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Pension Provisions

Dáil Éireann Debate, Wednesday - 4 October 2017

Wednesday, 4 October 2017

Ceisteanna (230, 231, 232)

Dara Calleary

Ceist:

230. Deputy Dara Calleary asked the Taoiseach and Minister for Defence the way in which the superannuation benefits of Defence Forces commissioned officers who are PRSI class A contributors are integrated with the range of social welfare benefits to include the payment of the State pension (contributory). [42089/17]

Amharc ar fhreagra

Dara Calleary

Ceist:

231. Deputy Dara Calleary asked the Taoiseach and Minister for Defence the arrangements that are applied in cases in which Defence Forces commissioned officers are forced to retire mandatorily on age grounds in advance of the eligibility and payment of the State pension (contributory). [42090/17]

Amharc ar fhreagra

Dara Calleary

Ceist:

232. Deputy Dara Calleary asked the Taoiseach and Minister for Defence the arrangements in place for Defence Forces commissioned officers who joined the Defence Forces since 1 January 2013 under the Public Service Pensions (Single Scheme and Other Provisions) Act 2012 factoring the unique mandatory retirement ages imposed by Defence Forces regulations and alignment with the entitlement of the State pension (contributory) for those that accrue 30 years of PRSI class A contributions. [42091/17]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Defence)

I propose to take Questions Nos. 230 to 232, inclusive, together.

Commissioned officers who joined the Permanent Defence Force on or after 6 April 1995 are, like other public servants appointed since then, insurable for full PRSI and so are entitled to the full range of Social Insurance benefits including the State Pension Contributory. Both the employers and employees make PRSI contributions. In an integrated pension scheme, the State Pension is viewed as part of the overall pension package payable to the individual. The combined benefit from both sources – the occupational pension plus the State Pension – makes up the person’s "total pension". On that basis, the employees’ occupational pensions are subject to a process – known as “integration” – whereby the occupational pension arrangements take account of entitlement to Social Insurance benefits (including the State Pension).

Integration is a standard feature of public service pension schemes applicable to employees in full PRSI class who, whether joining the public service before or since April 1995, were subject to full PRSI. Integration does not apply to retirement gratuities. Integration begins from the time the occupational pension comes into payment and operates on the assumption that a Social Insurance benefit is, in fact, payable. However, except in cases of ill-health early retirement, Social Insurance benefits may actually not be payable until age 66 to 68 (depending on a person’s date of birth). Under standard public service pension scheme arrangements for those who joined the public service before 1 January 2013 in full PRSI class, a "supplementary pension" may be payable in certain circumstances on compulsory retirement prior to State Pension age (66/68) in order to make up the shortfall in total pension in the interim.

This supplementary pension is not payable automatically once a person reaches compulsory retirement age – such as age 60/65 in the wider public service – or some years earlier in the case of military personnel. Rather, the supplementary pension is payable only during periods in which the pensioner is (a) not in insurable employment; and (b) due to causes outside his or her control, fails to qualify for Social Welfare benefit/pension (or qualifies at a rate less than the maximum personal rate of State Pension). The pensioner must meet these qualifying criteria to qualify for payment. Therefore, the supplementary pension is not payable where a "pre-January 2013" public service pensioner is, subsequent to compulsory retirement – for example at age 58, 60 or 65 – working or employed in any capacity that involves a Social Insurance contribution.

As I indicated to the House in my replies to Question No. 51 on 11 July 2017 and Question No. 2106 on 11 September 2017, the Single Public Service Pension 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. The terms and rules of the Single Scheme – which are fundamentally different to the superannuation arrangements of all public servants recruited before 1 January 2013 – make no provision for the concept or award of supplementary pensions for any new entrants joining any public service group on or after 1 January 2013. This position has been confirmed to the Permanent Defence Force Representative Associations.

However, the absence of any provision for the supplementary pension concept in the Single Scheme must be viewed in the overall context of the fundamental changes and reforms to the pension scheme terms of post-2013 new entrants. Such 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 context, there are many other 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.

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