EN ECB -PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 28 June 2013  
on pay and pension reforms  
(CON/2013/46 ) 
 
Introduction and legal basis  
On 27 May 201 3, the European Central Bank (ECB) received a request from the Irish Minister for Public 
Expenditure and Reform  (herein after ‘the Minister’) for an opinion on the Financial Emergency Measures 
in the Public Interest Bill 2013 (hereinafter  the ‘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 t he 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 provisions1, as the draft law relates to the Central B ank 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 law 
1.1 The draft law amends the Financial Emergency M easures in the Public Interest Act 2009  
(hereinafter the ‘2009 Act’) , which was introduced as part of the Government’s programme of 
measures to urgently address the serious position of the public finances, and which provided for 
deductions to be made from the remuneration of publ ic servants. The draft law provides for a 
further reduction in the remuneration of all public servants earning EUR  65 000 per annum or 
more. A public servant is defined in the 2009 Act as a person who is employed by, or who holds 
any office or other position in, a public service body. The CBI is explicitly defined as coming 
within the meaning of ‘public service body’. It follows, therefore, that the 2009 Act and the draft 
law apply to both employees and office holders of the CBI.  
1.2 The draft law also amends the Financial Emergency Measures in the Public Interest Act 2010 
(hereinafter the ‘2010 Act’) , the purpose of which was to reduce public service pension costs. It 
introduced the Public Service Pension Reduction (PSPR), under whic h a progressively structured 
levy-type is impos ed on Irish public service pensions greater than EUR  12 000 per annum. Public 
service pensions are defined as including pensions payable to or in respect of a public servant or 
former public servant under a pu blic service pension scheme. P ublic servant s are defined as  
                                                 
1  OJ L 189, 3.7.1998, p.  42. 
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2 person s who are employed by, or who hold  any office or other position in  a public service body , 
including the CBI, and includes an office holder. Both current and former e mployees and office 
holde rs of the CBI  come within the scope of application of the 2010 Act. The Financial Emergency 
Measures in the Public Interest (Amendment) Act 2011 (hereinafter the ‘2011 Act’) amended the 
2010 Act by introducing a provision pursuant to which the 2010 Act is to apply in respect of 
employees and office holders of the CBI only with its consent, given in writing to the Minister for 
Finance by the Governor, and with the consent of the Minister for Finance. The draft law provides 
for an increased reduction in respe ct of the PSPR for all public service pensions in excess of 
EUR  32 500. 
1.3 The draft law provides that , for a period of three years from 1  July 2013, increments will not be 
awarded and pay scales will be suspended in respect of public servants. This parti cular provision 
also applies  to any pay scale that is applicable  after 1  July 2013  in consequence of an appointment 
or a promotion  to a position,  but with the substitution for any reference to 1  July 2013 of a 
reference to the date of the appointment or pr omotion in question.  Groups or grades of public 
servants may be excluded from the effect of t his provision , or have its effects modified, in the event  
that a collective agreement, which has been registered with the Labour Relations Commission, is 
reached.  
1.4  Currently, the CBI  enjoys statutory autonomy in determining its staff policy , including 
remuneration, with the CB I’s officers and employees  subject to individual employment contracts 
and to collective bargaining agreements entered into between the CB I and staff representative 
groups . The measures provided for  in the draft law , as is the case with the 2009 Act and the 2010 
Act, represent a dep arture from th at regime in so far as the reductions proposed are to be imposed 
unilaterally.  
 
2. Non-compliance wit h the consultation obligation  
2.1 The ECB receiv ed the consultation request on 27 May 2013. The Irish  Parliament adopted the draft 
law on 6 June, and it came into force on the same date .  The consultation request does not 
specify a time by which the Irish authorities wished  to receive the ECB’s opinion, nor does it 
mention that it is urgent . The consultation request refer s to the fact that the draft law was being 
considered by the Irish Parliament at the time of the request . However, it fails  to mention whe n the 
Irish Parliament was scheduled to vote on the draft law . 
2.2 Article  4 of Decision 98/415/EC provides that  the ECB must be consulted ‘at an appropriate stage’ 
in the legislative process. It follows from this  that the consultation should take place at  a point in 
the legislative process that affords the ECB sufficient time to examine the draft legislative 
provisions  in question and adopt its opinion.  Follow ing from the wording of Article  3(4) of 
Decision 98/415/EC, Member States are obliged to suspend t he process for adoption of the draft 
legislative provision s pending receipt  of the ECB’s opinion in order to allow the relevant national 
authorities to meaningfully deliberate the ECB’s opinion prior to adoption of the provisions  in 
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3 question . In this respe ct, the ECB stresses that the fact that the enactment of a particular draft law is 
urgent does  not relieve national authorities of their obligation  to consult the ECB  and to allow 
sufficient time for its views to be taken into account in accordance with De cision 98/415/EC. The 
Irish Government should have postponed the final vote on the draft law until such time as would 
have allowed for a proper consultation with the ECB, as well as due consideration of the ECB ’s 
Opinion. The ECB would appreciate it if the consulting authority  would honour its obligation to 
consult the ECB in due time in the future.  
 
