Dáil Éireann Debate, Tuesday - 24 February 2004
245 Mr. R. Bruton asked the Minister for Finance his proposals to deal with the pension rights of unestablished workers in the Department of Defence who receive very low rates of non-contributory pension; and if he will make a statement on the matter. [5942/04]
Amharc ar fhreagraI indicated in my most recent budget speech that my intention is to bring forward proposals to change certain pension terms for existing staff. These proposals include, in particular, provisions to amend the formula used for integrating public service and social welfare pensions in order to make better provisions for current and future staff on lower pay levels.
Integration is the arrangement whereby, in the case of public service employees on full PRSI, which includes unestablished civil servants in the Department of Defence, the social welfare pension is combined with the occupational pension to provide a combined pension which is at least as good as the pension which would have been payable if the sole source of pension were occupational pension alone. For information, the lump sum payment due at the time of retirement is not integrated and as such is payable in full based pensionable remuneration and service.
Under the current approach to integration of pensions, the occupational portion of pensions is calculated on the basis of "net pensionable remuneration" — that is, pensionable remuneration less an offset of twice the value of the old age contributory pension. The occupational portion of pension is then calculated at a rate of 1/80th of the net pensionable remuneration for each year of reckonable service up to a maximum or 40/80th over 40 years. The current approach can provide a very low, or even zero, rate of occupational pension, apart from lump sum, for public servants who retire on low levels of pay.
In the approach recommended by the commission on public service pensions and discussed with the public service unions a new formula would be used which would ensure that workers with lower levels of income, that is income below three 1/3rd times old age contribution pension — currently about € 557 per week or €29,100 per annum, would be guaranteed a certain level of occupational income as well at the full old age contribution pension. The occupational portion of the pension will be calculated at 1/200th of total pensionable remuneration for each reckonable year of service; and would be payable in addition to old age contributory pension, as well as the unintegrated lump sum. In the case of employees earning over the limit of three 1/3rd times old age contributory pension, the calculation would yield the same pension as heretofore.
The effect of these proposed changes would be to improve the rate of occupational pension for lower paid public service workers generally, including relevant Department of Defence employees, while not affecting the occupational pensions of workers who are on relatively higher pay. It is important to note that old age contributory pension is paid in addition to the occupational pension, in respect of these workers, and would not be affected by the proposals. Similarly the unintegrated lump sum payments are not affected.
The revised proposals are in line with recommendations brought forward by the Commission on Public Service Pensions and improved, since then, in line with discussions with trade union representatives.
