Martin Heydon (Kildare South, Fine Gael)
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To ask the Minister for Defence the reason an army pension has been reduced in respect of a person (details supplied) in County Kildare; and if he will make a statement on the matter. [15342/13]

Alan Shatter (Dublin South, Fine Gael)
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Under the pre-April 2004 Defence Forces Pension Schemes, the minimum service required for an immediate pension and lump sum in the case of NCOs and Privates is 21 years, regardless of age. Maximum benefits accrue after 31 years. The 21-year pension consists of the following elements: (a) a basic flat-rate pension that varies according to rank (Sergeant in the case of the person referred to); plus (b) an addition in respect of military service allowance (MSA) equal to 40% of the MSA rate where discharged since August 1990; and ( c) if applicable, fixed % additions in respect of certain other qualifying payments (e.g. 3% extra for Technician Pay in this case).

All of the above elements are payable for the person’s lifetime. However, an ‘additional increment’ is also payable at a flat rate for each year of service in excess of 21 years up to a maximum of 31 years. This increment is increased, where appropriate, by the top-up at (c). Where maximum pensionable service is 31 or more years, as applied in this instance, the MSA top-up is 50% of the rate of MSA (rather than 40%). However, the additional increment ceases to be payable when the pensioner reaches the qualifying age of 66 under the Social Welfare code for a State Pension Contributory, or if they become entitled to a Retirement Pension Contributory at the earlier age of 65. At the same time, the 50% MSA top-up reverts to the 40% rate. When the person referred to retired from the Defence Forces on 7 October 2002 (at the prescribed age of 60), he had accrued the maximum pensionable service of 31 years. On that basis, his military pension included the additional increment for 31 years’ service and the corresponding MSA top-up. He reached the age of 66 years on 7 October 2008, the qualifying age for the State Pension Contributory. In accordance with the arrangements mentioned, these additional elements of his Defence Forces pension ceased to be payable from that date.

I am advised that 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 benefits under the Social Welfare Acts such as the State Pension. ‘Integration’ means that a person’s entitlement to Social Insurance benefits such as the State Pension is taken into account when calculating the rate of occupational pension payable. The State Pension etc. 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.

However, the method of integration for military pensioners such as the person referred to is considerably less severe than in other areas of the public service. The maximum personal rate of State Pension is currently €230.30 a week (if under age 80). This is considerably greater than any reduction that could arise under the pre-April 2004 Defence Forces’ pension arrangements on qualification for the State Pension.

The general issue of integration of occupational 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 pensions schemes.