Dáil Éireann Debate, Tuesday - 8 October 2013
309. Deputy Michael Healy-Rae asked the Minister for Social Protection the reason workers pay into their private pension schemes from their gross income less the State pension of €230.30 and not from their gross income; if it is possible to pay in from gross income, as workers are losing money going into pensions under the current scheme; and if she will make a statement on the matter. [42011/13]
View answer337. Deputy Michael Healy-Rae asked the Minister for Social Protection the reason workers pay into their private pension schemes form their gross income less the State pension of €230.30 and not from their gross income; if it is possible to pay in from gross income in view of the fact that workers are losing money going into pensions under the current scheme; and if she will make a statement on the matter. [42446/13]
View answerI propose to take Questions Nos. 309 and 337 together.
I understand from your question that the type of pension scheme you are referring to is an integrated pension scheme. An integrated pension scheme is one where the State pension is viewed as part of the total pension package promised to employees on retirement.
Integration is used as a means of taking into account the benefits payable under the social welfare system to calculate the amount of occupational pension required, so that the combined pension from both sources is at the level set in designing the scheme and to calculate the level of contribution payable by the employee towards the cost of their occupational pension.
The rationale for integrated schemes is to make retirement schemes as efficient as possible, .i.e. to take account of total income after retirement, and to allow for the fact that almost all members are likely to qualify for a State pension to which the employee and the employer have contributed.
If an employee wishes to make additional contributions to his/her normal contributions, he/she may do so if the rules of the particular scheme permits such contributions to be made. If the scheme rules do not permit AVCs to be made, then a Standard Personal Retirement Savings Account (PRSA) must be offered by his /her employer for the purpose of making AVCs.
