Public Service Pension Reduction (PSPR)

Original Introduction of PSPR:

PSPR was originally introduced for all pensions of persons who retired before 1 March 2012:

PSPR was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act 2010 (“FEMPI 2010”)

It cut pensions then in payment, along with new pensions awarded until the expiry, at end-February 2012, of the 2010–2012 “grace period”.

During that grace period new retirement pensions were, exceptionally, awarded by reference to higher salaries than the retirees actually earned (being the salaries paid just before the public service pay cuts of January 2010).

Original PSPR rates for Public Servants retiring before 1 March 2012:

NOTE: The band-specific reduction rates refer to the slices of income in each band; they do not apply to the whole pension.

Changes and increases in PSPR, (“FEMPI 2013”)

With effect from 1^st July 2013, the government introduced a second FEMPI Act, which focused especially on higher value public service pensions.

The PSPR on pensions of up to €34,132 remained the same, but further PSPR increases on pensions over this amount were introduced.

PSPR applicable from 1 July 2013 on pensions over €34,132:

Public Servants retiring on or after 1 March 2012

Pensions awarded after 1 March 2012 were originally exempt from PSPR, since they were based on the reduced salary once the grace period expired.

However, in 2013, The government introduced a second FEMPI Act, (“FEMPI 2013”) in which PSPR was deducted from pensions of those who had retired on or after 1 March 2012 and whose pensions exceeded €32,500. The PSPR rates are set out below:

PSPR rate for retirees post 1 March, 2012:

Pensions under €32,500:

Exempt: no deduction of PSPR

Pensions over €32,500:

PSPR applicable from 1 July 2013 to 31 December 2015:

NOTE: The band-specific reduction rates refer to the slices of income in each band; they do not apply to the whole pension.

Financial Emergency Measures in the Public Interest Acts 2009 – 2016 (FEMPI)

Beginning in 2009, in order to deal with the financial emergency, governments of various hues introduced measures to reduce public salaries and pensions. These measures were meant to be temporary and it was envisaged that there would be salary and pension restoration as financial conditions improved.

The process of restoration of pensions began with effect from 1 January 2016 and is still ongoing. It is due to be completed by 1 January 2018.

Two distinct classes of public pensioner exist for FEMPI purposes – persons who retired before 1 March 2012 and those who retired after that date on reduced salaries. The first group is subject to greater reductions in pension, since having retired before the end of the grace period, pension is calculated on the pre FEMPI salary cuts. The present position is that some of them will still be subject to reductions even after “restoration” has taken place.

Partial Reversal of PSPR and Pension Restoration

The FEMPI Act of 2015 initiated the partial reversal of the PSPR which had applied from 2010. Those retiring before 1 March 2012 and those retiring after that date, are treated differently, since the latter group retired on the reduced salary.

(a) Public Servants who retired before 1 March 2012:

Partial Reversals of PSPR: (“FEMPI 2015”)

A new FEMPI Act was introduced in late 2015, which began a reversal of the PSPR on all pensions. Again, Pensions up to €34,132 were treaded differently to those over that amount. The PSPR thresholds are being raised in three phases – on January 01, 2016, 2017 and 2018, as follows:

Pensions up to €34,132:

I January 2016:

I January 2017:

I January 2018:

Pensions over €34,132

I January 2016:

I January 2017:

I January 2018:

1 January 2019:

Pensions up to €39k – Exempt

Pensions €39k to €60k – 12% reduction

The effect of PSPR on pensions  is that a 12% PSPR will still apply on all pension over €39,000 and under €60,000.

1 January 2020:

Pensions up to €54k: Exempt

Pensions €54k t0 €60k: 12%

The effect of PSPR on pensions is that a 12% reduction will apply on pensions over €54,000 and less than €60,000.

For retired teachers, this amounts to full pension restoration.

(b) Public Servants who retired on or after 1 March 2012:

Partial Reversals of PSPR: (“FEMPI 2015”)

A new FEMPI Act was introduced in late 2015, which began a reversal of the PSPR on all pensions. Again, pensions up to €32,500 were treated differently to those over that amount. PSPR does not apply to pensions of €32,500 or less. The PSPR thresholds on pensions over €32,500 are being raised in three phases – on January 01, 2016, 2017 and 2018, as follows:

I January 2016:

I January 2017:

I January 2018:

In effect, after 1 January 2018, no teacher who retired after 1 March 2012 will have PSPR deducted from pension.