Dáil Éireann Debate, Tuesday - 30 June 2015
286. Deputy Peadar Tóibín asked the Minister for Public Expenditure and Reform the expected annual cost to the Exchequer of providing the option of opting into the spouses' and children's contributory pension scheme to current civil servants who were serving prior to 1984 and who have since entered into a civil partnership-same sex marriage. [26295/15]
View answerAt the outset, I wish to make clear that persons in civil partnerships or in same sex marriages are not discriminated against under any aspect of the public service pension scheme.
The public service operates a Spouses' and Children's Contributory Pension Scheme. This provides benefits to Spouses or Children of deceased members. In summary, when a member dies after retirement, a spouse's pension of one-half of the former member's pension is payable. Dependent children are also entitled to a child's pension of one-third of the spouse's pension for each of the first three eligible children.
The original pre 1984 scheme did not allow for the payment of a pension to a spouse who married or had children post retirement. Thus, the scheme allowed a refund of contributions if the individual had not been married up to the point of retirement.
In 1984, a revised Scheme which extended eligibility for benefits to spouses who married or had children after retirement was introduced and members of the original scheme and certain retirees were given the option of transferring to the revised Scheme, which became obligatory for subsequent recruits.
One of the benefits of the Revised Scheme was that the spouse of a post retirement marriage was eligible for a spouse's pension. The disadvantage of the Scheme was that there was no facility for repayment of contributions on retirement if the individual concerned did not have a spouse and would not therefore be in a position to avail of any benefit under the Scheme.
For members who remained in the original Scheme there was an entitlement to claim a refund of contributions in the event that the member remained unmarried at the date of retirement. Many members of the scheme availed of this option and received a refund.
Across the entire public service, approximately 30,000 staff who were not members and an unquantified number who had been members of the original scheme opted not to join the new scheme. Their reasons for doing so were presumably varied, including not expecting to marry, being in a relationship with a separated person who was not then able to divorce, or that it was personally more beneficial to them not to join the new scheme. For example, women were not prior to 1984 required to join the pension scheme and pay contributions; they may have decided that was better financially for them.
In recent years, some individuals have sought to reverse the decision they made at that point. More specifically, a number of people have argued that they could not have envisaged that same-sex civil partnerships would be legalised in the state.
A fundamental element of any new opt-in would have to be that it would have be open to all applicants regardless of their reasons for not opting-in the first place. This would be required to avoid alternative claims of discrimination. Every then serving and retired public servant who opted to remain in the old scheme, or chose not to join either scheme, would have to be given the opportunity to opt into the new scheme.
Public service spouses' and children's schemes are structured on a group insurance basis and the member contribution rates take account of the fact that payment of benefits will not arise in respect of all members. Given the passage of time since 1984 and the greater clarity those who opted out then will now have about their lives, it is eminently foreseeable that only those persons whose spouses and/or children would benefit would opt in. This would radically undermine the group insurance basis of the scheme.
There is no way of knowing how many people would decide to opt in. As an example of potential costs, the spouse and children of a pensioner who opted out in 1984 and retired age 60 with a full 40 years' service in 2010 and a final salary of €50,000 would be entitled to a spouse's pension of €12,500 per annum, and a children's pension of one-third of the spouse's pension for each of the first three eligible children, in this case up to €12,500 per annum, a total of €25,000 for each year the pensions remained in payment. The cost of a thousand such cases would be €25m per annum and of 10,000 would be €250m per annum.
To offset costs, an upfront fee could be levied on those who chose to opt in. However, the fee for opting in either could not cover the additional cost of the pensions involved or, alternatively, would have to be so large that it would be unfeasible for many persons to pay it.
My Department's position has also been that if decisions freely made about pensions or other matters could be reversed at any time this would have grave consequences for public administration. Where changes have been made to pension schemes, individuals have only been allowed to opt in to the new arrangements at the time of the introduction of the new scheme. This approach is in line with that of the Commission on Public Service Pensions.
