Sir, - Stephen Collins implies that only the private sector has been subject to reduced pensions (Opinion, November 3d). This is simply not the case.
The Financial Emergency Measures in the Public Interest Act of 2010 reduced public service pensions in payment by up to 12 per cent with effect from January 1st, 2011. Last year, arising from my concern about large public service pensions, I amended this legislation to increase the reduction on pensions over €100,000 to 20 per cent. My firm legal advice from the Attorney General was that I could go no further than that. The Top Level Appointment Committee terms governing the pensions for the highest paid public servants, those who have taken the largest pay reductions with consequences for pensions, have also been cut further. Following the expiry of the pension grace period in February, existing public servants, including politicians and ministers will have their pensions calculated on the basis of their reduced salaries, a measure which reduces the pension by up to 25 per cent for the highest earners.
It is not correct to suggest that "scant regard" has been paid to the future cost of public service pensions, since last year the Oireachtas passed the Public Service Pensions (Single Scheme and Other Provisions) Act. That changes the calculation of public services pensions for new entrants from the current position based on final salary to a career average basis - a move that will considerably affect those who retire on higher salaries. The scale of the reduction in future cost to the taxpayer as a result of the new scheme is significant. It had been estimated that expenditure on public service pensions would rise in the coming decades to about €5,000 million a year using constant prices - the introduction of the new scheme will reduce that cost by €1,800 million a year. The 2009 estimate of €114 billion referred to in Stephen Collins's article, which is an estimate of the aggregated, not annual, public service pension liability, does not factor in pay cuts since 2009 and includes estimates of built-in inflation rises which have not taken place either.
It is fair to mention the increase in the size of the public service pensions bill (though this is a factor of demographics and little else) but only if you mention the considerably higher reduction in the public service pay bill. All of the above focuses on pre-tax income levels.
Given that people cannot spend notional pre-tax income we need to look at the larger picture. In the case of public servants, the marginal rate of reduction on salaries - including income tax, USC, the pension-related deduction and social insurance - is over 60 per cent.
By all means let's have a debate on this issue, but at least let it be a balanced debate. - Yours, etc,