Seán Power
Question:9 Mr. Power asked the Minister for Defence when the voluntary early retirement package will commence; the number expected to avail of the offer; and the approximate cost of each redundancy. [5135/96]
Ceisteanna — Questions. Oral Answers - Defence Forces Retirement Package.
It is hoped that, following consultations with the PDF representative associations, the voluntary early retirement scheme for members of the Permanent Defence Forces will be introduced in or around May of this year. The purpose of the VER scheme is to allow the early retirement of up to 2,300 PDF personnel over the next three years.
In addition to their existing superannuation entitlements of pension and gratuity after 12 years service in the case of officers and after 21 years service in the case of enlisted personnel, the VER package will provide a once-off, tax free lump sum payment of four weeks pay for each year of potential service up to the age of 60, subject to a cap of 18 months pay. Personnel who have gratuity entitlements only will receive tax free lump sums of five weeks pay for each year of actual service subject to a cap of 24 months pay. In this regard £13 million was provided in this year's budget for the projected release of approximately 450 personnel.
I wish to reiterate that the scheme will be entirely voluntary and to assure the House that all those wishing to avail of VER will be dealt with in a humane and equitable fashion, having regard to both their needs and those of the organisation. It is impossible at this stage to predict precisely how many personnel will wish to avail of the VER scheme, but judging from the reported level of interest in it I am confident that it will make a significant contribution to the restructuring process upon which we have embarked.
I accept the voluntary early retirement package is central to the restructuring of our Defence Forces. I am delighted it has been announced. The Minister has gone to great lengths to explain this package is voluntary, but would he not agree that this package will effectively mean redundancy for category C members? Will he explain the major difference in the capital value of the pension scheme and the voluntary early retirement benefits to which a 35-year-old captain and a 35-year-old sergeant major with 13 years service would be entitled?
This package does not involve redundancy for medical category C personnel. This is a voluntary scheme and it is a matter for the personnel in that category to decide whether to apply for it. If they apply for the package they will be dealt with in the same way as other personnel and pressure will not be put on them to apply.
The difference in the package in regard to different ranks relates to the method by which schemes such as this are applied. The package will provide a lump sum payment of four weeks pay for each year of potential service up to the age of 60 subject to a cap of 18 months pay. That applies to personnel who have pension and gratuity entitlements. Those who have gratuity entitlements only — who do not qualify for a pension — will receive a tax free lump sum of five weeks pay for each year of actual service subject to a cap of 24 months pay. Entitlement under the package depends on the member's position and length of service up to age 60. There is no bias under the package. The lump sum payment of four weeks pay applies to a commissioned officer, an NCO or a private — the same formula is applied.
Would the Minister agree that this package will not be as attractive to a number of members of the Defence Forces as they would have wished? Will there be any flexibility in the scheme for such members or will it be cut and dried?
I can honestly say that this package is as good as any other presented in the public sector.
What about the ESB package which was struck at a higher level?
That was an entirely different set of circumstances. I will give the House an example of one of the provisions of this scheme. A captain aged 39, with 20 years service, whose current annual pay is £24,331, will receive a pension of £10,007, a gratuity of £20,043 and an additional severance gratuity of £36,497. That is a substantial sum of money paid with a pension immediately to a member aged 39. I do not think one will find an offer as good as that anywhere else in the public service.
The Minister will be aware that PDFORRA has indicated that the Department lied to its rank and file members. Would the Minister agree that great difficulty will be encountered — as there was some weeks ago interpreting what was or was not a public notice or advertisement — trying to interpret the term, voluntary redundancy? No doubt the Minister is aware that there are 400 soldiers in category C who will be forced to undergo a medical examination and, perhaps, asked to leave the Army, and 1,400 in category E deemed unfit to operate as soldiers. Given the provisions of this package, how can the Minister maintain it is a voluntary scheme?
I repeat, it is a voluntary early retirement package. I do not want anybody to think that any member of the Defence Forces will be forced to accept this package no matter what their category. If they do not apply, they will not be considered; it is entirely voluntary. I cannot understand any allegations of being misled because I have been entirely open with the representative associations each time I met them. I told them that, as soon as I had obtained Cabinet clearance for the package, they would be briefed immediately thereafter. That occurred immediately following the Cabinet meeting yesterday, when they were met, presented with a report and all details disclosed to them.