay cuts will be restored to all public servants earning up to €70,000, which equates to almost 90 per cent of public servants.
10. The PRD measures will ensure that over 70 per cent of public servants will be making a further permanent contribution to their pensions.
11. The yield from PRD will fall from over €700 million at present to some €550 million in 2020, which will now become a permanent additional pension contribution.
12. This will make a major contribution to the future sustainability of public service pensions.
13. The additional hours worked under previous agreements have been retained.
14. The Agreement allows for on-going co-operation with change and productivity improvements and industrial peace until 2020.
15. After this Agreement most of the outstanding €1.4 billion of pay cuts and PRD relief will have been addressed through pay increases and retention of PRD as a permanent measure.

Principal Features of the Agreement:
Pay Measures
2018
1 January 2018 annualised salaries to increase by 1%;
1 October 2018 annualised salaries to increase by 1%.
2019
1 January 2019 annualised salaries up to €30,000 to increase by 1%;
1 September annualised salaries to increase by 1.75%.
2020
1 January 2020 annualised salaries up to €32,000 to increase by 0.5%;
1 October 2020 annualised salaries to increase by 2%.

Additional Superannuation Contribution
Public Servants who are Members of pre-2013 Pension Schemes with Standard Accrual Terms
1 January 2019
Band Rate
Up to €32,000 Exempt
€32,000 to €60,000 10%
€60,000 plus 10.5%

1 January 2020
Band Rate
Up to €34,500 Exempt
€34,500 to €60,000 10%
€60,000 plus 10.5%

Public Servants who are Members of the Single Public Service Pension Scheme
1 January 2019
Band Rate
Up to €32,000 Exempt
€32,000 to €60,000 6.66%
€60,000 plus 7%

1 January 2020
Band Rate
Up to €34,500 Exempt
€34,500 to €60,000 3.33%
€60,000 plus 3.5%

Public Servants who are Members of pre-2013 Pension Schemes with Fast Accrual Terms
(Unchanged)
Band Rate
Up to €28,750 Exempt
€28,750 to €60,000 10%
€60,000 plus 10.5%