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Dáil Éireann debate -
Thursday, 4 Mar 2004
Vol. 581 No. 4
Public Service Superannuation (Miscellaneous Provisions) Bill 2004 [Seanad]: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
Mr. Kelleher
I welcome the opportunity to speak on this provision. It is timely and appropriate that we discuss the important matter of the provision of pensions. I wish to put on record my appreciation and thanks to the Government for addressing this concern that has arisen in recent years. However, if we were not forward planning and looking to the future, we would have made no efforts to address the problems that will arise from 2020 onwards owing to demographic changes and an ageing population with longer life expectancy. Some of the issues have been addressed already in terms of the introduction of PRSAs.
I raised this issue some years go because of my concern that young people in particular, because of the Celtic tiger and their consequential affluence, were not looking to the future and saving to provide for the rainy day and for pensions further down the road. The provision of PRSAs by the Government was very welcome. They made saving attractive for young people at a time when an ideology of invincibility had grown among young people involved in technology stocks and blue chip investments. Many were making a lot of money at an early age and they were not being encouraged to save any of it. They were led to believe that they would never experience poverty, fall ill or grow old and require some pension to sustain them and maintain quality of life in their latter years.
That is something that has been addressed through the introduction of PRSAs. There has been a great take-up of these, but it is important to keep driving home the message that while we have a young population the most effective way of addressing the issue of support for them in the years ahead is by getting them involved in pension schemes at a young age when payments are not as large as they would be for people in their mid-40s. If we do nothing else, we should drive home the message that people should invest in pension funds to allow a quality of life as they grow old.
The purpose of this Bill is to address two major problems. One is demographic change. We have a very young population, the result of the baby boom of the 1970s and 1980s. That population will begin to grow old from 2020 onwards and we need to make provisions for pension payments. That is the reason for introducing this Bill. Raising the age limit for retirement will allow people who are capable and willing to continue working. It means that people with ability and something to offer can stay within the public service. This is fundamentally important.
We have been saying for many years, since the Celtic tiger came about and since unemployment figures dropped, that there is a need to address this issue. Some of our very best, brightest, most experienced public servants must leave the public service, whether they wish to do so, simply because of the age barrier in the public service. This Bill provides for a major change in this area. The Commission on Public Service Pensions had major consultations and dialogue with the various unions and representatives. While this has been happening since 1996 and the publication of the report in 2001, there has not been consensus. We accept that. However, the Government must make a decision for the betterment of all society, not for particular interests. Unions are obviously trying to address the concerns of their members and highlight the issues they want included in any report, decision or legislation. The Government has been fair in addressing the underlying issue of ensuring that enough is put aside, through the pension reserve fund and through this public service superannuation Bill which provides for change in the age of retirement and more flexible arrangements throughout the public sector.
We must be honest with ourselves. If we took the short-term view, this would not be an issue for the coming years and we would not be making these changes. Governments must look to the longer term as well. The Government has been forward-looking in discussing issues relevant to the middle of the century, as far ahead as 2056. The Government is looking to the problems of the future and addressing those problems now. France and other countries experienced a similar demographic shift in a short period. Their populations were suddenly older, they had lower birth rates and longer life expectancy. All this culminated in an ageing population dependent on a small ratio of younger people in the workforce. That created huge problems in France and massive industrial problems as well. The French Government addressed the problem by changing the pension entitlements of people who had already retired because of concern that the country could not afford to maintain the current pension payments.
People have asked why we are taking the soft option. This is a soft option simply because the Government is making the decision in good time. If it put its head in the sand and did nothing until the issue arose more immediately some time down the road, it would have to make very difficult decisions that would cause much hurt to people who had contributed to pension funds for many years. If the State found it could not continue to pay these pensions we would have major problems. There would be huge industrial problems and huge personal problems for people who had assumed they would have a certain quality of life if the State had to renege on paying pensions. I do not accept that the proposals in this Bill constitute a soft option. It is an option that seems soft simply because it is an option of foresight. The decisions being made today will benefit people in the future.
There is concern on the part of the unions. They have expressed their grievances. They have contacted public representatives and made submissions to the commission. Some public sector unions are not happy with some of the changes proposed in this Bill. However, it must be accepted that new entrants to the public service are clearly defined in this Bill. Anybody entering into a contract of employment with the State, through the public sector, on or after 1 April will be fully aware of what will be involved when they reach retirement age, namely, that the latter will be increased and that they will have more flexibility in the later years of their working lives. We should emphasise this in a positive way. We are trying to highlight the importance of people making a full and meaningful contribution in the public sector, in society and in their lives and those of their families. If these people are capable, willing to work and have an ability to contribute, why should they not be allowed that opportunity to continue working?
In the past when we had high unemployment rates, there was always the option of trying to encourage people to retire early in order that spaces in the public service could be freed up and new employees recruited. It was a case of churning people out and taking others in. We should try to retain for as long as possible the bank of experience we have developed. This provision will help us to do so.
I have already referred to demographics but some of the figures are quite alarming. For example, the Department of Social and Family Affairs has indicated that older people will comprise a larger proportion of the population in the future. At present, there are 430,000 people of pensionable age in Ireland. During the next 17 years, this will increase by 55% to almost 660,000. That is an alarming increase in such a short space of time. If we do not address this matter in the next number of years, we would face major difficulties in trying to pay these people's pensions. The national pensions reserve fund is an integral part of our long-term planning and overall strategy to ensure that we can afford to support people in the public sector when they cease working and go on pension. These people must have available to them the dignity and quality of life for which they planned.