3. General observations  
The ECB welcomes the general aims of the draft law  in the context of the ongoing efforts to stabilise 
public finances . 
 
4. Central bank  indep endence  
4.1 As the draft law applies  to and directly affect s the CB I’s decision -making bodies and its 
employees , it should be examined from the perspective of central bank independence, in particular 
institutional and financial independence, as well as tha t of the personal independence of the 
members of the CB I’s decision -making bodies.  
4.2 The principle of central bank independence  as enshrined  in Article 130 of the Treaty prohibits third  
parties, including the governments of the Member States, from issuin g instructions to the national 
central banks (NCBs). In addition , the principle of central bank independence means that third 
parties may not influence , direct ly or indirect ly, an NCB  in the performance of its tasks or as 
regards its ability to fulfil its mandate  both operationally in terms of manpower, and in terms of 
appropriate  financial resources2. 
Financial independence  
4.3 Member States may not interfere with  an NCB’s ability to employ and retain the qualified staff 
necessary for the NCB to perform in dependently the tasks conferred on it by the Treaty and the 
Statute  of the European System of Central Banks and of the European Central Bank . To protect 
autonomy in staff matters , the ECB has consistently recommended in previous  opinions and in its 
converg ence reports that any amendment to legislati on on remuneration for members of an NCB’s 
decision -making bodies and its employees should be decided in close and effective cooperation 
with the NCB, taking due account of its views, to ensure the ongoing abilit y of the NCB to 
independently carry out its tasks . Autonomy in staff matters extends to issues relating to staff 
pensions3. 
                                                 
2  See, for example, the ECB’s Convergence Report 2013, p. 30, and paragraph 6 of Opinion CON/2012/89 . All ECB 
documents are published  on the ECB’s website at www.ecb.europa.eu.  
3  See the ECB’s Convergence Report 2013, p. 33  and the reference to ECB opinion s made there . 
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4 4.4 Given that the CBI’s  employees are employ ed under the  conditions (including conditions as to 
remuneration and allowances) set by  the Central Bank Commission4, in order to protect the CBI’s 
autonomy in staff matters , legislative provisions affecting the remuneration of members of the 
CBI’s decision -making bodies and employees  should be drafted in close and effective cooperation 
with the CBI5. The ECB understands that a first step has been made in terms of such cooperation 
since the CBI’s Governor has been consulted on the draft law.  
4.5 As regards the pension -related deductions applicable to the CBI’s officers and employees , the ECB 
notes that Section 1A of the 2010 Act, as inserted by the 2011 Act, requires the Minister to obtain 
the written consent of the CBI’s Governor in respect of reductions to pensions of former CBI 
employees and office holders.  
Personal independence of members of the CBI’s decision -making bodies  
4.6 Furthermore, Member States may not seek to influence the members of an NCB’s decision -making 
bodies by amending national legislation affecting their remuneration which  legislation , as a matter 
of principle, should ap ply only in res pect of  future appointments6. The draft law applies  not only to 
the CBI’s decision -making bodies but also more generally to all public servants  in Ireland  who 
come within its scope and, as such , does not  seek directly or indirectly to influe nce the CBI’s 
decision -making bodies in the performance of their tasks. The provisions will therefore be 
considered compatible with the principle of personal independence, as long as the abovementioned 
requirements in respect of the principle of financial independence are taken into account7. 
 
This opinion will be published on the ECB’s web site. 
 
 
Done at Frankfurt am Main, 28 June 2013 . 
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
4  See section 6D of the Central Bank of Ireland  Act 1942, as inserted by section 7 of the Central Bank and Financial 
Services Authority of Ireland A ct 2003  and as amended . 
5  See also Opinion CON/2012/89 and paragraph  2.6 of Opinion CON/2013/41 . 
6  ECB Convergence Report June 2013 , p. 27.  
7  See also paragraph  3.2.10 of Opinion CON/2010/80 .