Dáil Éireann debate -
Wednesday, 20 Oct 1999

Vol. 509 No. 5

Adjournment Debate. - Defence Forces Pensions.

Mr. Wall

A Leas-Cheann Comhairle, I thank you for allowing this matter and the Minister for taking it. When the Gleeson Commission con sidered the military service allowance, MSA, it concluded that it constituted an integral part of military pay and recommended that the Departments of Defence and Finance should give early and positive consideration to making the allowance fully reckonable for superannuation purposes. The Department had discussions without representatives of RACO and PDFORRA. These bodies represent serving personnel of the Defence Forces and are precluded from representing retired personnel.

As a result of these discussions MSA was included as part of reckonable income for superannuation purposes for personnel retiring on or after 1 August 1990. However, no organisation purporting to represent the interests of retired personnel was admitted to what proved to be crucial negotiations on this important issue. They feel aggrieved about the manner in which retired personnel were excluded from discussions concerning a matter of vital importance to the welfare of pensioners. The Chief of Staff who, in accordance with defence regulations, had a responsibility in this area, apparently made no contribution and had no say in the matter. The negotiations, therefore, on the implementation of the recommendations of the Gleeson Commission continued without consultation on the interests of retired personnel.

I ask that MSA should be pensioned for all Defence Forces pensioners, not just those who retired on or after 1 August 1990. The commission intended the pensioning of MSA to be retrospective and prospective, but MSA has only been pensioned in respect of personnel retiring on or after 1 August 1990. This is the only recommendation by the commission which has not yet been implemented. The commission's report states in chapter 10, paragraph 10(a)(2):

The Commission considers that Military Service Allowance is an integral part of military pay and, accordingly, recommends that the pension scheme be amended to provide for the reckoning of Military Service Allowance in calculating benefits.

The adoption of this provision since 1 August 1990 has been totally arbitrary. It has created a huge anomaly in that those who retired prior to that date are in receipt of a significantly lower pension than those who retired after that date with the same rank and service. Some individuals who retired on or after that date receive a greater pension than a person who had a higher rank and/or more years of service.

The arbitrary selection of August 1990 as the qualifying date for the inclusion of MSA in the pension entitlements has resulted in retired personnel and surviving spouses being treated unfairly. It smacks of a parsimonious approach to the needs of Defence Forces' pensioners and there is no need for this group to suffer needlessly for an allowance which in an overall budget context is negligible. Retired personnel numbering less than 1,000 who were in receipt of MSA during their service are deemed ineligible to have MSA included in their pensions because they retired before August 1990. The Department has accepted the principle of pensioning MSA but it has deemed it appropriate to reduce the cost of doing so in the short term through the introduction of an arbitrary cut-off date. It has justified the pensioning of MSA only to those retiring on or after that date on the grounds of cost and possible implications in other areas of the public service.

The pension provisions for the Defence Forces are unique in many respects for the public sector and on this basis I do not see how a precedent could be created for other areas. In 1995 a total of 5,600 pensioners were estimated to have been excluded from the MSA additional payment and it is calculated that it would cost approximately £4 million per annum to extend the payment to this group. However, in 1996 the total number of pensioners excluded from the payment had reduced to 5,400 and thus the annual cost of the allowance had decreased. The reason for this reduction is a high mortality rate among the group and it is estimated that the number will decrease steadily over the coming years and, thus, the cost of extending the allowance will shrink and eventually disappear as the individuals concerned do not have an infinite life expectancy.

The depth of resentment among retired personnel and surviving spouses, most of whom live on modest pensions, cannot be understated, especially in light of long service to the State at home and abroad with the UN, frequently in hazardous circumstances. If the Minister does not adopt a positive approach, I have no doubt that they will seek other means of obtaining their entitlement.

Minister for Defence (Mr. M. Smith)

I thank the Deputy for raising this matter. The Defence Forces pensions code is unique in the public sector in that provision is made for the payment of immediate pensions and gratuities after unusually short periods of service and regardless of age. The minimum service required for a pension and gratuity is 12 years in the case of commissioned officers and 21 years in the case of enlisted personnel. Maximum pension can be attained after as few as 24 to 25 years service for officers and 31 years for enlisted personnel.

Military service allowance, MSA, was introduced in 1979 as compensation for the special disadvantages associated with military life and was not reckonable for pension or gratuity purposes. The inclusion of MSA in the calculation of superannuation benefits arose from a recommendation made in 1990 by the Gleeson Commission which has been implemented. The agreed arrangements for the implementation of the recommendation provide, subject to certain conditions, for increases in pensions and gratuities to take account of MSA in the case of personnel retiring on or after 1 August 1990, the day following publication of the commission's report.

MSA has been reckoned in the calculation of the pensions of all qualified persons who retired since that date. The various arguments in support of the view that MSA should be reflected in the pensions of personnel who retired before 1 August 1990 were considered fully in the context of the detailed and lengthy discussions with the military representative associations which preceded the implementation of the recommendation of the Gleeson Commission. However, having regard to the practice followed in other areas of the public service and the considerable cost involved, which is not confined to my Department alone, it has not been possible to extend the scope of the commission's recommendation to those who retired before 1 August 1990. The cost to my Department of extending this benefit to such pensioners is estimated at £4.8 million a year.

It is a core element of public service pensions parity policy that, when an allowance is being made pensionable for serving personnel, the benefit does not apply to existing pensioners. Accordingly, the stance adopted on the pensionability of MSA is consistent with settled pensions policy in the public service generally. As the Deputy is aware, the Commission on Public Service Pensions was established by the Government in February 1996 against a background of growing concern generally about the emerging cost of existing public service pensions. The commission has broad terms of reference to examine and report on occupational pension arrangements of public servants, including claims for improvements in existing superannuation benefits. It was open to individuals and groups to make submissions to the commission and I understand that various organisations representative of military pensioners did so.

The commission is an independent body and is scheduled to make its final report to Government in the near future. In its interim report, published in November 1997, it listed the pensionability of allowances generally as one of the main issues raised by various interested parties who made submissions. The Government will consider any recommendations the commission may make in this regard. The position of pre-August 1990 Defence Forces' pensioners in the context of the MSA, will be further considered in light of the final report of the commission and any relevant Government decisions taken thereon.

The pension payable to an NCO or private on retirement consists of a basic flat rate in respect of 21 years service, which ranges from £109.13 per week for a private to £162.30 for a sergeant-major with an addition to basic pension of £23.52 per week in respect of MSA, 40 per cent of the rate of that allowance. Where pensionable service is 31 or more years an increased addition in respect of MSA of £29.40 a week is paid, 50 per cent of the rate of that allowance, and an additional increment of £4.17 a week in respect of each year of pensionable service in excess of 21 years but not exceeding 31 years. The minimum pension payable to a captain retiring with 12 years service is £5,732 per year while the maximum pension for a lieutenant-colonel with 25 years service is £18,812 per year inclusive of the MSA addition in each case.