Written answers

Tuesday, 24 May 2016

Department of Education and Skills

Pension Provisions

Photo of Noel GrealishNoel Grealish (Galway West, Independent)
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183. To ask the Minister for Education and Skills the number of retired staff from his Department who are deemed to be overpaid due to the payment of a supplementary pension in the past five years; how this situation arose and how these pensions were calculated incorrectly; the value of the overpayment; if the retired staff can appeal this overpayment; and if he will make a statement on the matter. [11629/16]

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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Supplementary pension is a top-up pension paid by the occupational pension provider in the period between retirement and age 66 (previously age 65) to public servants who paid Class A PRSI during some or all of their employment. Supplementary pension is paid in order to ensure that these public servants are not disadvantaged between the date of retirement and state pension age. It is a rule of the pension scheme that a supplementary pension should cease or be abated as appropriate when a pensioner applies for and comes into receipt of the state pension. The limited circumstances in which supplementary pension is payable is included in documentation which issues to pensioners at their retirement. Responsibility in the first instance rests with the pensioner to inform the occupational pension provided (the Department in this case) once the person applies for and becomes eligible for a social welfare payment from the Department of Social Protection.

The advent of new pension legislation in late 2012 facilitated the sharing of information between this Department and the Department of Social Protection. In late 2012/early 2013 the Department conducted an analysis of those pensioners over age 65 who were in receipt of a supplementary pension. On completion of this analysis and a follow-up exercise some c320 teacher-pensioners, out of a total population of more than 25,000 retired school staff, were identified as in receipt of a supplementary pension to which they were no longer entitled as they were also in receipt of a state pension from the Department of Social Protection. Payment of supplementary pension to these pensioners was ceased in May 2013. Payment of the occupational pension has continued in the normal way. Additionally the pensioners continue to benefit from receipt of their social welfare pension.

Overpayment of individual supplementary pension was subsequently calculated. Gross overpayment amounted to €2.7 million. It is estimated that the overpayment net of statutory deductions (PAYE, PRSI etc.) is likely to be in the region of €1.5m however net figures have not yet been finalised as a small number of complex cases are still being worked through.

The Department was conscious that the recovery of the overpayment would have implications in terms of tax treatment for the individuals. Revenue rules provide that relief from income tax paid is granted on repayment only where the overpayment occurs within the previous 4 years. In the instance of these cases some proportions of the overpayment accrued in a period outside the 4 year Revenue limit. In the case of overpayments which fall outside the 4 year Revenue limit, the Department has put in place a method which involves repayment of a net amount calculated using historic pay data from the P60 statements of the individual. This method allows the pensioner to repay the overpayment net of statutory deductions. This approach, which, following consultations with the Revenue Commissioners, was agreed with the Department of Public Expenditure and Reform, represents a fair and equitable response to the issue as it ensures that those affected do not refund pension overpayments to the State to which they subsequently cannot claim tax refunds.

The pension paid by the Department was correctly calculated based on the information provided by the pensioners in question but the overpayment arose when those pensioners also came into receipt of a state pension from Department of Social Protection. The pensioners were not entitled to concurrent payment of supplementary pension and state pension.

To-date just over 200 of the 320 pensioners who incurred the overpayment have already entered into repayment arrangements with my Department or discharged the overpayment in full. My Department is continuing to received undertakings and cheque payments on a daily basis.

The Department is continuing to work with remaining individuals with a view to achieving a mutually satisfactory arrangement for repayment. While the Department's approach to the arrangements for repayment will continue to be flexible in terms of method and timescale for repayment, it must insist on recovery of the outstanding amounts. The statutory superannuation provision for teachers, under which pensions are awarded, provide that where at any time a person receives payment of pension and the person is not entitled to it under the Scheme or receives payment of pension which exceeds those which are appropriate under the Scheme, the person shall repay the amount to the Minister on demand. In addition in default of payment, the amount shall be recoverable as a simple contract debt in any court of competent jurisdiction.

The Department operates an Internal Disputes Resolution process for pension matters generally where a person is aggrieved by any decision affecting their pension. Additionally a person who is not satisfied with the outcome of the Internal Dispute Resolution may refer the complaint or dispute to the Pensions Ombudsman who will determine whether or not this is an issue which falls under his jurisdiction.

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