EN ECB-PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 26 January 2012 
on pension reforms in the public sector 
(CON/2012/6) 
 
Introduction and legal basis  
On 20 December 2011, the European Central Bank (ECB)  received a request from the Irish Minister for 
Public Expenditure and Reform for an opinion on two drafts laws which amend the current and future pension arrangements for public servants in Ireland:  the Financial Emergency Measures in the Public 
Interest (Amendment) Bill 2011 (hereinafter the ‘FEM PI draft law’) and the Public Service Pensions 
(Single Scheme) and Remuneration Bill 2011 (hereinafter the ‘PSPR draft law’).   
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions
1, as the draft law relates to the Central Ba nk of Ireland (CBI). In accordance with 
the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing 
Council has adopted this opinion.  
 1. Purpose of the draft laws 
1.1 PSPR draft law  
The PSPR draft law will create a new single pub lic service pension scheme (hereinafter the 
‘Scheme’) for newly recruited public servants. The ECB understands that the Scheme will not affect existing public servants, who will remain members of their current sector-specific schemes. 
The ECB further understands that the features of the Scheme include a career-based average rather 
than final salary basis for pension awards
2, the adjustment of accrued benefits and pensions in line 
with inflation rather than remuneration3 and a higher minimum pension age4. The Scheme is one of 
the commitments under the financial assistance programme agreed between the Minister for 
Finance, the European Commission, the ECB and the International Monetary Fund, to implement 
                                                     
1  OJ L 189, 3.7.1998, p. 42. 
2  Section 19 of the PSPR draft law.  
3  Section 39 of the PSPR draft law.  
4  Sections 13 and 14 of the PSPR draft law.  
ECB-PUBLIC 
2 fiscal consolidation and expenditu re reduction in public finances5. The PSPR draft law provides 
that the Scheme will apply to newly appointed public servants of ‘public service bodies’. The CBI is included in the definition of ‘public service body ’, but the PSPR draft law stipulates that future 
CBI staff may only be members of the Scheme to th e extent provided for in a written consent to the 
Minister by the CBI’s Governor and by the Minister for Finance.  
1.2 FEMPI draft law  
The FEMPI draft law will amend the Financial Em ergency Measures in the Public Interest 
Act 2009 (hereinafter the ‘2009 Act’) and the Financial Emergency Measures in the Public Interest (No 2) Act 2009 (hereinafter the ‘2009 No 2 Act’), which reduced the remuneration of certain public servants, including CBI staff. These amendments mainly extend the reductions to members 
of the judiciary, following a recent constitutional referendum. The FEMPI draft law also amends 
the Financial Emergency Measures in the Public Interest Act 2010 (hereinafter the ‘2010 Act’), 
which reduced the pensions of certain public servants. The 2010 Act included the CBI within the definition of ‘public service body’ to which the pe nsion reductions were to apply. The FEMPI draft 
law amends the 2010 Act so that the CBI’s Govern or, along with the Minister for Finance, must 
consent in writing to the Minister before the pension reduction may be applied to CBI pensioners. The 2009 Act, the 2009 No 2 Act and the 2010 Act were introduced in the context of the 
stabilisation of public finances in Ireland. 
 
2. Observations on the PSPR draft law 
The ECB notes that the PSPR draft law has pote ntial implications for the CBI’s financial 
independence, in particular its au tonomy in staff matters , which is part of the principle of central 
bank independence under Article 130 of the Treaty . Autonomy in staff matters extends to issues 
relating to staff pensions. As stated in th e ECB Convergence Report 2010 and several ECB 
opinions
6 on issues concerning autonomy in staff ma tters, the principle of financial independence 
requires that a Member State does not impair the abil ity of its central bank to employ and retain the 
qualified staff necessary to perform independently  the tasks conferred on it by the Treaty, the 
Statute of the European System of Central Banks and of the European Central Bank  (hereinafter 
‘the Statute of the ESCB’) and national legislatio n. In addition, a Member State may not put its 
NCB in a position where it has limited or no control over its staff, or where the Government of that 
Member State can influence its policy on staff matters.  
As already stated in ECB Opinion CON/2009/15 on the draft 2009 law, the ECB reiterates that to 
protect the CBI’s autonomy in staff matters, the Irish authorities are under an obligation to ensure 
                                                     
