Seanad Éireann debate -
Thursday, 7 Jul 1994

Vol. 140 No. 21

Adjournment Matters. - Local Government Pension Scheme.

Mrs. McGennis

In 1986, the referendum on divorce was defeated for a number of reasons. One of the reasons was that people were unsure or worried about their pension and inheritance rights and so on. I know there have been a number of important legislative changes since then but the case I want to bring to the Minister's notice is an indication that we are not yet ready to recommend a referendum on divorce.

I have been contacted by a lady, whom I will call Mary, who works as a nurse for the Southern Health Board. She joined the widows and orphans pension scheme in 1984 when that scheme was extended to all female local authority workers. At the time, Mary was married with five children. However, in 1985 she and her husband separated legally and she also secured a church annulment. Since 1987, she has tried unsuccessfully to opt out of the pension scheme. Since the separation she has received no maintenance whatsoever from her husband and she has been solely responsible for the education and maintenance of her five children.

This year, Mary decided to take early retirement and was informed that the following deductions would be made from her lump sum: a deduction of £867.67 for a temporary service and one of £6,152.24 for her widows and orphans pension scheme. Interestingly enough, when she queried this and asked what the deductions would be if her husband had died in 1984, she was told that the amount which she would be liable for would be almost half that — approximately £3,138.

Mary's children are now all over 16 years of age and will not have any benefit from the scheme in the event of their mother's death. The final insult is that if Mary dies before her ex-husband, he will receive a pension which she has paid for despite the fact that they are legally separated, that the marriage has been annulled by the church and that this man has not supported or contributed one penny towards his wife or children since 1985.

This case highlights a glaring anomaly in the pension scheme, a scheme which was only introduced two years before the last divorce referendum. It also highlights a grave injustice and I ask him to amend the scheme without delay.

Minister of State at the Department of Transport, Energy and Communications (Mr. N. Treacy)

The local government officers (widows and orphans contributory pension) scheme, 1984, which also applies to health board employees, is a statutory scheme and is in line with similar schemes operating throughout the public sector generally. The scheme provides for the grant of a pension to the spouse and children of a deceased member or former member of the scheme. These are the only persons who can obtain benefit under the scheme. There are no provisions whereby this entitlement may be cancelled or transferred. Neither are there any provisions whereby a person who joined the scheme may opt out of it at a later stage.

The scheme was originally introduced for male officers on a non-statutory basis in 1968. Following negotiations with staff interests, membership was extended to female officers in 1984. Existing female pensionable officers were given an option to join the scheme.

In the case of a person who joined the scheme in 1984 but had pensionable service with a local authority or health board prior to that date, contributions in respect of that service must be made. These contributions are made by way of deduction from the lump sum payable on retirement.

If a member of the scheme separates from a spouse, the spouse is still the beneficiary for the purpose of the scheme. However, where, at the retirement of a member of the scheme the spouse of the member is dead or is divorced under a divorce which is recognised by the State, contributions in respect of the period following the death or divorce are refundable or offset against contributions due for pensionable service before the member joined the scheme.

This scheme is structured on an actuarial basis to cover certain risks and on certain assumptions, for example, life expectancy, that the payment of benefits will not arise in respect of all members and that a person may not opt out of membership at a later date. The combination of these factors ensures the operation of a relatively low contribution rate — 1.5 per cent by the member and 1.5 per cent by the employer. Proposals to change the existing structure could have financial implications for the viability of the scheme and could lead to a higher contribution rate following an actuarial re-evaluation.

In addition to the above considerations, it should be noted that any proposal to amend the scheme would require the consent of the Minister for Finance who is responsible for public sector pension schemes generally. This could not be considered in isolation and would have to be dealt with in the context of all similar schemes operating in the public sector. I should point out that the application of this scheme in individual cases is a matter for the particular local authority or health board concerned.

In deference to the excellent cases made by Senator McGennis I assure the House that I will bring the points she raised to the attention of the Minister for the Environment, Deputy Smith, who, due to Government business, cannot be with us this afternoon.

Agus i ndeireadh na dála, ba mhaith liom gach dea-ghuí a ghabháil le gach ball de Sheanad Éireann agus guím go mbedh sos sásúil ciúin agaibh i rith an tsamhraidh. Míle buíochas.

Acting Chairman (Mr. Sherlock)

I join with the Cathaoirleach, an t-Aire and Members in wishing Senator Crowley, a fellow Corkman, well in his new responsibility as a Member of the European Parliament for Munster.

The Seanad adjourned at 3.45 p.m. sine die.