We have made many strides forward in recent years, particularly in terms of changes to budgetary and taxation measures designed to encourage people to save their money. We have encouraged people earning good incomes to make their regular pension contributions and also to save more money through other available pension schemes to ensure that they will have a good quality of life and will not be the burden on others that they would have been if they did not take action in this regard. I urge the Minister and those involved in the pension schemes to market this matter in a positive light and encourage people to join such a scheme at an early age. I compare this to young people smoking. One might say to them at 17 or 18 years of age that cigarettes will affect their health but, at that age, it does not make a great deal of sense to them because they believe they are invincible and will never get sick or grow old. At 35 or 40 years of age, however, they may discover that they have cardiovascular difficulties as a result of their smoking. They will look back and state that if they had not smoked, they would not be in that position. The same mentality applies in respect of pensions. We must do whatever we can through taxation changes to encourage people to save money and invest in their pensions.
The Commission on Public Service Pensions did a great deal of work. It was established in 1996 and reported in 2001. This body is owed a debt of gratitude for producing its in-depth analysis. The commission was made up of a broad cross-section of people representing the social partners, the various Departments and those involved in the insurance and pensions industries. The Government has taken on board the majority of the commission's recommendations, which is one of the reasons the Bill is before us today.
While various unions may have difficulties from the point of view of their members, we must try to address societal and demographic changes as a whole. Everybody concerned must take the broad and long-term view that this issue must be confronted and addressed now to ensure that there is no pain or difficulty in the years ahead. New entrants are clearly defined in the Bill and this makes those entering the public services after 1 April fully aware of what will be involved when they reach retirement age, which will be increased from 60 to 65 in most cases.
It is not possible or practical to try to change a pensions system halfway through. On commencing employment, people enter into contracts with their employers — in this case, the State — and certain pension provisions are made for them. It would be unthinkable that, in 2020, 2025 or later, the State would be obliged to renege on the contracts into which it entered with public sector workers and that their pension payments would be changed. The latter happened in France and it is continuing to create problems for that state and its employees.
Everyone is conscious of the importance of increasing social welfare and pension payments to elderly people. The Government has made a commitment to try to increase the pension payment to €200 during its term of office. We must ensure that we can afford to do so in a comfortable way and that, by increasing pensions in one area, we do not short-change those in other areas who are entitled to payments. The provisions the Government has made in recent years are coming to fruition in the sense that the Bill has come before the House and the national pensions reserve fund is already in place. Under the Bill, people in the public sector will be able to continue to remain in employment until they reach 65 and, in some cases, beyond, particularly if they are capable, willing and want to contribute.
We have planned ahead and I hope that those who oppose us and have concerns will consider the fact that the Government is making the decision for everyone. It is in the best interests of everybody to make these decisions now as opposed to doing so down the road. While individual unions and sections of the public sector have highlighted their concerns, there is no doubt that we have, in general, taken a balanced and long-term approach.
I compliment and place on record my thanks to everybody who sat on the Commission on Public Service Pensions. They faced an arduous task by becoming involved in this huge undertaking. The commission issued many good recommendations and the Government has taken most of them on board. Such action is a compliment to the commission and its approach which entailed bringing everyone into the loop and discussing and explaining the issues. It was not merely a case of the commission obtaining submissions from a few people and drawing up a report for submission to the Government. The commission's approach was detailed and well thought out from the point of view of extracting information and its report was well presented.
I commend the Bill to the House. I thank the Minister and those involved in this area in recent years. While members of the Opposition might complain about the fact that we have been in Government for so long, it is at times like this they must accept that it is important to have continuity on this side of the House in order that there is a follow through regarding decisions that are made and commissions that are established. The Bill, the national pensions reserve fund and the various tax changes in recent years aimed at encouraging people to save are representative of the continuity of Government, policy and personnel in the different Departments. This continuity has helped us to begin to address the alarming problems with which we would be faced in the future.
The Minister for Finance, Deputy McCreevy, must be commended because he highlighted this matter many years ago when in Opposition. It was part of our policy platform before the 1997 general election that, in the event of our returning to Government, this issue would have to be addressed. I do not wish to make political points about something that will happen in the future regarding changes in public sector pension services. However, some Opposition parties accused us of having election slush funds, etc.
Before the previous general election, the parties in Opposition stated that, if they got their hands on the reins of Government, they would use money from the national pensions reserve fund for various projects. The Government has made a commitment, through the enactment of legislation, to ensure that a fixed percentage of gross domestic product, GDP, would be invested in the pension reserve fund every year, whereas members of the Opposition have indicated that, if elected to Government, they would loot and pillage the fund which was established to address the concerns, fears and anxieties of many people whose pensions the State may otherwise not be able to afford. I highlight this point to show the paradox of Deputies who have accused the Government of not planning sufficiently for the future stating in the same breath that they would plunder the national pensions reserve fund.
I thank everybody involved in the presentation of the Bill and commend it to the House.
Ms O'Sullivan
I welcome the opportunity to contribute to this debate on pensions legislation. The Labour Party is supportive of Government efforts to address the issue of pensions and supported the establishment of the Commission on Public Service Pensions. Having said that, we oppose the Bill because we do not support aspects of it, specifically those which were not agreed by the public service committee of the Irish Congress of Trade Unions. While it is important to make provisions such as those in the legislation, many of which we support, it is being pushed through without agreement having been reached in the working group established following the publication of the report of the Commission on Public Service Pensions. As such, the Bill is a betrayal of the spirit of partnership.
