Service pensioners will see the entitlement from their former military employer increase by €200 a year following another adjustment to the social security system.

The move is a further step towards eliminating the injustice these pensioners – about 6,200 – have been suffering since 1979 when the pension they were afforded by the British government started being deduced from the national pension they were entitled to.

The service pension came about in the 1970s, when a number of workers were given the option to invest in a second tier pension scheme by the British Civil Service.

However, when the time came for them to retire, their national insurance pension was reduced by the whole amount of the service pension because of a ceiling imposed by the Labour government in 1979.

Three years ago, in the 2008 Budget, the government started to address this anomaly, saying the state was committing an injustice by having the overseas service pension deducted. To redress the situation, in 2008, the threshold ceiling was increased by €465.87 a year and then by another €200 in 2009.

The 2010 Budget had no further allowance. However, in yesterday’s Budget, another €200 was added, bringing the total allowance granted over the past three years to €866.

This measure is expected to cost about €1.3 million.