Opinion of the European Central Bank of 24 February 2009 on a draft Financial Emergency Measures in the Public Interest Bill 2009 (CON/2009/15)
Date: 2009-02-24
Institutions: European Central Bank
Subjects: Ireland, central bank, national law, public service employee, remuneration of work

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 24 February 2009  

on a draft Financial Emergency Measures in the Public Interest Bill 2009 

(CON/2009/15) 

Introduction and legal basis 

On 18 February 2009 a draft ‘Financial Emergency Measures in the Public Interest Bill 2009’ (hereinafter 

the  ‘draft  law’)  was  published  by  the  Irish  Minister  for  Finance  (hereinafter  ‘the  Minister’)  for  its  first 

stage reading before the Dáil Éireann, the lower house of the Oireachtas (the National Parliament). The 

second  stage  debate  on  the  draft  law  took  place  in  the  Dáil  Éireann  on  19  February  2009.  Specific 

amendments  are  due  to  be  considered  by  the  relevant  committee  of  the  Houses  of  the  Oireachtas 

(Dáil Éireann and Seaned Éireann) on 24 February 2009 with final adoption expected by both Houses the 

following day. 

The competence of the European Central Bank (ECB) to deliver an opinion is based on Article 105(4) of 

the Treaty establishing the European Community 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 Bank and Financial Services 

Authority of Ireland (hereinafter ‘the Central Bank’).  

In  particular,  the  draft  law  proposes  to  deduct  up  to  10%  from  the  remuneration  of  public  servants 
accruing  from  1  March  20092,  including  employees  of  the  Central  Bank.  In  the  light  of  the  above  and 

considering the direct implications of the abovementioned provisions for the Central Bank, the ECB has 

decided to submit this own-initiative opinion, with a view to assisting in the ongoing legislative procedure 

by commenting on specific provisions. 

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  proposes  to  deduct  up  to  10 %  from  the  remuneration  of  public  servants  accruing 

from 1 March 2009. For the purposes of the draft law, a public servant is defined, inter alia, as a 

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2  

OJ L 189, 3.7.1998, p. 42. 
Section 2(3) of the draft law. Where the amount of remuneration of a public servant from 1 March to 31 December 2009 
or  any year  beginning  in  2010  is  over  €20  000,  the  rate  of  de duction  is  10 %.  The  rate  of  deduction  is  3 %  where  the 
amount of remuneration is up to €15 000 and 6 % where the  amount is in excess of €15 000 but not over €20 000.  

 
 
 
 
                                                 
person who is employed by, or who holds any office or other position in, a public service body3. 
The  draft  law  includes  the  Central  Bank  within  its  list  of  public  service  bodies4.  Under  the  draft 

law, the deduction is to be made by the person responsible for, or who authorises, the payment of 
remuneration5, which in the case of the Central Bank’s officers and employees is the Central Bank. 

In  addition,  the  deductions  are  to  be  made  in  accordance  with  regulations  to  be  issued  by  the 

Minister  for  the  purposes  of  the  calculation,  making,  collection,  disposal  and  recovery  of  such 

deductions  (including,  for  instance,  regulations  addressing  the  manner  in  which  and  the  periods 

within  which  deductions  are  to  be  made  and  paid  into  or  disposed  of  for  the  benefit  of  the 
Exchequer)6. The draft law further requires the deductions made to be paid into or disposed of for 

the benefit of the Exchequer in accordance with the directions of the Minister or otherwise paid or 
disposed of as the Minister may direct7. 

1.2  The draft law has been introduced in the context of the priority being given to the stabilisation of 

public finances in Ireland. To that effect, the Minister has announced that the draft law introduces 
provisions  to  give  effect  to  a  pension  related  deduction  for  the  public  service8.  The  deductions 

under the draft law therefore apply to public servants who on 1 March 2009 or any time afterwards 

are a member of a public service pension scheme, are entitled to a benefit under such a scheme, or 
receive  a  payment  in  lieu  of  membership  in  such  a  scheme9.  For  this  purpose,  a  public  service 

pension scheme is defined to include an occupational pension scheme or pension arrangement for 

any part of the public service which is made by a relevant Minister or has been approved or requires 
the  approval  or  consent  of  a  relevant  Minister10.  Under  the  Central  Bank  Acts,  the  Central  Bank 

may  establish  and  operate  one  or  more  superannuation  schemes  under  which  superannuation 

benefits are payable on the retirement or death of persons. However, such a scheme does not take 
effect until it has been approved by the Minister11.   