As the previous speaker stated, it is important that Government introduces provisions of this nature for the future. Pension provision is also an issue for all European countries, and the establishment in 1996 of the Commission on Public Service Pensions, which reported in January 2001, was necessary. It is important, however, to examine the subsequent sequence of events to explain the reason the Labour Party opposes the Bill.
Following publication of the commission's report, a working group was established comprising representatives of employers and the public service unions under the aegis of the public service committee of the Irish Congress of Trade Unions. Sustaining Progress referred to the working group and suggested it should report by April 2003. However, no agreement had been reached in the working group by that date and further discussions, which followed in the autumn of 2003, also failed to reach agreement. The Minister for Finance then announced the Government's decision on public service pensions in his budget speech of 2004, effectively railroading it through against the express wishes of ICTU. That is the background to the legislation.
I was made aware of the concerns of the trade union movement in October 2003 when the matter was brought to my attention by the teaching unions. I subsequently wrote to the Minister for Education and Science who transferred my correspondence to the Minister for Finance. The Minister wrote to me outlining his plans to announce in the budget the implementation of the recommendations of the Commission on Public Service Pensions and to take a decision on the teaching profession and other groups, despite the objections of the public service committee of the Irish Congress of Trade Unions.
As I stated, this amounted to a betrayal of the spirit of partnership because agreement had not been reached. The teaching unions are especially concerned about the provisions of the Bill and, as my party's spokesperson on education and science, I will focus on addressing their concerns. Concern is not confined to the Irish National Teachers' Organisation which has spoken to almost every Member of the Oireachtas about the legislation. All the teaching unions are concerned about the measures, including those which affect the entire public service.
The increase in the minimum pension age, for example, will apply to all new entrants to the public service, including civil servants and those working in education, local government and the health services. I will comment briefly on psychiatric nurses later because they are particularly adversely affected by the legislation. Other health professionals and staff in the non-commercial State-sponsored bodies are also covered by the provision on retirement age.
I am concerned about teachers because they will be required to work until the age of 65 years before they are eligible for a full retirement pension. I am also concerned about the effect this will have on children in the classroom. When the teaching unions raised this issue with my party, they pointed out that only a small number of teachers will face difficulties arising the provision to preclude them from taking early retirement from the profession. On the other hand, difficulties will arise for many children being taught by teachers who should be retired, whether due to stress — teaching is a stressful occupation — or other reasons.
I do not speak as someone with a great deal experience in teaching as I taught for only two years in what could be described as the public service, although I also did some pre-school teaching, an area outside the remit of the legislation. I speak from my experience as a parent and from listening to other parents and teachers. When a teacher should not be in the profession, especially if or she knows this, it can result in major changes in the lives of children and their attitudes to school and education.
This is especially true of primary schoolchildren, who spend a full school year with a teacher, and infants, specifically those in their first year who commence school with enthusiasm, bright eyed and bushy tailed with their new bag and books and so forth. If a teacher should not be teaching due to personal problems with the profession, it will colour the attitude of such children to school with the possible result that they decide they do not want to go to school. These attitudes can stay with children for the rest of their educational life and will obviously affect the rest of their lives, given that one's life chances are largely determined by one's success at school.
For this reason, it is probably more important for parents and children than the teacher in question that teachers should not be compelled to remain in the classroom in circumstances in which they should be retired. For every teacher affected, as many as 30 children in his or her class will be affected.
This leads me to the stressful nature of teaching. Teachers must deal with large groups of children in among the largest classes in Europe. They must also deal with social behaviour which has changed significantly since the Deputies present attended school, although I note the presence of two relatively young Deputies who probably went to school much later than I did. As recently as yesterday, I spoke to a teacher who described the kind of abuse and language teachers must now listen to in schools and the kind of pressures they are under. Even a few troublemakers in a class can change its atmosphere and make it extraordinarily difficult for a teacher to do the job he or she is employed to do, namely, to teach.
Much of teachers' time is spent simply maintaining control. Young people have the capacity to disrupt a class in a manner not possible in the past when there was a much greater respect for authority. It is a fact of life that the social system, including respect for gardaí, teachers and various other authority figures — I could mention politicians — has changed dramatically. Teachers have to cope with that in the school setting. I am convinced there is a genuine case to be made to allowing teachers to retire early. The general retirement scheme which currently provides that one must retire at 60 years of age is being changed to 65 years and the early retirement scheme is limited. There is a particular case to be made for the teaching profession.
Another issue specific to teachers relates to young people currently in teacher training. The Bill exempts trainees in the Garda training college in Templemore from the changes being made in this legislation. Obviously, as other speakers said, people already in public service employment are also exempt. There is every good reason trainee gardaí should be exempted from these provisions and I fully support the Minister in that regard. Will the Minister apply that exemption to trainee teachers? A person attending a university or institute of technology has various professional options but those who attend teacher training colleges do so because they have chosen to become teachers. Such people are, therefore, already linked to the profession. An amendment in this regard has been tabled for Committee Stage in the Seanad and I understand one will also be tabled during Committee Stage in this House. This matter was raised with me yesterday by a student from St. Patrick's College when I and many other Deputies met student union representatives. I ask that the Minister apply the exemption to students already in teacher training.
