Dáil Éireann - Volume 614 - 14 February, 2006
Written Answers. - Pension Provisions.
Dr. Upton Dr. Upton
351. Dr. Upton asked the Minister for Finance the way in which and the reason the deduction by twice the rate of the old age contributory pension arises for people in receipt of the old age pension. [5089/06]
Dr. Upton Dr. Upton
352. Dr. Upton asked the Minister for Finance if a person who retires before the age of 65 years, for example at 58 years, still has his entitlement to an old age pension reduced by a deduction of twice the rate of the old age contributory pension. [5090/06]
Mr. Cowen Mr. Cowen
Mr. Cowen: I propose to take Questions Nos. 351 and 352 together.
The Deputy is referring to the system of pension “integration” or “co-ordination” for public servants. This is an arrangement under which the pension entitlements of public servants on full PRSI are limited to take account of the fact that these public servants have both a social welfare pension and an occupational pension from a public service pension scheme. Integration has the effect that the reduced occupational pension, when combined with the old age contributory pension, provides an overall 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.
Before July 2005 “integration” was based on a formula which deducted twice the rate of the contributory old age pension, OACP, from the pensionable income used in the calculation of their occupational pension. After that date, a revised formula was introduced to improve the position of public servants on lower income. The introduction of the new formula was agreed by the Government as part of public service pension reforms and implementation of the bulk of the recommendations of the Commission on Public Service Pensions. The new formula does not make a flat rate deduction of twice the OACP, but applies a weighted deduction to give relatively greater benefits to lower-paid staff.
This new approach to the calculation of the occupational portion of pensions is as follows: 1/200th of the pensionable remuneration below three and one third times OACP — currently €33,621.31 — multiplied by the total number of years reckonable service plus, where applicable, 1/80th of the pensionable remuneration in excess of three and one third times OACP multiplied by the total number of years of reckonable service.
 Persons appointed to the public service can not, as a general rule be paid superannuation benefits until they have reached 65 years of age — 60 years of age in the case of people appointed before April 2004. While there are exceptions to this general rule, such exceptions tend to apply in the security services — Garda, Army, Prison Service — where members can retire at earlier ages. In 2005, following on the recommendation of the Commission on Public Service Pensions, a scheme was introduced — backdated to 1 April 2004 — to allow public servants, who meet certain conditions, to retire with immediate payment of actuarially reduced superannuation benefits. The actuarial reduction is designed to ensure that the overall cost of the pension benefits are not increased.
In any situation, regardless of age, where an integrated pension is being calculated the entitlement to old age contributory pension is taken into account by the application of the revised formula to reckonable remuneration.
Mr. Hayes Mr. Hayes
353. Mr. Hayes asked the Minister for Finance the position with effect from the 1 January 2004 on the fact that PRSI and tax relief apply to all pension contributions as raised by a person (details supplied). [5126/06]
Mr. Cowen Mr. Cowen
Mr. Cowen: I understand PRSI relief is only available for employees who pay pension contributions to occupational pension schemes, retirement annuity contracts, or personal retirement savings accounts. Relief is not available to the self-employed. PRSI is first and foremost a matter for the Minister for Social, Community and Family Affairs.
Dáil Éireann 614 Written Answers. Pension Provisions.