5  See Ireland Memora ndum of Understanding on specifi c economic policy conditionality,   28.11.2011, p. 3, available on 
the Commission’s website at www.ec.europa.eu.  
6  See Opinions CON/2008/9, CON/2008/10, CON/2009/15, CON/2009/45, CON/2009/47, CON/2010/42, CON/2010/51, 
CON/2010/56, CON/2010/58, CON/2010/59, CON/2010/69 and CON/2010/80 . All ECB opinions are published on the 
ECB’s website at www.ecb.europa.eu. 
ECB-PUBLIC 
3 that the Scheme’s application to future CBI staff is decided by the Irish authorities in cooperation 
with the CBI7, taking due account of the CBI’s views, and such cooperation must ensure the 
ongoing ability of the CBI to perform independently  the tasks conferred on it by the Treaty, the 
Statute of the ESCB and national legislation. The ECB welcomes section 6(1)(a) of the PSPR draft 
law, which provides that the Scheme will only apply to the CBI ‘to the extent provided for in a consent,  given in writing to the Minister by the Govern or of that Bank’. Such wording would allow 
the Governor, on behalf of the CBI, to take into  account the particularities of the CBI’s own legal 
framework and special legal regime and any other re levant considerations, in particular obligations 
arising under the Treaty, in formulating the form and extent of the Governor’s consent or dissent to the application of the Scheme to future CBI staff. Moreover, assuming that the Governor’s consent 
has been given, the consent should be required also in the future when there is a significant change 
to the consented Scheme to ensure the ongoing ab ility of the CBI to perform independently the 
tasks conferred on it by the Treaty, the Stat ute of the ESCB and national legislation. 
The ECB understands that section 30(1)(a) of the PS PR draft law indicates that the calculation and 
payment of any pension benefits under the Scheme to  future CBI staff will be a function of the CBI 
on the Governor’s consent. The ECB would welcom e clarification in the PSPR draft law that, in 
this context, the term ‘function’ means that the CBI will in the first instance be responsible for 
funding, calculating and paying pension benefits to future CBI staff to the extent of the Governor’s consent.  
The ECB understands that section 16(4) and 16(5) provides that the Minister may require the CBI 
to make contributions to the Scheme in respect of  its Scheme members and that such contributions 
will be paid, and collected and disp osed of for the benefit of the Exchequer, by the CBI in such 
manner as the Minister may direct. The ECB further understands that the Minister may recover 
amounts due from the CBI where the CBI fails to dispose of such contributions in accordance with the Minister’s directions under section 16(5) and th at Minister may apply to the High Court for an 
order directing the CBI to (i) comply with the Mini ster’s or the Court’s directions, and (ii) make 
good any shortfall in contributions collected. To  ensure full compliance with the prohibition on 
monetary financing under Article 123 of the Treaty
8 and the CBI’s financial independence, the 
ECB would welcome clarification in the PSPR draft law that (i) in no event will CBI resources be 
applied towards the funding or payment of pension contributions or benefits for future, non-CBI 
public servants under the Scheme, and (ii) th e CBI will in no event assume or finance any 
obligations of any other public service body or the Minister in relation to such pension 
contributions or benefits for future, non-CBI public servants under the Scheme. 
                                                     
7  See also paragraph 3.2.2 of ECB Opinion CON/2010/80 which establishes the parameters of an effective cooperation.  
8  Further clarified in Council Regulation EC (No) 3603/93 of 13 December 1993 specifying definitions for the application 
of prohibitions in Article 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1), according to which overdraft 
facilities or any other type of credit facility with the ECB or the national central banks of Member States in favour of 
Community institutions or bodies, central governments, regional , local or other public authorities, other bodies governed 
by public law, or public undertakings of Member States are prohibited, as is any purchase directly from these public 
sector entities by the ECB or national  central banks of debt instruments. 
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4  
3. Observations on the FEMPI draft law 
The 2010 Act aimed at reducing public service pension costs by introducing the Public Service 
Pension Reduction (hereinafter the ‘PSPR’). It imposed from 1 January 2011 a progressively-structured levy-type imposition on Irish public service pensions greater than EUR 12 000 per annum. The CBI was included within the definition of ‘public service body’ in the 2010 Act and 
therefore the PSPR was intended to apply to CBI pensioners in the same way as public service 
pensioners generally. Section 8 of the FEMPI draf t law will amend this provision so that the PSPR 
will only apply to the CBI with the written consent to the Minister by the Governor of CBI and the 
Minister for Finance. The Minister must then publish a notice that such consents have been given 
and stating the date from which the 2010 Act (and consequently the PSPR) will apply to CBI 
pensioners. 
As referred to under 2 above, to protect the CBI’s  autonomy in staff matters, any pension-related 
deductions applicable to the officers and employ ees of the CBI in view of the current difficult 
economic circumstances should be decided in cooperation with the appropriate decision-making 
bodies of the CBI taking due account of their views. As in the case of the PSPR draft law, the ECB welcomes the requirement for a sp ecific ‘consent’ from the CBI be fore the PSPR will apply to CBI 
pensioners.   
 
This opinion will be published on the ECB’s website.   
 
Done at Frankfurt am Main, 26 January 2012. 
 
[signed] 
 
The Vice-President of the ECB 
Vítor CONSTÂNCIO