Dáil Éireann Debate, Monday - 11 September 2017
2106. Deputy Aengus Ó Snodaigh asked the Taoiseach and Minister for Defence his plans to address the reduction of benefits to Defence Forces personnel since the introduction of the single pension scheme in January 2013; and if he will make a statement on the matter. [37936/17]
View answerAs I indicated to the House in my reply to Question No. 51 on 11th July 2017, the occupational pension scheme terms of post-1 January 2013 new entrants to the public service, including the Permanent Defence Force, are governed by the Public Service Pensions (Single Scheme and Other Provisions) Act 2012. All first-time new entrants to pensionable public service employment on or after that date are members of the Single Scheme. Under the 2012 Act, overall statutory responsibility for the Single Scheme pension terms and rules rests with the Minister for Public Expenditure and Reform.
The Single Scheme was one of the key structural fiscal reform commitments agreed by Government with the EU/IMF in 2010 under the programme of financial support for Ireland. In the context of the Government’s decision to introduce the Single Scheme, a stated primary objective is to help significantly reduce the cost of public service pensions in the longer-term through far-reaching transformation and reform of the public service pension system. It provides for a new approach which modernises and standardises pension arrangements throughout the public service. As stated by the then Minister for Public Expenditure and Reform on publication of the relevant Bill in September 2011, the new scheme will be fairer particularly to those on low and moderate earnings and, above all, the public service will be better able to manage the costs associated with the demographic and other changes which are coming. These policy objectives and the underlying rationale for them were well publicised in advance of enactment of the 2012 Act.
As I also said in my reply to Question No. 51 on 11th July 2017, the Single Scheme must be viewed in the overall context of the fundamental changes and reforms to the pension scheme terms of post-1 January 2013 new entrants to the public service. Those reforms were decided by Government and the Oireachtas as necessary to support the long-term financial sustainability of the public service pension system. In that regard, I would refer the Deputy to the Annual Review of the FEMPI Acts published by the Minister for Public Expenditure and Reform in June 2017, paragraph 34 of which states as follows:
“The 2017 estimate for the Exchequer pension bill is €2.59 billion in net terms. Underlying cost-increasing trends, notably improvements in life expectancy and connected demographic factors, will continue to challenge the financing of public service pensions. In particular, the expansion of the public service throughout the 1970s will lead to a large cohort of retirements in the current decade. In this context the launch at the start of 2013 of a new career-average pension scheme for new-joiner public servants, known as the Single Public Service Pension Scheme, will be important in curbing upward cost pressures over the longer-term”.
The 2017 pension bill of €2.59 billion includes a net sum of €224.6 million in respect of Defence Forces pension benefits, the cost of which has been increasing year on year.
The terms and rules of the Single Scheme are fundamentally different to the superannuation arrangements of all public servants recruited before 1 January 2013. In that context, there are many established features of the pre-1 January 2013 public service occupational pension arrangements that have been discontinued, or that have been fundamentally changed under the Single Scheme. Among the most notable of these changes is the introduction of career-average pension accrual under the Single Scheme, in place of the more costly final salary pension accrual applicable in the earlier “pre-existing” public service pension schemes.
I should point out that notwithstanding the novel distinguishing features of the Single Scheme, members of the Permanent Defence Force in that Scheme retain the minimum pension age of 50 to reflect operational needs, as already applies to new entrant military personnel recruited since April 2004. This compares with an effective raising of the minimum pension age, from 65 to 68 years, in the case of the mainstream ‘standard accrual’ membership occupations in the Single Scheme. Moreover, the 2012 Act does not alter military retirement ages for future or serving military personnel generally, or upper service limits where applicable – these will continue to be determined by the Minister for Defence, following consultation with the Minister for Public Expenditure and Reform. Importantly, the Single Scheme also retains ‘fast accrual’ pension terms for groups such as the Defence Forces: for operational and HR manpower policy reasons they are required to retire earlier than the norm, and on that account they retain early-paid pensions and accelerated pension accrual.