Many of the concerns expressed by teachers also affect other professions. One such issue is the exemption for those categorised as re-entrants provided they return no later than 26 weeks following the last day of service prior to 31 March. The case is made that the legislation will apply retrospectively to people who were not aware this legislation was being introduced and who have been out of service for a period longer than six months. I ask the Minister to ensure such people are enabled to return to service after 1 April. It is only fair they are not affected because they were out of service for more than 26 weeks.
People with a long service record of not less than 15 years who return to service should also be recognised. I am referring in this instance to women, and possibly men, who have taken time out for parenting duties, many of whom would be teachers though not all because it also applies to other public servants. The Minister should ensure the legislation is family-friendly and should facilitate those who have taken such time out. I had an opportunity to be at home when my children were young. I would not wish on anyone the possibility of not being able to take time out. Pressures on young parents are greater now than in the past because of high mortgages and the difficulties encountered when running a home on one income. A parent who makes the sacrifice and decides in the best interests of his or her family to take time out, should not be penalised when he or she reaches pension age. I ask the Minister to take that point on board.
The proposals I have put forward are valid and will not be costly in terms of overall savings. The Minister, in his budget speech, said it was estimated that the annual savings which will arise from the introduction of the pension changes will be approximately €300 million in current terms in 30 to 40 years time, with some savings being realised earlier. I commend the Minister for saving money whenever he can. It would not cost a great percentage of that figure to make the changes requested by the teachers' unions in particular although these issues also affect other professions.
Psychiatric nurses, who obtained rights under earlier pension schemes, will be more affected by this provision than others in the health sector though it will affect general nurses, doctors and others. Psychiatric nurses do a demanding job and work under enormous pressure. They work on a day-to-day basis with people who, by their definition, have psychiatric problems and can be extraordinarily difficult to deal with on a personal level. Many psychiatric nurses suffer physical assault and are faced with physical danger and psychological stress. It is a difficult profession. Again, I believe their case should be listened to.
Changes are also being made for gardaí, prisoner officers and the Defence Forces. One could make the case that these are difficult areas in which to work. I understand the Minister has to put money aside and the Labour Party does not have a problem with the broad thrust of the public service pensions commission's remit and the majority of its recommendations. It is good to plan for the future. These are human issues; they are not something we might talk about in terms of broad policy objectives. We are talking about individual human beings who are inappropriately placed in the caring professions and who, through no fault of their own, may not be able to retire early and who may cause problems for those in their care be they children in school, psychiatric patients or others being cared for in the health services.
The Minister should consider these proposals in the interests of society and the particular individuals mentioned. I assume the Minister also met the INTO and other unions concerned about this issue. I hope he listened to what they said and will take their genuine concerns on board. They are not just making a case for themselves because those who made representations on this matter are people already employed in the public service who will not lose out or be affected by the changes. They do not argue this case for selfish reasons, their motives are altruistic. They are concerned about their professions and for those coming after them who may have even more difficult and stressful issues with which to deal in the future. Things are already moving in that direction and may continue moving that way. These are, by and large, caring professions whose influence is much wider than their health and stresses. They affect others with whom they come into contact in their role as carers.
I ask that the Minister consider these issues in a human way and that he be sympathetic to amendments which my colleague, Deputy Burton and other spokespersons, will table on Committee and Report Stages.
Mr. Andrews
I wish to share time with Deputy Mulcahy. It is slightly surreal to speak on legislation, the effect of which will not be felt for another 30 years. Few of us can hope to be around when its effects are realised. This legislation is a far-sighted measure on the part of Government in that it is laying the groundwork for solving the problems of the future. This problem has already manifested itself in Europe, particularly in northern Europe, in demographic changes. It is normally characterised as a time-bomb and it has become something of a cliché to talk about the pensions requirement growing here.
We are in the fortunate position of having experienced a period of growth and wealth that allows us to plan as well not have the same problems as the northern European countries. Principally this is because we have the social tradition of southern Europe in countries like Spain and Italy in the sense that our older people are still cared for by their families to a much greater extent than is the case in northern Europe. The pressures on the State, therefore, to provide for the care of the elderly is not as great now as it is in our neighbouring countries. In the United Kingdom, for example, the worker to pension ratio is much lower than it is here.
The planning for the future with which the Government is to be credited will not only extend to this legislation, which is short but far-sighted, but it is seen in the national pensions reserve fund which is operated independently of the Minister. It has been effectively sanitised from political influence and bar that the Committee of Public Accounts can call the fund to task for any of its activities, it is without political influence. That is appropriate.
One per cent of GNP is a very significant amount of money. That it is GNP and not GDP means it is an even greater sum of money because GDP includes repatriated profits in respect of foreign companies here. The national pensions reserve fund is another branch of this forward thinking and far-sightedness of the Government. This fund cannot be touched until 2025 and that effectively allows Governments to plan ahead to the year 2055. In 2055, if God spares me, I will be in my late 80s. That is why I said it is slightly surreal to talk about the impact of legislation before the House today which will bear fruit in so many years' time.
The Employment Equality Authority has identified that of the issues complained about to the authority, 10% are related to age discrimination. That indicates that we need to make some serious changes in work practices, as well as deal with the legislation before us today. The National Economic and Social Forum recommends wide-ranging changes in work practices to reflect the greater pressures for the elderly.
