merrion street

The Minister for Public Expenditure and Reform, Brendan Howlin T.D., today published the Public Service Pensions (Single Scheme) and Remuneration Bill 2011.

Minister Howlin said that "The new single scheme is a far-reaching transformation of the public service pension system. It makes clear the Government’s strong commitment to major public service reform. The Bill’s main purpose is to provide for a new single pension scheme for all new entrants to the public service which will significantly reduce costs to the taxpayer. It provides for a new approach which will modernise and standardise pension arrangements throughout the public service.

This new scheme places Ireland at the fore-front of public service pension reform in Europe. Apart from the Exchequer savings which will be realised, we will be making sure that the public service uses this opportunity to stream-line pension administration and secure further savings."

This is a significant change from the current position where the pension is based on ‘final salary’ at retirement. The Minister said that "this is a fairer approach to pensions; your pension reflects your career average earnings as opposed to your final salary."

The provisions do not affect the pensions of existing public servants. Under the Public Service Agreement 2010-2014 (the Croke Park agreement), it was agreed that there will be no change in current arrangements for the indexation of pensions for current public service pensioners and serving public servants during the life of the agreement. Public service pensions for current pensioners has been reduced since the beginning of this year by about 4% on average and that from the end of February 2012 the pensions of those retiring from the public service would be based on reduced pay levels.

"This Government is determined to deal with issues in the long term interests of the country. There was a clear need for reform of public service pensions. Getting these decisions right now is crucial for both the taxpayer and for future public servants. The changes I am presenting in the Bill make public service pension arrangements simpler and more transparent. The new scheme will be fairer particularly to those on low and moderate earnings. Above all, the public service will be better able to manage the costs associated with the demographic and other changes which are coming."