Pension Implications – Budget 2010

By Deputy General Secretary

The Minister for Finance in his Budget 2010 speech outlined a number of measures in relation to Adjustments to Public Service Pay and Pensions and Public Service Pension Reform.

 Adjustments to Public Service Pay and Pensions:

In relation to pensions, the Minister for Finance made the following two important statements:

1.         In order to avoid a destabilising rate of retirement among older public servants, the pension entitlements of those retiring in 2010 will not be affected.

 2.         I accept the Commission on Taxation’s recommendation that pension lump sums below €200,000 should not be taxed.

 This means that members of PDFORRA who retire on pension during 2010 will not suffer any reductions in their Pension and Gratuity entitlements.  However, it is important to note that we are unable to advise what changes may occur going forward from 2011.

 Public Service Pension Reform:

In relation to Public Service Pension Reform, the Minister for Finance made the following two important statements:

1.         The Government has decided to introduce a new single pension scheme for all new entrants into the public service.  The legislation will be introduced in 2010 and the scheme will be in place by the end of the year.  Among other things, it will change the calculation of benefits so that pensions are based on ‘career average’ earning rather than final salary on retirement as at present

 2.         As part of the reform of public service pension arrangements, I will review the current arrangements and consider linking pensions to increases in the cost of living.  Pending that review, I do not intend to apply the pay cuts I have already outlined to existing public service pensioners.

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