Dáil Éireann debate -
Wednesday, 22 Nov 2000

Vol. 526 No. 4

Written Answers. - Social Welfare Benefits.

Noel Ahern

Question:

250 Mr. N. Ahern asked the Minister for Finance the purpose of the co-ordination provision in relation to pensions and its effect on the pensions with particular reference to airline employees; the categories of workers in Aer Lingus and Aer Rianta to whom it applies; the reason this was done selectively; the other workers or employments to which it relates; the reason some workers should be penalised or discriminated against because they also have an occupational pension; the reason some employers should contribute reduced contributions to the social insurance fund; if he will consider abolishing the co-ordination principle in the upcoming budget and Finance Bill; and if he will make a statement on the matter. [27030/00]

Minister for Finance (Mr. McCreevy)

Since April 1995, on foot of a Government decision, all new entrants to the public service are in full PRSI class and are subject to co-ordination.

Co-ordination applies in both the public service and the private sector, where it is sometimes known as integration. A co-ordinated scheme is one that takes into account the social welfare contributory pension or other similar contributory benefits in designing the overall benefit promise being made by the occupational pension scheme of the member in question. It looks upon the old age contributory pension as part of the total pension package promised to employees on retirement. It acknowledges the substantial PRSI contributions being made by employers and employees which in turn entitle members to substantial social insurance benefits. On the other hand, contributions toward the occupational element of the pension are less than they would be if the pension were not co-ordinated.

Prior to the change in PRSI status for new entrants to the public service in April 1995, the general position was that co-ordination applied to non-established and industrial civil servants, non-officer grades in the education and local authority sectors, non-officer grades in health boards and voluntary hospitals and all grades in nominated health agencies and certain state sponsored bodies as well as civilian employees of the Permanent Defence Forces. A limited form of co-ordination applied also to enlisted personnel in the Permanent Defence Forces. The remaining public servants had no entitlement to social insurance pensions. As such they were not subject to co-ordination.

Details in relation to the categories of workers subject to co-ordination in Aer Lingus and Aer Rianta are a matter for those bodies and the responsible Minister.

Integration is a central feature of public service pension schemes and of the majority of schemes in the private sector. However, the Deputy may wish to note that the Commission on Public Service Pensions indicated in its interim report that it would examine the issue of co-ordination/integration with particular reference to the occupational pension position of those retiring on relatively low levels of pay and part-time staff. I hope to be in a position to publish the final report shortly.