Dáil Éireann Debate, Tuesday - 5 October 2004
277 Mr. Haughey asked the Minister for Finance if he will give details of changes published in September 2004 in relation to pensions for public service workers; if existing pensioners who previously worked for local authorities will benefit from those changes; and if he will make a statement on the matter. [23574/04]
View answerDetails of the changes published in September 2004 are as follows: The cost-neutral early retirement facility will allow public servants to retire early with actuarially reduced superannuation benefits. Workers whose current minimum pension age is 60 will be able to avail of the facility from age 50 upwards, while those whose minimum pension age is 65 will be eligible from age 55 upwards. This facility is being made available to serving staff and the option will be extended to staff who resigned with an entitlement to preserved superannuation benefits as and from 1 April 2004. Superannuation benefits in such cases will be based on pensionable service at the time of resignation reduced, appropriately, to take account of early payment. An outline of the table to be used for this purpose is set out following.
The table shows the values for each full year of age; adjustments based on exact age — that is, years and days — will be made when calculating actual benefits due.
|
Members with a preserved age of 60 |
Members with a preserved age of 65 |
||||
|
age last birthday |
pension |
lump sum |
age last birthday |
pension |
lump sum |
|
% |
% |
% |
% |
||
|
50 |
62.4 |
82.2 |
55 |
58.2 |
82.4 |
|
51 |
65.1 |
83.9 |
56 |
61.1 |
84.0 |
|
52 |
67.9 |
85.5 |
57 |
64.1 |
85.6 |
|
53 |
71.0 |
87.2 |
58 |
67.4 |
87.3 |
|
54 |
74.3 |
88.9 |
59 |
71.0 |
89.0 |
|
55 |
77.8 |
90.7 |
60 |
74.8 |
90.7 |
|
56 |
81.6 |
92.4 |
61 |
79.0 |
92.5 |
|
57 |
85.7 |
94.3 |
62 |
83.6 |
94.3 |
|
58 |
90.1 |
96.1 |
63 |
88.5 |
96.1 |
|
59 |
94.8 |
98.0 |
64 |
94.0 |
98.0 |
Integration formula: Public servants with full social insurance get an old age contributory pension, OACP, and their public service occupational pension is reduced to take account of this fact. This process, known as integration, can mean that lower-paid workers get only small public service pensions, or none at all. The calculation formula underlying integration is being adjusted to deliver a boost to the public service pension income of lower paid public servants. Accrual rates under the new formula are 1/200th for pensionable remuneration below 31/3rd times OACP and 1/80th for pensionable remuneration in excess of this limit.
This revision represents an improvement in rates of occupational pension for lower paid workers, without any requirement to increase contribution rate. The current salary "cut-off point" below which workers and retired public servants will benefit from this revision is €557.67 per week or €29,099 per annum. Persons with remuneration above this level are unaffected. For an employee, therefore, on, say, €25,000 per annum, with maximum service at retirement, the annual increase in pension benefits would be in the order of €1,230 — that is, €23.57 a week. The revised basis of calculation will apply to existing pensioners with effect from 1 January 2004 and all relevant retirees as and from that date.
Pro rata integration, as opposed to full integration which applies at present, will apply to part-time public servants and relevant pensioners with full social insurance, as and from 20 December 2001. The terms full and pro-rata integration refer to different methods of co-ordinating OACP with public service occupational pension in the case of part time employees.
The new method of pro rata calculation along with the new integration formula will be of significant benefit to part timers. For example, the value of the increase in the occupational pension of a part-time employee on, say, €15,000 per annum, with maximum service at retirement, would be in the order of €3,135 per annum or €60 per week. The revision to the integration formula — see earlier paragraph — may also further increase benefits payable to certain part-time employees.
Existing schemes of notional added years will be replaced, for new entrants, from a current date, by a single transitional scheme which will be reviewed in 2015. The commission had recommended the abolition of such schemes. Following discussion with the unions however, the Government has decided to replace the existing schemes with a new interim scheme with a lower maximum award.
The calculation of pension on variable pensionable allowances will be based on the best three consecutive years in the ten years preceding retirement, rather than on the three years immediately prior to retirement, as at present. The new system will apply to relevant staff who retire or have retired from the public service as and from 1 April 2004.
The current pension interest rate, which applies, in particular, to repayment of marriage gratuities, will be cut from 6% to 4% in respect of repayment due for periods from 14 November 2000 onwards.
Implementation of the various changes will commence as soon as detailed guidelines have been prepared and circulated by my Department. The preparation of these guidelines is being addressed, as a matter of urgency, by my officials. Public service pensioners who may have entitlement to benefit from any of these changes, including those who previously worked for local authorities, will have such benefit passed on to them, as soon as practicable. In general, there should be no need for individuals to make application in advance of payment.