1.3  The draft law exempts from the definition of ‘public service bodies’ 22 bodies whose officers and 
employees are subject to the deductions12. The Explanatory Memorandum to the draft law indicates 

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Section 1(a) of the draft law. 
Section 1(d) of the draft law. 
Section 2(3) of the draft law. 
Section 2(4) and Section 3 of the draft law. 
Section 4(1) of the draft law. 
Available on the Department of Finances’ website at www.finance.gov.ie. 
Section 2(1) of the draft law. 
Section  1  of  the  draft  law.    The  Central  Bank  and  Financial  Services  Authority  of  Ireland  Superannuation  Scheme 
received approval of the Minister on 8 April 2008 under S.I. No. 99 of 2008. 
Section 33AG(2) of the Central Bank Act 1942. A superannuation scheme established by the Central Bank is required to 
be embodied in rules made by the Central Bank. Such rules are required to be laid before each House of the Oireachtas 
(National Parliament) as soon as practicable after they are made, and if either House, within the 21 days on which it has 
sat after the rules are laid before it, passes a resolution annulling the rules, the rules are accordingly annulled, but without 
affecting  the  validity  of  anything  previously  done  under  them.  See  Section  33AG(3)  and  (7)  of  the  Central  Bank 
Act 1942. 
See the Schedule to the draft law. 

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that the public service bodies whose officers and employees are subject to the deductions include 
non-commercial semi-state bodies where a public service pension scheme exists or may be made13. 

2. 

General observations 

2.1  The ECB recognises the very difficult economic circumstances, both in Ireland and internationally, 

that have led to the current efforts being made by the Irish Government to stabilise public finances. 

2.2  As noted in the ECB Convergence Report 2008 under the sub-chapter ‘Autonomy in staff matters’, 

‘Member States may not impair an NCB’s ability to employ and retain the qualified staff necessary 

for the NCB to perform independently the tasks conferred on it by the Treaty and the Statute’ of the 

European  System  of  Central  Banks  and  of  the  European  Central  Bank  (hereinafter  the  ‘ESCB 

Statute’). ‘In addition, an NCB  may not be put into a position where it has limited or no control 

over its staff, or where the government of a Member State is in a position to influence its policy on 
staff matters’14. This point has been stressed in a recent ECB opinion on draft German legislation 
regulating certain matters concerning the national central bank staff15. The ECB also stated in its 

opinion  on  draft  Italian  legislation  establishing  a  threshold  for  the  overall  remuneration  of  the 

national central bank staff ‘that the ECB defines autonomously its staff’s conditions of employment 

and that this autonomy forms part of the ECB’s independence as guaranteed by Article 108 of the 
Treaty and Article 36 of the [ESCB Statute]’16. 

3. 

Specific observations 

3.1  The  proposed  deductions  are  conceived  as  pension-related  deductions  for  the  public  service. 

However,  while  the  Minister  formally  approves  the  Central  Bank’s  superannuation  scheme,  the 

Central  Bank’s  scheme  is  not  funded  through  the  Exchequer,  but  is  established,  operated  and 

financed by the Central Bank independently. In this regard, the proposed deductions do not appear 

to reflect the distinctive features of the Central Bank’s superannuation scheme, and might therefore 

be regarded as a form of taxation on the Central Bank’s officers and employees.  

3.2  Under  the  Central  Bank  Acts,  the  employees  of  the  Central  Bank  are  to  be  employed  on  such 

conditions (including conditions as to remuneration and allowances) as the Central Bank’s Board 
of  Directors  fixes  from  time  to  time17.  In  order  to  protect  the  Central  Bank’s  autonomy  in  staff 

matters,  which  is  a  particular  aspect  of  the  principle  of  central  bank  independence  under  Article 

108 of the Treaty, any pension-related deductions applicable to the officers and employees of the 

Central  Bank  in  view  of  the  current  difficult  economic  circumstances  should  be  decided  in 

13  
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17  

Explanatory Memorandum to Financial Emergency Measures in the Public Interest Bill 2009, p. 1. 
ECB Convergence Report May 2008, p. 22.  
See paragraph 2.2 of ECB Opinion CON/2008/9 of 21 February 2008 at the request of the German Ministry of Finance 
on a draft law amending the Law on the Deutsche Bundesbank.  
See  paragraph  3.2.2  of  ECB  Opinion  CON/2008/10  of  21  February  2008  at  the  request  of  the  Italian  Ministry  of 
Economic Affairs and Finance on some provisions of the Law on the State annual and pluriannual budget (2008 budget 
law).  
See Section 6D(5) of the Central Bank Act 1942. 

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cooperation  with  the  appropriate  decision-making  bodies  of  the  Central  Bank.  Such  cooperation 

with the Central Bank should also ensure compliance with the Treaty provisions on the prohibition 
of monetary financing established by Article 10118. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 24 February 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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Compliance with the monetary financing prohibition requires that, in connection with the way the proposed arrangements 
between the Central Bank and the Exchequer are legally regulated and executed, no element of provision of Central Bank 
credit to the Exchequer arises in the form of Central Bank financing of public sector obligations vis-à-vis third parties or 
otherwise. See Article 1(1)(b)(ii) of Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for 
the  application  of  the  prohibitions  referred  to  in  Articles  104  [now  101]  and  104b(1)  [now  103(1)]  of  the  Treaty 
(OJ L 332, 31.12.1993, p. 1); See also the eleventh recital of Regulation (EC) No 3603/93, indicating the need to ensure 
that central bank transactions ‘do not result overall in a credit for the public sector'. 

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