Dáil Éireann Debate, Tuesday - 3 October 2023
169. Deputy Imelda Munster asked the Tánaiste and Minister for Defence the reason that a former Army Private, who retired in February 2012 with 34 years of service, has a 31-year pension, but when they turn 66, their pension falls back to a 21-year pension; and if he will make a statement on the matter. [42708/23]
Amharc ar fhreagraThe Defence Forces Pension Schemes are ‘fast accrual’ schemes under which maximum retirement benefits accrue after 31 years. The vast majority of public service pension schemes are ‘standard accrual’ pension schemes under which maximum benefits accrue after 40 years’ service.
Under the pre-April 2004 Defence Forces Pension Schemes, in the case of Non-Commissioned Officers (NCOs) and Privates, 21 years is the minimum service required for an immediate retirement pension and gratuity, regardless of age.
Where a retiring member has qualifying service of more than 21 years the schemes provide for the award of a 21 year pension which is payable for the person’s lifetime. An ‘additional increment’ is also payable at a flat rate of €10 a week at current rates for each year of service in excess of 21 years, up to a maximum of 31 years. This would give a maximum additional increment of €100 weekly for a person with 31 years’ service. However, under the pension scheme rules, this additional increment ceases to be payable when the pensioner reaches the qualifying age for the State Pension (Contributory), that is currently at age 66.
These arrangements are in accordance with the long established principle of integrating occupational pensions with Social Insurance benefits of employees who are in full PRSI class. This includes NCOs and Privates, who are fully insured for the range of social insurance benefits under the Social Welfare Acts such as the State Pension (Contributory).
Integration means that a person’s entitlement to social insurance benefits is taken into account when calculating the rate of occupational pension payable. In an integrated pension scheme the State Pension or similar contributory social welfare benefit is regarded as part of the overall pension package payable to the individual. The integration principle applies right across the public service and, indeed, in many areas of the private sector as well as in other countries.
It should be noted that the maximum personal rate of State Pension payable upon reaching age 66 (€265.30 a week currently if under age 80) is considerably greater than any reduction that will arise under the Defence Forces Pension Schemes by virtue of the loss of the additional increment on qualification for the State Pension (a maximum loss of €100 weekly under current rates).
This method of integration for ‘pre-April 2004’ military pensioners is in fact more favourable than in other areas of the public service where standard integration applies.
In the public service generally, integration begins from the time the retirement pension starts payment, for example from age 60 where ‘standard pension accrual’ applies. However, these NCOs or Privates who serve 31 years having joined the Defence Forces at age 18/20, can qualify for maximum retirement benefits payable immediately from age 49/51. In their case, the integration process only begins when the State Pension becomes payable to them, for example, at age 66.
The general issue of integration of retirement pensions in the public service was examined by the Commission on Public Service Pensions . Its Final Report, published in November 2000, was considered and broadly accepted by Government. The Commission accepted that integration is a fundamental component in the public service pension framework and was strongly of the view that it should be continued. It did not make any recommendations that would affect the current integration arrangements applicable to retired NCOs and Privates covered by the pre-April 2004 Defence Forces Pensions Schemes.