A large number of reforms should be promoted by the Government in the not too distant future. Already we are seeing specific housing policies for the elderly to allow them stay at home for the longest possible time and in so far as these policies are successful, it relieves the burden on the Government and enhances the quality of life for elderly people.
In the health strategy we need to prioritise the provision of home help services for the elderly. The Minister of State, Deputy Callely, has provided for primary care physicians, which helps older people to stay at home for longer periods. He is already in consultation with my health board area to deliver this service in a more wide-ranging fashion.
Work practices need to be greatly improved. We have to provide incentives, in particular flexible working hours, in the future to encourage people to stay in the workplace.
An issue I have raised a few times in the House is the role of the elderly in the partnership process. I am aware some influence is being brought to bear to try to include representatives of the elderly population in the partnership process and I hope they will be included in all future negotiations in that regard.
I would also like to see an extension of the applicable age limit in the Employment Equality Act from the current age of 65. If we are to introduce these wide-ranging reforms in the working population, we have to increase the ambit of the Employment Equality Act so that it will protect those over the age of 65.
The Law Reform Commission has also recommended changes in regard to vulnerable adults, and I hope we will be able to make those changes.
There was some comment about the drop in the ratio, to which I referred earlier. In this country it is something like 5:1, which is a much better ratio than that in other countries. For example, in the UK it is 3.4:1. It is predicted that 50 years from now it will be 2:1 here and in just ten years it will be 2:1 in the UK. We should not panic unduly about the drop in the ratio for two reasons. First, work practices have become far more productive in the past decade or so. Workers are producing more than they have in previous times, and as a result we are not really comparing like with like. It is also relevant to point out that we have a much larger migrant population and we need to encourage that. I have spoken about that issue previously.
Deputies have referred to younger Members of the Oireachtas and how this measure will affect new entrants after 1 April 2004. It does not apply to me but will apply to a person of my age coming into the House who perhaps faces the prospect of a short political career. The constituency I represent, Dún Laoghaire, can be volatile and is not in the habit of returning the same five Deputies. It is a sword one may have to fall on in due course. Is it unreasonable for a Deputy to expect some kind of pension entitlement, given the increasingly precarious nature of our job? That should not be the case. We should not be entitled to pensions at young ages when other members of the population are not entitled to them. Nobody comes into this House on the basis of the attractive financial arrangements, whether by way of salary, entitlements or pensions. Most people, if not all, who come into this House have other careers and are able to fall back on those careers to some extent after they leave the House. It is proper and right that the Members of the Oireachtas always have that characteristic. The idea of a career politician is not a good one. If Members have something to fall back on they do not feel the pressure to stay here at all costs. If one at least has something to fall back on one knows one can hang on to some of the principles one came in here with. Politicians do not hope to stay here at all costs. They have an ambition to see their principles through and if that means putting their political careers in jeopardy, so be it. That is not something we should try to stitch into legislation.
On the question of teachers, I spent seven years working as a teacher at post-primary level. I acknowledge the point Deputy O'Sullivan made and I have listened to many teachers on this issue. In the schools in which I taught there were many teachers who were over 60 years of age but who were extremely valuable members of the staff. There is a provision in section 10 to allow teachers suffering from ill health to take up their pensions at an earlier age. As regards flexibility, where a teacher suffers stress — there is no question that it arises in teaching more than in other professions — that should be acknowledged as a ground of ill health and the person should be allowed to retire, accordingly, with dignity and a full pension. Such an approach benefits both teachers and students. I will conclude on that and commend the Bill to the House.
Mr. Mulcahy
I welcome the Bill and thank the Minister for coming to the House to listen to the debate. It is an extremely important issue. This Bill primarily deals with public sector pensions. The Minister, who has been in office for a fair number of years in comparison with several other Ministers for Finance, has made many other changes to pensions in the private sector. I hope the private sector is not ignored in this debate. People in the public service have security of tenure and their pensions are secure. That is not the case throughout the private sector. When debating the principles of this Bill there are issues which should be borne in mind with regard to the private sector.
I welcome the Bill because it gives legislative effect to the Commission on Public Service Pensions. One of the Bill's great triumphs is that it attacks the old concept of ageism. That is——
Mr. Durkan
There is a new concept of ageism now.
——that at the age of 65 there is a little drinks reception, the employee is given a gold watch and goes home to vegetate for the rest of his or her life. Not only are people living longer, they are better educated and well capable of contributing to their jobs, to the economy and to themselves at the age of 65 and over. Unlike Deputy Andrews, who perhaps sees himself as being long departed from this House at the age of 80, if I am alive and well and still being elected-——
The Deputy should please not go there.
——at the age of 80, I am prepared to offer my services to this House, à la Chinese leaders who seem to live for a long time. Anyway, I do not want to trivialise the debate by going into that issue. The most important point in this Bill for me is that it abolishes the link for new entrants between age and compulsory retirement in most areas of the public service. I am not sure where that leaves current employees in the public sector, whether they will be forced to retire at the age of 65. If they are, why not change it for everybody from 1 April 2004? Why not let people who are in the public service at this stage work on past the age of 65?
