Opinion of the European Central Bank of 28 June 2013 on pay and pension reforms (CON/2013/46)
Date: 2013-06-28
Institutions: European Central Bank
Subjects: Ireland, pension scheme, public finance, public service employee, remuneration of work

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 2013, the European Central Bank (ECB) received a request from the Irish Minister for Public 

Expenditure and Reform (hereinafter ‘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 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 provisions1, as the draft law relates to the Central Bank 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  Measures  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  public  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 which a progressively structured 

levy-type is imposed 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  public  service  pension  scheme.  Public  servants  are  defined  as 

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OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
                                                 
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persons 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  employees  and  office 

holders 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  respect  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 particular 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  promotion  in  question.  Groups  or  grades  of  public 

servants may be excluded from the effect of this 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  CBI’s  officers  and  employees  subject  to  individual employment  contracts 

and  to  collective  bargaining  agreements  entered  into  between  the  CBI  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 departure from that regime in so far as the reductions proposed are to be imposed 

unilaterally. 

2. 

Non-compliance with the consultation obligation 

2.1  The ECB received 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  refers  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 when 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.  Following  from  the  wording  of  Article 3(4)  of 

Decision  98/415/EC,  Member  States  are  obliged  to  suspend  the  process  for  adoption  of the draft 

legislative provisions 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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question. In this respect, 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 Decision 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 independence 

4.1  As  the  draft  law  applies  to  and  directly  affects  the  CBI’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  that  of  the  personal  independence  of  the 

members of the CBI’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 issuing instructions to the national 

central  banks  (NCBs).  In  addition,  the  principle  of  central  bank  independence  means  that  third 

parties  may  not  influence,  directly  or  indirectly,  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  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.  To  protect 

autonomy in staff matters, the ECB has consistently recommended in previous opinions and in its 

convergence reports that any amendment to legislation 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  ability  of  the  NCB  to 

independently  carry  out  its  tasks.  Autonomy  in  staff  matters  extends  to  issues  relating  to  staff 
pensions3. 

2  

3  

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. 
See the ECB’s Convergence Report 2013, p. 33 and the reference to ECB opinions made there. 

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4.4  Given  that  the  CBI’s  employees  are  employed  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 apply only in respect 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  influence  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 website. 

Done at Frankfurt am Main, 28 June 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

4  

5  
6  
7  

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 Act 2003 and as amended. 
See also Opinion CON/2012/89 and paragraph 2.6 of Opinion CON/2013/41. 
ECB Convergence Report June 2013, p. 27. 
See also paragraph 3.2.10 of Opinion CON/2010/80. 

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