Dáil Éireann Debate, Tuesday - 23 March 2004
163 Mr. R. Bruton asked the Minister for Finance the impact of the new pension provisions on the pension entitlement of paid public service workers as a result of the new rules for social welfare pension co-ordination with public service pension entitlements. [8616/04]
Amharc ar fhreagraI indicated in the budget for 2004 my intention to bring forward proposals to change certain pension terms for existing staff. These proposals include, among other things, provisions to amend the formula used for integrating public service and social welfare pensions in order to make better provision for current and future staff on lower pay levels.
Integration is the arrangement whereby, in the case of public service employees on full PRSI, 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. The lump sum payment due at the time of retirement is not integrated and as such is payable in full based on 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 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 income below 3 1/3rd times' old age contributory pension, currently €557 per week or €29,100 per annum, would be guaranteed a certain level of occupational pension as well as the full old age contributory pension. Discussions are under way with the public service unions on the development of a new formula in line with the commission's recommendations.
