The purpose of this meeting is to consider the Supplementary Estimate for the Department of Defence — Vote 37, Army pensions, subheads B and D. The meeting is due to finish no later than 3 p.m. Is that agreed? Agreed. I thank the Minister for Defence, Deputy Willie O'Dea, together with his officials for attending and assisting our consideration of the Supplementary Estimate. A briefing note, providing details of the Supplementary Estimate, was circulated to members. I ask the Minister to address the select committee and provide a briefing on the Supplementary Estimate, after which each of the Opposition spokespersons will have time to respond. We will then have an open discussion, concluding with comments. Is that agreed? Agreed.
Vote 37 — Army Pensions (Supplementary).
As this is my first opportunity to do so, I congratulate the Chairman, Deputy Peter Power, on his elevation. I also congratulate the new members and thank the committee for giving me the opportunity to present for its consideration a Supplementary Estimate for Vote 37, Army pensions. The Supplementary Estimate is for the net sum of €4 million.
The Army pensions Vote makes provision for retired pay, pensions, compensation, allowances and gratuities payable to or in respect of members of the Defence Forces. The original Estimate provided a net sum of €177.9 million and the additional sum of €4 million now required represents 2.2% of the original provision. Two subheads of the Vote require additional funding, namely, subhead B in the sum of €5.6 million and subhead D in the sum of €80,000. This total additional requirement of €5.68 million can be funded, in part, by savings of €880,000 across subheads C, E and F and surplus appropriations-in-aid of €800,000.
Subhead B is the main subhead of the Vote and covers expenditure on all superannuation benefits to former members of the Defence Forces and their dependants. It accounts for over 90% of all Army pensions expenditure. Two pension increases, one of which was retrospective to 2006, were authorised and paid during 2007, on foot of the Towards 2016 pay agreement. In addition, the number of pensioners has increased slightly from 9,766 at the end of last year to 9,970 currently. The original provision of €171 million in this subhead will not be adequate to fund both the pension increases and the increased numbers and it is estimated that an additional €5.6 million will be needed.
Subhead D provides for the pensions and allowances payable to the spouses of deceased veterans of the War of Independence. A small additional requirement of €80,000 has been identified under this heading.
Committee members will have seen from the briefing material provided for them details of the savings of €880,000 that will arise in various subheads, together with surplus appropriations-in-aid of €800,000. The net effect is to reduce the additional amount required by way of Supplementary Estimate to €4 million.
I take this opportunity to update the committee regarding the new pension scheme for personnel recruited to the Defence Forces since April 2004. Discussions on this matter have been ongoing for some time between the Defence Forces representative associations and officials of my Department. Those discussions also cover some improvements in existing pension terms for personnel recruited prior to April 2004. I understand the discussions are coming close to a conclusion, subject to the resolution of a few outstanding issues which are being addressed by my officials.
The new pension scheme will have a defined benefit structure, with the following main features: benefits will be calculated by reference to total service and pay at retirement; the minimum pension age will be 50 years; preservation of benefits will apply on retirement before the age of 50 years; maximum benefits will accrue over a period of 30 years; and benefits will be integrated with the social insurance system, as in other public service pension schemes generally.
I thank the committee for its co-operation and I commend the Supplementary Estimate to it.
I remind members that at this stage we are only considering the Supplementary Estimate for Army pensions. While they may discuss issues relevant to this subhead, they may not recommend increases or decreases in the Estimate. There will be no vote on the matter.
It is appropriate that we are having this discussion because the issue of Army pensions is topical; it was addressed at the RACO conference in Kilkenny recently. There seem to be a few anomalies that I hope the Minister will address. He will be familiar with aspects of the pensions scheme and aware that those officers who joined the Defence Forces after April 1995 have integrated pensions. They are concerned that they are not being provided with timely information on individual benefits and details of the scheme. I ask the Minister to ensure his officials provide more information in this regard.
Those officers who joined the Defence Forces since 1995 have pensions which are integrated with the social welfare scheme. Such an occupational pension, when combined with the State pension, amounts to the same as a pension which is not integrated. However, there is an anomaly in that the scheme was not designed for groups such as the military, the members of which have a compulsory retirement age lower than 65 years. This means that, to get the full benefit of the integrated pension, officers who retire on age grounds have to claim social welfare benefits such as jobseeker's allowance or unemployment assistance until they qualify for a State pension. This opens up the prospect of a high ranking officer who retires at 65 years having to sign on if he or she wants to get the full benefit of his or her integrated pension.
