Richard Bruton (Dublin North Central, Fine Gael)
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Question 180: To ask the Tánaiste and Minister for Finance the terms on which national years of service are available for purchase by public service workers; if his attention has been drawn to the complaint that AVCs are sold to public servants without a clear comparison of the relative benefits of opting to buy back years instead; and if he has initiatives in preparation to ensure that pensioners have full information on both options at the time of committing to AVC purchase. [21592/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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In the Civil Service, for which I am primarily responsible, subject to certain conditions an officer may consider purchasing service where s/he has a potential shortfall in service at the relevant retirement age — in other words the officer may be in a position to make additional provision in order to accrue the maximum 40 years' service required for full superannuation benefits by their retirement age. Any superannuation benefits already accrued by the officer in other employment (other than Social Welfare benefits) are taken into account when determining the maximum amount of service the officer may purchase. Any officer wishing to purchase service must apply to his/her Personnel Section. An officer who is permitted to purchase service may opt to do so either by lump-sum payments or by periodic contributions from salary.

In the wider Public Service, it is a matter for each public service body to decide if it wishes to offer a purchase facility to its staff. As I understand it, most if not all public service bodies offer such a facility based on the scheme applicable in the Civil Service.

The AVC schemes operating in the Civil and Public Service are separate from the main pension schemes. In the Civil Service, they are administered by Trustees nominated by the relevant Union under an approved Trust Deed. My Department or other relevant employer (e.g. the Department of Education for teachers, individual State bodies, etc.) co-signs the Trust Deed as Principal Employer. The Trust Deed for each AVC plan makes it clear that the employer's role is primarily a facilitatory one, and that no liability attaches to the Exchequer in relation to the investment and management of the Fund or the payment of benefits under the plan. AVCs are a private arrangement between the individual and the provider. An AVC scheme in the Civil or Public Service is no different to an AVC in the private sector in that it is set up under Trust Law, requires Revenue approval and is subject to the same regulatory regime as an AVC in the private sector. For the purposes of regulation by the Pensions Board (under the Pensions Act) an AVC scheme is classified as a Defined Contribution (DC) scheme.

I am aware of recent comments in the media concerning AVC Schemes operating in the public service. As regards the relative merits of the purchase of service scheme vis-À-vis an AVC scheme, this would be a matter for the officer to consider in the context of his/her own individual circumstances. If in doubt about the matter, independent advice could be sought by the officer.

In relation to the availability of information, detailed information on the purchase of notional service scheme in the Civil Service is available on the Government's website www.cspensions.gov.ie together with some basic information on AVCs. Furthermore, a letter issued from my Department to all Heads of Departments in December 2006 in which they were advised of the requirements to provide specified pensions information to scheme members under the Occupational Pension Schemes (Disclosure of Information) Regulations [S.I. 301 of 2006], including information on the availability of purchase and AVC arrangements. They were also advised that the obligations apply to bodies under the aegis of their respective Departments and that they should ensure that those bodies are formally made aware of the disclosure requirements.