The first thing I welcome about the Bill is that it scotches the notion that an employee is finished at the age of 65. However, in so far as this will apply to the public sector, will the Minister please ensure that it also applies to the private sector, because employees, aged 65, are being forced out of business and made to retire? That is, in effect, an ageism principle. Somebody came to my advice clinic recently who had an independent contract with a statutory company established by the State. I looked into the matter and, although this man was in the fullness of his health and had passed the various eye tests and so on, he was told that he could not continue with his contract over a certain age. That is wrong. The principle should be if someone is in the fullness of health and passes the various eye checks and so on, he or she should be able to carry on business with public companies for as long as he or she is capable. I accept of course that some general guidelines must be in place, for example where public safety is concerned. I ask the Minister to look at the whole question of the inter-relationship between private contractors and the public service, with reference to the question of ageism.
Public servants, including politicians, are lucky to have such a high level of pension benefit. The Minister made the point in a speech recently that it would take an enormous sum of money paid into a private sector pension fund to get the type of annual pension payment that somebody in the public service gets. It is a generous benefit indeed. This issue needs to be looked at in greater depth in the private sector. It is a scandal that low paid workers are ignored in their pension entitlements by many private sector employers. In recent years construction workers have complained that their pension contributions were not being paid by employers. That is a terrible scandal. Any employer who does not fulfil his or her contractual pension obligations to employees should face serious consequences, if not imprisonment. It is not good enough that those low paid vulnerable workers can be exploited by people and not given their proper entitlements.
Neither does the Bill deal with the self-employed. The Minister, over his long tenure as Minister for Finance — I hope it continues for a few more years — has made several significant changes with regard to private pension entitlements. For example, formerly when a person reached the age of 65 or 70 — I cannot remember which — he or she had to buy an annuity. The Minister abolished that so that an employee may now take 25% in cash on retirement and buy an annuity with the remaining 75%. Formerly, if the person died early into retirement the life assurance company gobbled up all that money and made extraordinary profits. The Minister changed that rule and now the estate will get the money and not the life assurance company. That is a significant change.
The Minister has also helped to create PRSAs, which is the start of mobility in pensions. Further pension reform is needed. I agree with the point made by Deputy Richard Bruton in his contribution, much more pension mobility is needed between the public and private sectors. Just as there is to be a so-called "mortgage passport", there should also be a pension passport. If an employee spends two years in the private sector, then goes to the public sector and back to the private sector, all the time his or her pension entitlements should be protected. I believe more work has to be done and more imagination brought to that area.
I welcome in particular the Bill's anti-ageism measures. People are healthier and live longer. It is not unreasonable that in general 65 should be the minimum age for receiving a pension. There will have to be exceptions such as fire fighters, gardaí, prison officers etc., and I am glad to see that politicians are included. I do not see why politicians should get special treatment over anyone else. We are employees in the public service and I am glad we are not receiving preferential treatment.
My final word is on the national pension reserve fund. The continuing criticism and carping from Fine Gael and the Labour Party is completely undeserved. Deputy Bruton——
He is digging a hole now for himself.
Those who criticise the pension reserve fund for investing in stocks and shares when that is exactly where private pensions are invested simply do not know what they are talking about. Stocks and shares will appreciate greatly over the next ten years and Fine Gael and the Labour Party will be left with considerable egg on their faces on this issue. I support the Bill and commend it to the House.
Mr. Eamon Ryan
I am glad Deputy Mulcahy made his views so clear. We might revisit him when he is in his 80s and the stocks and shares have performed differently from the sales pitch he gave.
Mr. C. Lenihan
There is a great deal more expertise in stocks and shares on the Deputy's side of the House than on this side.
The Minister for Finance should be commended for looking 50 years into the future. If only the same forward-thinking applied to other areas of Government policy and he took a similar 50 year view on energy policy and the introduction of a carbon tax. Mr. Alan Greenspan of the US Federal Reserve, whom the Minister would respect, was asked by a Congressman in a congressional committee if they should look at a five or ten year horizon and he stated that people should think about a 40-year horizon. I am glad we are doing that now but it is lamentable that the Minister does not take the same long-term view when it comes to the environmental issues that are looming and will not amend decisions in other areas to reflect that.
Deputy Andrews said that he was glad the Pensions Board does not reflect any bias and is sanitised from political control. Looking at the portfolio the Pensions Board holds for 50 years' time, it is incredibly biased towards a narrow definition of where wealth generation will occur and where secure investments exist. The massive over-allocation of funds to a small number of stocks in the US and European markets is incredibly risky for the public sector workers who will rely on the fund in future. It would be far better and more secure if there was a broader spread of assets and investments in the pension fund into wealth generating assets in our own country which the Government refuses to fund, be that public transport or other infrastructural projects that we would like to see supported in the pensions fund. I totally disagree with Deputy Mulcahy that putting everything in Exxon Mobil and Microsoft stock is a clever way to invest for the future of public servants.
There is an incredible provision for and attention to public sector pensions on the part of this and previous Governments and nothing like the same allocation for private sector workers. This Bill is important to teachers, gardaí and other public sector workers but there is a real issue in the private sector about the failure to provide proper pensions on a similar basis. The difference in treatment and the fact that this large pension fund is getting so much attention and such resources is very well for those in the public sector but does nothing for those in the private sector who will not have recourse to the fund in later years.
This imbalance reflects a greater imbalance in Government policy as set by the partnership process. If a person is within the golden circle of Government decision making and represented by IBEC or one of the large public sector unions, he will do well under the partnership process. If, however, he is outside the circle, a small employer or environmental group which is not represented in the process, his thoughts and concerns are given no weight.
