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Pension Increase Policy


Pension increase policy in the public service refers to the upward adjustment (increase) of those pensions in payment that have been awarded under pre-existing public service pension schemes. It does not cover the post-retirement adjustment of pensions awarded under the Single Scheme.

Post-retirement increases to pensions in payment awarded under pre-existing public service pension schemes are generally not provided for under pension scheme rules, and therefore there is no guarantee or entitlement to such increases. A policy of increasing public service pensions in payment developed incrementally from the 1960s onwards as part of pay negotiations with public service trade unions.

Section 29(2) of the Pension Increase Act 1964 provides that the Minister for Public Expenditure, NDP Delivery and Reform may make regulations to provide for increases in public service pensions in payment. Such increases are awarded at the discretion of the minister.

Pay parity

In the past, the occupational pensions of public service pensioners were generally adjusted in line with changes applying to the wages or salary of the pensioner's grade at retirement. This method of increasing public service pensions in payment is known as ‘pay parity’. There is no statutory entitlement to the pay parity method of pension adjustment. The 1964 Act which gives discretion to the minister to grant pension increases, does not prescribe what form those increases should take, or how they should be calculated.

Although the pay parity method has historically been used to adjust public service pensions in payment, this non-statutory link to pay lapsed in 2010, when the values of pensions in payment were left unchanged notwithstanding salary cuts at the beginning of that year which affected all public servants under the financial emergency legislation.

2017-2023: PSSA, Building Momentum

In 2017, the government agreed a policy on increasing public service pensions in payment for the period to end-2020, as part of its commitments under the Public Service Stability Agreement 2018-2020 (PSSA).

Under this policy, which applied for the period 1 September 2017 to 31 December 2020, pay increases granted to serving staff were passed on to those pensions awarded under pre-existing public service pension schemes where the salary on which the pension was based did not exceed the salary of serving staff with the same grade and scale point, after the pay increase had been applied. If it qualified, the pension was eligible for an increase to the extent that this would ensure alignment with the pay of equivalent serving staff.

This approach took account of the differentiation of pensioner cohorts between pre-and post-end February 2012 retirees, and was intended to deal with the complexities of unwinding the FEMPI pay-related provisions.

This pension increase policy was extended when sanction was given for the pay increases granted under ‘Building Momentum - A New Public Service Agreement 2021-2022’ to be passed through to eligible pensions (Circular 10/2021), and further continued to end-2023, in line with the extension to Building Momentum for the same period.

Pension increases in Commercial Semi-State Bodies

Pension increases in the wider public sector, which is generally understood as including Commercial Semi-State Bodies, are subject to different arrangements and generally require the approval of the relevant line minister and the consent of the Minister for the Department of Public Expenditure, NDP Delivery and Reform.

Further information is available on pension increases in Commercial Semi-State Bodies here.

Single Scheme

Pensions awarded under the Single Public Service Pension Scheme (‘Single Scheme’) are uprated annually in-line with the changes in the Consumer Price Index (CPI). Further information can be found on the Single Scheme website.

Public Service Pension Reduction (PSPR)

The Public Service Pension Reduction (PSPR) was a progressive reduction imposed on public service pensions in payment, which exceeded applicable exemption thresholds and applied during the period of the financial emergency. PSPR did not alter the gross value of public service pensions in payment. Instead, it applied by way of temporary reduction in the pay-out value of the impacted pension.

As PSPR was lessened and removed, the pay-out value of impacted pensions in payment increased. This was not a ‘pension increase’, but restoration of the impacted pension to its original amount. Pension increases involve application of an upward adjustment to the gross value of the public service pension.

Further information on PSPR is available here.

Supporting information