I understand there is a provision in public service schemes for a supplementary pension to be paid to those who, through no fault of their own, do not qualify for benefits in amounts equal to the State pension. It is necessary to amend this provision to provide that a supplementary pension may also be paid automatically to those who retire on grounds of age if they are not in other employment and do not qualify for the State pension. Will the Minister explain why such a provision has not been made and why the officers mentioned are subjected to the inconvenience and embarrassment of having to sign on for jobseeker's allowance or unemployment assistance after their time in the Army? Pensions are complicated, unless one is a member of a trade union or involved in the discussion of pension agreements. We are lucky as Members of the Dáil that our pensions are provided for but listening to Army personnel leads me to believe their arrangements could be better.
There are also anomalies in the new deferred pension scheme. As I understand it, a person who retires at 39 will receive a deferred pension on reaching 50 years of age. Currently, a person retiring from the Army receives a gratuity of 45 weeks' pay while a person retiring from the public service receives a gratuity of 78 weeks' pay. Will the Minister consider bringing discharge from the Army into line with that which applies generally in the public service? I believe it only fair that this is done. Issues such as pre-discharge leave, which I understand is available in the public service, could be examined in this regard. To do this would ensure a level playing field in this area. The Minister will be aware that many Army personnel will shortly be deployed to Chad and on other missions. While they accept that on entering the Army they are putting their lives at risk, they need to be adequately compensated for so doing.
Another important issue is allowances reckonable for pension purposes. A number of Army and military personnel have been involved during the past few years in one way or another in Border duty. I understand the allowances they received in this regard are not pensionable. In other words, despite the fact that Border duty is quite dangerous, allowances paid for this work are not reckonable for pension purposes. I would like if the Minister could respond on this important issue which affects a large number of personnel.
Currently, technical allowances paid after May 2004 are reckonable for pension purposes. Allowances paid out prior to this date are disregarded. Obviously, people benefiting from pensions prior to May 2004 believe they are entitled to have their allowances taken into account. The Minister might respond on this issue also when replying. My next question relates to general issues.
Are the issues related to the subhead?
Yes. Subhead D, payment to and in respect of veterans of the War of Independence, relates to payments to spouses. I note there are 555 recipients of this payment, all of whom I am sure are worthy of it. Perhaps the Minister will tell us the number of remaining recipients of War of Independence pensions, if any.
Pensions is a topical issue at the moment especially in the private sector. Perhaps the Minister could clarify the issues I raised in respect of pensions for Army personnel. I am aware he is currently in negotiations with RACO and PDFORRA and that it is hoped they will shortly conclude to the satisfaction of all concerned. As I have stated previously, it is important that members of the Defence Forces are content. The Defence Forces which do not have as many members as they used to have will engage in many more missions now that Ireland is participating in the European Union's security structures. I do not doubt that the Union will undertake more missions in flashpoint regions, along the lines of the Chad mission that is about to begin, as time passes. It is starting to become apparent that the Chad mission will be challenging and dangerous. If we are to encourage people to join the Army and be part of the Permanent Defence Force, it is important for us to ensure a clear career path is open to them and that they are incentivised by the prospect of a good pension after they retire. I am sure the Minister accepts that the more incentives we offer, the better the calibre of person who will join the Defence Forces.
I have recently noticed that there seems to be a major problem with the numbers in the Reserve Defence Force. The Minister might not have referred to this matter in his statement. A newspaper article over the weekend highlighted the major fall-off in numbers in the Reserve Defence Force. I look forward to the Minister's response to the matters I have raised.
I will deal briefly with a number of the issues raised by Deputy Deenihan. I agree that there are some anomalies in the Army pension scheme, particularly in respect of those who joined the Army after April 1995. I am aware of the Deputy's legitimate complaint about the insufficiency of information being communicated to possible recipients because it was raised by the Representative Association of Commissioned Officers during its recent conference. I am informed that information sessions will be held in January or February next year.
The Deputy has argued that the integrated pensions system is not suitable for individuals who have been compulsorily retired under the age of 65 years. As he is aware, discussions about that matter are ongoing. Everything is in the mix, including the gratuity and the payment of the supplementary pension mentioned by the Deputy. Both matters have been put on the table by the representative association. The pensioners and the Department of Defence are ably represented in the conciliation and arbitration process which is continuing. My officials have told me that it is coming to a close. It is more appropriate for us to let the arbitration and conciliation committee's discussions come to a close, rather than carrying on parallel negotiations here on behalf of the Department. I hope these matters will be resolved satisfactorily.
I will examine the Deputy's suggestion that Border allowances are not pensionable. I will also consider the point he made about technical allowances received after rather than before May 2004. No veterans of the War of Independence are in receipt of pension payments, although 555 widows are receiving payments.