Mr. M. Ahern
That is not true.
That is my experience after two years in this House.
That is misinformation.
In every area of policy, the Government looks after the big employers and unions and forgets about the people running small businesses and the environment. That is not misinformation, I am fully informed after two years of watching the Government in action and I regret it.
I am sure the Deputy knows everything by now.
The explanatory memoranda to the Bill state that the legislation increases the minimum retirement age for public sector workers to 65 and that there should be no compulsion in the system for people to retire at a particular age if they are fit and willing to remain in employment. I agree with that but, likewise, there should be no compulsion in the system that a person has to stay until 65.
This new compulsion to stay to that later age, which the Bill will encourage by the pension only coming into effect when 65 is reached, will not be good for the education system.
There is concern among teachers about the type of education system we are developing. Our education system is best served by encouraging a more flexible work arrangement system which sees people entering and leaving the profession as their lifestyles suit them instead of a compulsion to stay to a certain age to secure pension benefits. That would attract the people we need into the profession, those who are motivated and energised by their jobs. Teaching is an energised and energetic job, it is not one which can be done well without motivation. To hold the attention of 25, or in certain scandalous cases 35, students is something that a person cannot be compelled to do well if he is not ready to take on that task.
We have done the right thing in some instances. Some teachers I know availed of the five year career gap that was instituted in the 1980s. That was an excellent example of State flexibility that benefited the teachers by allowing them to take a break and explore other areas and if they come back to teaching, they do so because they are committed to the career and they have been re-energised. That was of great benefit to the education system and the individuals involved.
We should introduce more of that flexibility into teachers' jobs. Maternity leave for parents who are teachers should be much longer and teachers should be given a five year break to spend those crucial early years rearing children. It would be good for the children, the parents and the education system.
I have no difficulty with a teacher working at 65. If someone thinks he or she is able to keep going years after, I see no reason he or she should not continue, perhaps with fewer hours. We will need such a flexible approach to personnel management in the education system if we are to attract the best people in the country to that job because it is the area where we need the best people.
Over the years we have constantly stated that our young people are our greatest asset and the education system has brought us much of our wealth. The Government, however, believes its own propaganda that measures introduced by the Minister for Finance brought about our prosperity. This prosperity was brought about by the investment over 40 years in the education system and our young people. It gave us a flexible workforce that could adapt to the modern economy. Unless we make sure we have the best teachers, we will lose that competitive advantage. To attract such people we cannot state that a person must work X years with the same work and conditions without flexibility. That is not good personnel management.
Mr. Healy
I am happy to have a few minutes to address this Bill. The national pensions reserve fund, or at least a significant proportion thereof, could be much better used for the good of the country by investing it in the provision of infrastructure to ensure continued development and job creation, thereby reflecting a healthy economy which will be able to fund pensions for both public and private sector workers in future. I am thinking in particular of transport. Our bus and rail services are seriously substandard and need to be upgraded and extended significantly. Examples would be rail services in the south-east, such as the Limerick-Waterford-Rosslare line, in the western corridor and various other services.
There is also a need for infrastructural development in education and health. We all know of the huge backlog of work in the extension and refurbishment of existing schools and the building of new ones. It appears from what we have seen from the Department of Education and Science that many schools which need urgent refurbishment and extension or new buildings will have to wait years before these are provided.
Regarding health, in the town of Clonmel in my constituency, facilities needed for the expansion of general surgical services have been provided but have remained unopened for the past 12 months. They are like a white elephant. There is no indication that these services will be available in the near future. A significant portion of the funds earmarked for pensions should be used to make them available.
The Bill represents a sea-change in the attitude towards the public service. The introduction of a compulsory pensionable retirement age of 65 across the public service is unacceptable and unfair. It reflects the Government's ethos of commercialisation, marketisation, privatisation and bringing everything down to its value in euro and cent — or pounds, shillings and pence, as we would have said. The compulsion of making people serve up to the age of 65 is unwise, unfair and unacceptable. Some of these proposals came from the Commission on Public Service Pensions. I am disappointed by the input from the union side in that regard. There has certainly not been consultation with the membership on it, and there is significant opposition among the membership of the main unions affected by the measure, including the nursing and teaching professions and the clerical and administrative grades in local authorities and health services. These people are now being forced to work up to the age of 65 before they get a pension.
My background is in local authorities and the health service where I worked for about 30 years. I can tell the House first-hand that forcing someone such as a psychiatric or general nurse in a public hospital, or a teacher, to work to a pensionable age of 65 is impractical and unwise. It says to me that those proposing these changes have no hands-on information or experience of what happens in those professions. Let us consider psychiatric nurses. They deal daily with difficult circumstances on a one-to-one and group basis with patients. Over the years, it has been quite properly accepted that the work that they do is of such a pressurised nature that they should be allowed to reach retirement age earlier than would usually be the case. That should continue.
A general nurse must work in one of our overcrowded hospitals with patients on trolleys in corridors. Accident and emergency departments are overcrowded. In the case of Cork University Hospital this week, 35 patients were on trolleys. Despite this, we are suggesting that those nurses work to the age of 65 to get a pension. That is unacceptable, unwise and impractical. We will find that significant numbers of public servants, especially in nursing and education, will find it impossible to continue to that age. I have no difficulty where a person wishes to continue to the age of 65 or later if he or she wishes to do so and opts for that voluntarily. However, this Bill introduces a compulsion to work for 65.
