I thank the Minister of State for taking this matter. Many anomalies arise in respect of the infamous pensions levy. My understanding is somebody who works in the private sector and is a retained firefighter does not pay any pension levy by virtue of the amount they earn as a retained firefighter. A person who is self-employed and a retained firefighter will pay 4.5% in a pensions levy. However, if one is employed by a local authority as a semi-skilled worker, one pays 10% in a pensions levy on one's wages and 10% as a retained firefighter, which is a huge chunk to take from a working family's wages. Many such individuals are now struggling with both the pensions levy and the universal social charge, USC. I note the welcome changes to the USC announced in the budget, on which the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, is to be complimented. Crucially, however, in all cases of retained firefighters paying a pensions levy, they still do not qualify for a pension. I note members of the Garda took and lost a court challenge on the subject of the pensions levy. They lost it on the grounds they actually were paying into a pension fund, which is why they continue to pay the pensions levy. However, the retained firefighters are not paying into a pension fund but are paying a pensions levy. Therefore, I call for the abolition of the pensions levy in this instance and believe it is in the gift of the Minister to so do.

I thank the Senator, on behalf of my colleague, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, for raising this important matter.

The public service pension-related deduction, sometimes referred to as the pensions levy, applies to the pay of pensionable public servants. However, it is not a pension contribution. The measure was introduced as an emergency measure in 2009 to effect a reduction in the remuneration paid to public servants, including retained firefighters, as a contribution to the necessary reduction in public service expenditure brought about by the financial crisis at the time.

The measure is progressive in that the reduction applied is directly related to the amount of remuneration paid, with those earning more being subject to the greater reduction. The first €15,000 of remuneration paid is exempt from reduction.

The specific law underpinning the pension-related deduction is the Financial Emergency Measures in the Public Interest Act 2009, as amended. That Act provides that the pension-related deduction is to apply to the pay, including any non-pensionable pay elements, of public servants who are pensionable. In this connection, the term "pensionable" is defined in terms that give it a broad reach. It includes not just membership of a public service pension scheme but also any payment in lieu of such membership. I understand from the Minister for the Environment, Community and Local Government that retained firefighters have historically qualified on retirement for a one-off, non-recurring gratuity calculated at one eighth of their annual retainer payment multiplied by the number of years of actual service up to a maximum of four times the annual retainer. To qualify for the gratuity, a retained firefighter must have a minimum of two years service. The maximum gratuity payable is four times that of the annual retainer and retained firefighters do not pay any contribution to that gratuity.

Retained firefighters in place in 2008 and those hired thereafter until the end of 2012 were given the option of joining the local government superannuation scheme and receiving a pension and retirement lump sum based on their pensionable remuneration and length of service. All retained firefighters appointed after 1 January 2013 must join the single public service pension scheme. Section 2(1)(b) of the Financial Emergency Measures in the Public Interest Act 2009 provides that any public servant who is a member of a public service pension scheme or who is entitled to benefit under such a scheme or receives a payment in lieu of membership of such a scheme is subject to the deduction. The payment of the one-off gratuity at retirement to retained firefighters who are not members of the superannuation scheme constitutes a payment in lieu of membership of the pension scheme and, as such, all retained firefighters, regardless of whether they are members of the public service pension scheme, are subject to the deduction.

I will address the recently announced plans by the Minister for Public Expenditure and Reform for the reduction of the pension levy as it applies to all public servants, including retained firefighters which, I am sure, will be good news and welcomed by the retained firefighters, when the Senator has had a chance to respond.

The Senator may ask a brief supplementary.

In the first sentence of his response the Minister of State said "the public service pension-related deduction, sometimes referred to as the pensions levy, applies to the pay of pensionable public servants." As stated, they do not pay into a pension fund. I appreciate that they receive a gratuity. It is a one-off payment and not a pension. There is a difference. They were still entitled to that gratuity prior to the introduction of the pensions levy, as an emergency measure, in 2009. As matters are improving, consideration should be given in these cases to exempting retained firefighters. I would appreciate it if the Minister of State could bring this matter to the Minister for Public Expenditure and Reform and ask him to re-examine it. Gardaí took a case which they lost purely because they were paying the pensions levy. Being assured of a gratuity is different. If a case was taken to the courts in this instance, what would be the outcome? I would appreciate whatever the Minister of State can do to improve the lot of retained firefighters. When a guy is working with a local authority, pays 10% on his wages - €28,000 or €29,000 - and then receives another €16,000 as a firefighter on which he has to pay 10%, it is a heavy burden on families.

I agree fully with the Senator that it is a heavy burden on families. The Minister for Public Expenditure and Reform and the Government are very eager to reduce that burden. I concur with the Senator. He quoted the first sentence of my response. I reiterate that, in legislation, the term "pensionable" is defined as not just membership of the pension scheme but also any payment in lieu of such membership. Without being technical about it, that is the legal basis and why the position is as it is.

As the economy grows, the absolute priority of the Minister and the Government is to reduce the burden on public servants. We all know the very positive impact that retained firefighters have in all communities throughout the country. The agreed proposals brought forward by the Minister - they are in line with the Lansdowne Road agreement and will be subject to the enactment of the recently published Financial Emergency Measures in the Public Interest Bill 2015 - will provide for a significant reduction in the PRD burden on all public servants, including retained firefighters. This follows on from a more modest reduction in the rates applicable, which were agreed to under the terms of the Haddington Road agreement which was implemented in January 2014. The new Bill with which we will debate shortly in this and the Lower House and which we will, I hope, pass into law, provides that the threshold for annual earnings below which the pension-related deduction will not be applied will increase from its current level of €15,000 to €26,083 per year on 1 January 2016 and to €28,750 per year on 1 January 2017.

This substantial relaxation of the pension-related deduction, as proposed in the new FEMPI Bill, will mean significant income gains for all affected public servants and, more particularly, ensure a significant proportion of public servants will be fully exempt from the pension-related deduction by 2017. Many retained firefighters would be expected to be among those exempt entirely from the pension-related deduction in this way, assuming their only public service remuneration consists of their retained firefighter earnings and that they are not simultaneously working in other public service jobs.

The message from the Minister and the Department of Public Expenditure and Reform and the Government is that as the economy has continued to improve, we are now in a position to reduce the burden. If the legislation is passed, the threshold will be increased this January from €15,000 to over €26,000 and from January 2017 to €28,000, which will remove many public servants, including many retired firefighters, from the PRD net, which I am sure will be welcomed by all.