I seek the approval of the Select Committee on Finance and the Public Service for a Supplementary Estimate of €65 million for Vote 7, bringing the net total Vote for 2009 to €333.735 million. This Supplementary Estimate of €65 million is to provide for the excess expenditure on the Vote arising from the significant increase in retirements of civil servants this year. The total number of established and unestablished pensioners has risen by 95% to date compared with 2008. The rise is due to an increase in normal retirements and those retiring under the incentivised scheme of early retirement.
It is likely the initial surge in retirements earlier in 2009 was due to the announcement in the supplementary budget in April that the Commission on Taxation was examining various aspects of pension tax treatment, including the treatment of lump sums, and that its recommendations were likely to be dealt with in the 2010 budget in December. The introduction of the incentivised scheme of early retirement also gave rise to a further increase in numbers retiring. Perceptions about future salary levels may also affect decisions to retire. In addition, the rise in retirements may be associated with the reduction in public service net salaries resulting from the pension-related deduction, or levy, as it is more commonly called.
To date approximately 1,000 civil servants have applied for early retirement under the incentivised scheme. It is estimated that some 960 will retire under the ISER this year, while the remainder will retire next year. The cost of the scheme in 2009 is estimated to be of the order of €12 million, for which no provision was made in the 2009 Estimates. There will be off-setting savings in salaries that over time will reduce the net cost to the Exchequer.
The subheads principally affected by the increased numbers of pensioners are subhead A, concerning superannuation allowances, compensation allowances, pensions and certain children's allowances. Subhead D concerns additional allowances and gratuities in respect of established officers and payments in respect of transferred service, namely, lump sums, death gratuities and marriage gratuities. The first heading related to the pensions of retired established civil servants, the second subhead relates to the payment of lump sums, death gratuities and marriage gratuities in respect of established civil servants. It also includes payments to public sector organisations in respect of the scheme for the transfer of pensionable service.
The third and final subhead, E, provides for the payment of pensions, lump sums, death gratuities and spouses' pensions in respect of unestablished civil servants.