As the Deputy is aware, we are reorganising the Reserve Defence Force in line with the White Paper. The reorganisation of the force will mirror the reorganisation of the Army — the same structure will be used. It is intended to provide for an integrated element of the force in the form of a particular battalion that will serve as a back-up to the Army. It will be entitled to extra training and equipment, etc. We originally envisaged that approximately 2,500 members of the force would be involved by 2010. When we ran a pilot scheme during the year to test the water — to see how many would be willing to come forward — the numbers were, frankly, disappointing. My officials who are keeping me informed about the matter are looking at the conditions under which individuals can be asked to join the integrated element of the force to see if the numbers involved can be increased. That is the main problem in relation to the force.
I welcome the Minister and his officials. The Supplementary Estimate is straightforward. I merely seek clarification on a number of issues in relation to it.
Subhead B deals with the Defence Forces pension scheme and payments in respect of transferred service. What does transferred service mean in this instance? If a person joins the Defence Forces, having worked in the public or private sector, what provision is made for transfer of service and pension rights? The Department of Enterprise, Trade and Employment maintains a list of transfers which can be made between various employments in the public service or Civil Service. This would apply to someone who transferred from a health board, for example, to the Civil Service. What provision is made for the transfer of service and pension rights for persons who join the Defence Forces?
I recall the case of a widow of a veteran of the War of Independence who died in the middle of a month. As her pension was paid a month in advance, the Department sought to recoup the outstanding part of her pension. I pursued this matter with the Minister's predecessor and understood the practice would cease. Will the Minister confirm that this is the case and that such a thing cannot happen in the future? To seek to recoup a pension in such circumstances is niggardly. I understand civil servants must follow rules and regulations; however, I hope such a thing will not happen to the 555 spouses still drawing pensions.
Issues surround the integrated pension. I cite the example of a person who is invalided out of the Defence Forces and has been paying social welfare contributions. It will soon be the case that to qualify for disability benefit one will need five years full contributions. To qualify for job seeker's allowance a person must be available for work and genuinely seeking work. This is a contributory benefit and lasts for only 15 months. The non-contributory payment is, obviously, means-tested. A person who has been invalided out of the Defence Forces will apply, initially, for is disability benefit. I am concerned that there may be different definitions of disability. One definition may declare a person unfit to serve in the Defence Forces, while to be entitled to disability benefit a person must be incapable of all work suitable to his or her experience and education. Disability benefit is open-ended and a person can qualify for invalidity pension if he or she is found to be permanently incapable of all work. A person with a low level of contributions can qualify for disability benefit, but only for one year. Issues surround the retirement age. The minimum retirement age is 50 years. This has its implications for pensions. In the context of an integrated pension, an effort should be made to have a standard definition of disability. We are aware of situations where somebody such as a factory doctor may say somebody is incapable of work or of resuming that employment, whereas the Department of Social and Family Affairs may find the person capable of work.
On the issue of the Reserve Defence Force, I have noticed it is not as strong in my area as it used to be. It is important we maintain a strong force and it is disappointing the Minister's recent initiative has not had a more positive response. It is important to persevere in that regard and to restore energy to the sector.
I thank Deputy O'Shea for his comments on the Reserve Defence Force. We have set a target for the Reserve Defence Force in the White Paper which comes to an end in 2010. I will do my utmost to meet that target or get as close to it as possible. The pilot scheme launched last year demonstrated the difficulties related to recruiting people into the integrated element of the Reserve Defence Force. We are working on possible solutions to that major problem and, hopefully, we will be able to strike the right balance. The Reserve Defence Force is now better trained and receives better allowances, equipment and clothing. We will maintain this.
On the transfer of pensions, my officials have stated that under the public sector transfer schemes, service with the Permanent Defence Force may be reckoned for superannuation purposes by certain public sector organisations, for example, the Civil Service, the Garda Síochána, and semi-State bodies such as Aer Lingus, the ESB and RTE. When transfers take place between the Defence Forces and other approved organisations, a contribution towards the pension and lump sum of the transferee becomes payable by the Department unless the second organisation has opted for a knock-for-knock arrangement under the scheme.
The Deputy made a point about the widow of the veteran of the War of Independence. I understand that practice has discontinued and will be very annoyed if I hear of a recurrence. He also suggested we define disability, both for the Army disability pension and for people applying for disability benefit or invalidity pension. There is a particular social welfare definition for disability or illness benefit and another definition for invalidity pension, where one must prove one will be permanently incapable of working. A third definition exists to qualify one for an Army disability allowance. I understand the standard for disability out of the Army is somewhat higher than that applied by the Department of Social and Family Affairs. As to whether the definitions should be brought closer, obviously the Department of Social and Family Affairs will not change its definitions at our behest. Therefore, it would be up to us to move in its direction. I will discuss the issue with my officials to see if there is merit in bringing the tests closer together.
