6. Deputy Lisa Chambers asked the Minister for Public Expenditure and Reform his plans to review the Public Service Pensions (Single Scheme and Other Provisions) Act 2012; and if he will make a statement on the matter. (Question 47144/17 asked on 09 Nov 2017)
Deputy Lisa Chambers: Has the Minister any plans to review the Public Service Pensions (Single Scheme and Other Provisions) Act 2012? I ask because the current position of the Minister of State at the Department of Defence is that the Act does not provide for pre-existing superannuation arrangements and, consequently, a 2009 arrangement, CCR 421, which allows for a supplementary pension for retired commissioned officers to be in place.
Deputy Paschal Donohoe: Under section 41 of the Public Service Pensions (Single Scheme and Other Provisions) Act 2012, the Minister for Public Expenditure and Reform can initiate a review, or an actuarial review, or an actuarial review and revaluation of the single public service pension scheme, also known as the single scheme. I have no immediate plans for the carrying out of such a review, bearing in mind, in particular, that the single scheme has been in place for less than five years, which is a relatively short time in pension terms.
Since its commencement on 1 January 2013, the single scheme has been the default pension scheme for new-recruit personnel across all sectors of the Irish public service. It is administered principally by individual public service employers, who are known as “Relevant Authorities”, and who discharge or oversee key member-facing responsibilities, such as the collection of contributions and the tracking of pension benefit accrual. The single scheme already has 60,000 members across the public service, with further significant membership growth in prospect. Against that overall background, the single scheme is, of course, subject to ongoing monitoring by my Department, as is the operation of the 2012 Act more generally.
Deputy Lisa Chambers: I am asking for a review because there is an anomaly in respect of the Defence Forces. From 1995, commissioned officers of the Defence Forces have paid a PRSI class-A contribution, and their pensions are fully integrated with the social welfare system. They were eligible for a supplementary pension, provided by the agreement in 2009, CCR 421, because they reached retirement age at 56. This age went up to 58 and there is a gap before the individuals concerned get their State pension. The implication, where the agreement is no longer in place, is that a new entrant to the Defence Forces - from 1 January 2013 - who is mandatorily retired at 58 or 60 would have a final benefit less than the value of the State contributory pension. New-entrant Defence Forces officers will be at a loss of approximately €12,390 until they reach the age of retirement, at 66. This is to increase to 68.
The Department of Defence acknowledged in 2009 that the compulsory retirement age set the individuals concerned apart from those in other areas of the public service. There is an anomaly whereby the agreement is no longer recognised. There is a gap between mandatory retirement at 58 and the age of 66. The affected officers are actually getting less than what officers who joined before them are getting.
Deputy Paschal Donohoe: In respect of members of pre-existing public service pension schemes, supplementary pensions can be paid only to certain retiree categories and, even then, their payment is subject to strict terms and conditions. In essence, a supplementary pension in a pre-existing scheme is an additional amount of pension that may be paid to a person whose occupational pension is integrated or co-ordinated with the contributory State pension. It can be paid only where the occupational pension, combined with any relevant social welfare benefit to which the person is entitled, is less than the pension the person would receive if the occupational pension were calculated on a non-co-ordinated basis.
If a public service pensioner who would otherwise qualify for a supplementary pension has taken up employment, no supplementary pension is paid. Many public service pensioners with mandated early retirement, such as former members of the Garda and military personnel, go on to take up further employment. I am aware that the Minister of State, Deputy Paul Kehoe, wants to raise with me the point made by Deputy Lisa Chambers. In my contacts with him, I am sure he will raise the matter with me. My experience is that pension schemes are exceptionally complex and any changes thereto have all kinds of consequences that require consideration. I have noted the Deputy’s views on the matter.
Deputy Lisa Chambers: I appreciate that this is complex, but there is an anomaly. It is different from other areas of the public service in that officers are mandatorily retired. At the age of 56, it is more difficult to seek other employment. A small number of people are affected but they are at a disadvantage. In 2012, when the single pension scheme was being negotiated, this did not arise. There was an expectation by the military that this particular arrangement would continue as normal. It was not until afterwards that it realised there was an effect. The superannuation arrangements for new Defence Forces officers who have entered after 2013 are unfit for purpose. They fail to provide a sustainable living benefit until the age of retirement is reached. There is a gap of a substantial number of years during which those affected receive less pay than they otherwise might. It will be very difficult to live on what they will be getting. The officers are being forced to pay a higher contribution.
I appreciate that the Minister of State of the Department of Defence, Deputy Paul Kehoe, will raise the matter with the Minister. The anomaly needs to be addressed. In light of the considerable retention problem faced by the Defence Forces, in respect of which I am sure the Minister of State will brief the Minister further, this matter needs to be addressed. It contributes to members leaving early.
Deputy Paschal Donohoe: As the Deputy will no doubt be aware, many other parts of our public service have mandatory early retirement. The pension schemes of affected members of the public service reflect that. Although not always, the schemes tend to have a slightly different accrual rate to reflect scheme members’ early retirement.
I acknowledge what the Deputy said on this matter. Any changes in areas such as this are very difficult and complex and tend to have costs associated with them. If we make a change in one area, it always has consequences in others. As I have stated, there are personnel in other areas of our public service who have an earlier retirement age and, in many cases, a mandatory early retirement age. I thank the Deputy for raising the matter. I am sure she will continue to raise it with the Minister of State, Deputy Paul Kehoe, who I have no doubt will raise it with me.