75. Deputy Jack Chambers asked the Taoiseach and Minister for Defence his views on whether fast accrual is designed to deliver optimal final benefits after 30 years of contributions and that standard accrual is designed to deliver optimal benefits after 40 years of contributions in Defence Forces pensions; and if he will make a statement on the matter. (Question 18315/18 asked on 25 Apr 2018)
Minister of State at the Department of Defence (Deputy Paul Kehoe): Military occupational pension (superannuation) schemes operate within the broader context and framework of public service pension policy as determined by Government. The design, structure etc. of military superannuation arrangements has evolved in the overall context of public service pension reforms, especially developments over the past two decades or more. For operational and HR policy reasons, Permanent Defence Force (PDF) personnel have ‘fast accrual’ superannuation arrangements, along with lower ‘minimum pension ages’ and lower mandatory retirement ages (or where applicable, upper service limits) than the norm elsewhere in the public service.
The superannuation arrangements of members of the PDF depend primarily on when a person first joins the public service. Different fast pension accrual arrangements apply to personnel who:
- joined the PDF before April 2004 (‘pre-April 2004’);
- joined between 1 April 2004 and 31 December 2012 (‘post-April 2004’); or
- join from 1 January 2013 onwards.
PDF personnel who joined ‘pre-April 2004’ have atypical fast accrual pension scheme arrangements the overall value of which are considered to be more advantageous to the individual, in the round, than for other public service schemes generally. This is due mainly to the availability of pension and gratuity (lump sum) payable immediately on retirement after relatively short periods of service, and regardless of age. The minimum qualifying period for pension and gratuity is 12 years pensionable service in the case of commissioned officers and 21 years’ service for enlisted ranks. For pre-April 2004 enlisted ranks, maximum retirement benefits (pension and gratuity) accrue after 31 years’ pensionable service. In the case of pre-April 2004 commissioned officers, maximum pension accrues after 23 – 30 years’ pensionable service depending on retiring rank, service in rank, overall service etc., while maximum gratuity accrues within four years of the mandatory retirement age for the rank.
‘Post-April 2004’ PDF personnel have quite different superannuation arrangements that are more in line with conventional public service schemes generally but, importantly, retain early-paid pensions and fast pension accrual. These PDF personnel have a ‘minimum pension age’ of 50. Maximum retirement benefits, based on pensionable remuneration at retirement date, are attained after 30 years’ pensionable service. This is the equivalent of the 40-year standard accrual period required for computing maximum retirement benefits in most other public service areas, where retirement benefits are not ordinarily payable until age 65.
New entrants who join the public service from 1 January 2013 onwards – including PDF members – are covered by the Single Public Service Pension Scheme, the terms and rules of which are fundamentally different to all pre-existing public service pension scheme arrangements. Retirement benefits are based on a career average-earnings model, rather than final salary as applies pre-2013. Members of the PDF in the Single Scheme retain the minimum pension age of 50 as well as fast accrual pension terms, to reflect operational needs. Retirement benefits are based on the person’s pensionable remuneration (reckonable earnings) throughout their total career in the public service, and not on years’ service as such. The Single Scheme does not cap the length of time over which members can accrue pension benefits (unlike the 40-year service cap for standard accrual, or its equivalent 30-year service cap for fast accrual typically present in pre-2013 public service pension schemes).