Before Deputy McGrath came in I pointed out we are considering the Supplementary Estimate for Army pensions under subheads B and D. All contributions should relate to those subheads.
Is the Chairman setting out a marker in case I wander from the point?
I am just repeatingfor the Deputy’s benefit the instructions I gave to other members before his arrival.
I welcome the Minister and his officials to the select committee. My first question concerns the pension scheme operating in the Defence Forces since April 2004. The Minister stated that negotiations are ongoing and I will not take up the issue now.
The number of pensioners increased from 9,766 at the end of last year to 9,970. Is that number expected to rise dramatically next year and will it be well over the 10,000 mark in 2008? Has an analysis been carried out as to why people are not joining the Army reserve forces? Is it that people are too busy and that time is a factor in modern society? During my school years about 20% of my class were in the FCA, and 25 years ago there was always a strong desire to join the FCA.
Will the Minister clarify whether Irish troops will go to Chad in January?
The Deputy is straying outside the Supplementary Estimates.
Will the Minister ensure that when international affairs are being discussed by the Minister for Foreign Affairs and his colleagues at Cabinet, that he points out that the Chad mission is under the flag of the United Nations? I am hearing about the EU's role in Chad in the past three or four days but the mission is under the UN flag.
It will be a long time before our veterans from Chad will be applying for pensions and we can deal with it at that stage.
I do not expect the number of pensioners to increase dramatically but there will be a marginal increase. A detailed analysis was done on why people do not join the reserve and the Deputy mentioned some of the factors involved. However, there are other relevant factors including: the way the reserve is distributed throughout the country, that is why we are reorganising it; the quality of training; the allowances payable; and the equipment available. We are addressing all of these issues. I have a target figure for the reserve forces in 2010 and we will do our utmost to reach that target.
I reassure the committee that the Chad mission is mandated by the UN and is a United Nations approved mission. It is being organised by the EU on behalf of the United Nations. The mission will not be deployed until the force commander is absolutely satisfied that sufficient logistical support will be put in place to make it as safe as possible for the troops to go in.
Are we near that point?
There has been some delay in mustering the logistical support. We have other options if people do not come forward, but we are not contemplating them yet as negotiations are still ongoing.
That is okay.
Under subhead B, Army nursing service, will the Minister clarify the number of nurses in the service at this time?
There are approximately 30 nurses.
Is this the full complement of nurses?
It is in or about this figure.
I have raised already the medical back-up service. I know that a report from PriceWaterhouseCoopers suggested a figure and this was confirmed in the White Paper. At this moment how many medical staff are in the Army?
I would say 20 or 21.
That must give rise to major concern.
Obviously we hire staff in from the private sector. When we are on a mission, to Chad for example, we always have arrangements made in advance--
With other countries?
--with other countries.
We are depending on others.
Not necessarily, we have a joint operation with the other countries. Sometimes we supply some of the doctors and the medical facilities. It is a joint effort.
Of course. The Dutch were involved in the case of Liberia. Irish soldiers would prefer to have Irish doctors, not only for medical reasons but for their psychological and emotional well-being. They need doctors with whom they can communicate. Cultural or language problems could arise, although I do not wish to say anything against those doctors who come from other European countries. There must be reasons doctors are not attracted into the Defence Forces. Perhaps one of those reasons is the lack of a proper pension. We spoke about providing more incentives to attract people to the Defence Forces. Will the Minister look at the possibility of improving pensions for medical personnel? Can he do that?
Is 65 the maximum retirement age for the Defence Forces?
No, 63 is the maximum age and that is for the Chief of Staff. It is 60 for others.
Would the Chief of Staff have to be 65 to get a full pension?
The Minister mentioned the Chief of Staff would have to be 65 to get a full pension.
Is the Deputy asking about the current Chief of Staff?
I am talking about anyone appointed post 1995 who in the future wants a pension. In the future, if a Chief of Staff retires at 63, in order to get the full pension he or she will have to claim jobseeker's allowance in the meantime.
That issue is being dealt with currently by the conciliation and arbitration process. Let us wait to see the outcome of that, which is imminent.
Of course, but it is a major anomaly that must be sorted.
It will be solved before it arises in practice.
Thankfully.
On the question of doctors, when employing people in the public sector, we can only go so far without causing knock-on effects. We have managed to increase the pay of medical staff within the Defence Forces. The major problem with regard to recruitment of doctors to the Defence Forces is the lack of a career structure. It is not everybody's cup of tea. We are recruiting as many people as possible. While a number of these are non-nationals, they are eminently qualified. We also have the facility and financial provision to hire people from the private sector.
Thank you. We have now completed our consideration of the Supplementary Estimate for Vote 37. Under Standing Order 86.2, the message is deemed to be the report of the committee. I thank the Minister and his officials for their attendance.