Public pensions cost €1.37bn last year, says Brendan Howlin

The net cost of public-sector pensions was about €1.37 billion last year, according to the Minister for Public Expenditure Brendan Howlin.

In response to questions from Fianna Fáil’s spokesman on public expenditure Seán Fleming, the Minister said the gross cost of providing public-sector pensions in 2013 was €2.815 billion.

Offsetting this cost, Mr Howlin said the Public Service Pension Related Deduction (PRD) generated €930.3 million for the exchequer last year, excluding the local government sector, while regular pension contributions are expected to yield receipts of €514 million for the State.

The PRD was a special levy imposed on public servants by the then Minister for Finance Brian Lenihan as an emergency measure to help boost the public finances in the wake of the economic crash in late 2008.

The first €15,000 of earnings is exempt from PRD. A rate of 5 per cent applies between €15,000 and €20,000 and 10 per cent between €20,000 and €60,000. A rate of 10.5 per cent applies above €60,000.

The Minister told Mr Fleming the PRD yielded €837.4 million in income for the exchequer in 2009 and peaked at €960.2 million in 2011. The yield from the regular pension contributions made by public servants has declined each year since 2009, when it was €578 million.

This might reflect the reduction in public-sector employee numbers over the period due to an embargo on appointments by the Government.

Reduction in benefits
Mr Howlin said the gross cost of public-sector pensions is projected at €2.872 billion. This would represent an increase of €57 million on last year. No figures were provided for the expected pension contributions from public-sector workers for 2014.

Mr Fleming also questioned the minister about the savings achieved from the reduction in benefits paid to those drawing public-sector pensions. This includes payments to former taoisigh such as Bertie Ahern and Brian Cowen, former ministers and senior civil servants.

Mr Howlin said the cuts were expected to generate savings for the State of €114 million this year. This compares with €100 million in each of the past two years.

The so-called Public Service Pension Reduction was introduced on January 1st, 2011, and is an income-graduated reduction applied to each gross public service pension in excess of €12,000.

The reduction ranges from 6 per cent for those earning pensions of between €12,000 and €24,000 up to 20 per cent for those earning more than €100,000.

Last week, the Government gave effect to legislation that allows the remaining €6.8 billion from the National Pension Reserve Fund (NPRF) to be transferred to the Ireland Strategic Investment Fund to help stimulate growth in the economy.