Dáil Éireann Debate, Tuesday - 27 April 2004
263 Mr. Andrews asked the Minister for Finance if he will ensure coherence in Government policy by matching his expressed desire to keep persons in the workforce for longer by ensuring that pension contributions after the 40th year of public service employment is matched by increases in pension entitlements; and if he will make a statement on the matter. [11255/04]
View answerIt is long-standing practice in public service pension schemes for maximum benefits to be based on 40 years' service, with service beyond 40 years conferring no additional benefits. Based on a standard accrual rate of one eightieth per year of service, this allows retiring public servants who have 40 years' service to qualify for a lump sum of one and a half times their salary and a pension benefit equivalent to half salary. Most public service pension schemes, whether contributory or non-contributory, are financed by the Exchequer on a pay-as-you-go basis. In defined benefit contributory schemes, this means that members' contributions do not determine the final salary benefits they can expect to receive on retirement. In such cases the employee contribution represents only a small part of the total cost to the employer of a public service defined benefit occupational pension. These benefits compare favourably with provision in the private sector and international public service arrangements. I do not intend to improve them for persons whose service exceeds 40 years.
The Deputy's question makes reference to the issue of persons remaining longer in the workforce. In this connection, I consider the recent enactment of the Public Service Superannuation (Miscellaneous Provisions) Act 2004 to be an important measure, in that the requirement to retire on age grounds will not apply to most new entrants to the public service from 1 April 2004. There is no lack of coherence, therefore, between the policy for new entrants to the service contained in the Act and the maximum accrual of 40 years, in view of the excellent pension benefits available to public servants.