There is another element in the Bill which needs to be addressed specifically, namely, the question of re-entry to the service. With minor exceptions, anyone who has left the service and re-enters will now be subject to the new provisions. For instance, female professionals with children who, in the belief that they must accord some time to family life, give up working for a certain period and afterwards return to the profession will now find themselves affected by the new proposals in this Bill. That is especially unfair to female members of the nursing and teaching professions and the administrative and clerical grades in the Civil Service.
There is also the question of student nurses and teachers who have come into the system on that basis before 1 April 2004. They will now be brought into the system under the new provisions of this Bill. Those cases in particular have been accepted into the system for a specific purpose. Anybody who entered that system before 1 April this year should not be subject to the provisions of this Bill.
I listened to the last contribution with wry amusement. In his speech on Second Stage, the Minister quoted rather startling figures which make a striking statement about this State since its foundation. Life expectancy for men has increased by 15 years since the foundation of the State while the life expectancy of women has increased by 20 years. That statistic appears to have passed Deputy Healy by.
The Deputy wants them to work for the extra 15 and 20 years.
Life expectancy in modern Ireland is similar to the average life expectancy of people in other northern European and developed states. That mirrors other international comparisons we can make with other developed states such as ours. Deputy Healy's contribution seemed to miss this essential point. People are living longer so the age at which they retire——
They should work longer as well. That is typical of Fianna Fáil.
Given this longer life expectancy it is natural that people would wish to work harder and longer than in previous decades. They do not wish to retire. I accept that many people look forward to retirement, although perhaps Deputy Healy is looking forward to it with greater expectancy than the rest of us.
Most people are defined by their work. There are conferences and organisations dedicated to what is benignly described as the work-life balance. The bottom line is that work is an important component of what people do; it is an important part of their personality. That applies to older people too. In the majority of cases older people do not particularly look forward to retiring and to being alone, doing little other than recreation. That is the experience in the modern world. We are increasingly calling on the wisdom and experience of older people and encouraging them back into the workforce to lend the expertise which they have developed over the years.
The objective of this Bill is to reform the pensions regime. It allows people to work beyond the pension age, which is a most enlightened change. I was amused when Deputy Healy said there would be a compulsion to work to the age of 65. There is no compulsion.
There is a compulsion to work until 65 for a pension.
There is no compulsion in the Bill.
Acting Chairman (Mr. McCormack)
Deputy Lenihan, without interruption.
I have read the Bill carefully.
The Deputy has not. There is a compulsion to work to 65 years of age.
The Deputy either profoundly misunderstood the Bill or profoundly misunderstands the English language. The Bill provides that a pension entitlement will become active at the age of 65. There is no compulsory provision in the Bill that compels somebody to work to the age of 65.
Nobody suggested that. The Deputy is deliberately misinterpreting me.
If one wishes to make an advanced voluntary contribution towards one's pension, one can cease working in the public service and work somewhere else. Indeed, if one makes an advanced contribution over a lifetime, one can pick the age at which one wishes to retire. That facility still exists. The Minister is not forcing anybody to do anything.
However, it is typical of the left wing approach, and a singular obsession of the Opposition Members, to condemn almost anything the Minister, Deputy McCreevy, does as harsh, right wing and ideological, even if it is actually left wing. It is a cliché at this stage. This is enlightened legislation which takes account of the changing demographic picture of modern Ireland.
An instructive report was produced by National City Brokers some years ago which predicted our future prosperity and, to an extent, the extraordinary boom we experienced in the years from 1998 to 2001. It predicted that the prosperity would be sustained up to 2020. There is no magic or rocket science involved in this. It is due to the simple fact that the demographic structure in Ireland has become extraordinarily benign in recent years. There should be sustained economic growth up to the year 2020 because of the strong ratio between the number of people working and the number of people who are dependent on those working. That is known as the dependency ratio. It is benign and helpful at present. The bulk of our population is categorised as able-bodied and willing to work and that is contributing enormously to the economic success we currently enjoy.
It contrasts strongly with the 1970s and 1980s, which are often described as a period of economic failure in our recent history. In that period, there was an extremely high dependency ratio. In other words, there were many people going through the full-time education system or they were of pensionable age. The Minister is trying, in an enlightened fashion, to ensure we will not have a pensions crisis in 2020.
The thrust of his policies to date has been to encourage people to provide for their future and to take responsibility for their pensions by making advanced voluntary contributions and by increasing the retirement age. There is nothing intrinsically wrong with making people work longer to achieve their pensions. It is a positive thing.
I am delighted the Deputy has confirmed that they have to work longer to get their pensions.
They have to work for a longer period and that is right. Sometimes these things must be changed so people can benefit in the future. Politics is not always defined by the attitude of, "What is in it for me?" This is a long-term measure to provide for the future of this country and for future generations who are willing to work well into their 60s and, if possible, into their 70s and 80s. It depends on whether they have the mental and physical capabilities and the desire to do so. Much in this area is driven by people's desire and that is reflected in the provisions of the Bill.
The Minister has revolutionised the pensions regime in this country. People are now taking responsibility for their future in a way that could not have been envisaged five or ten years ago because the economic paradigm was unsuccessful. We are now able to do it. The Minister established the national pensions reserve fund, which has been criticised by the Opposition, as well as the savings scheme. These are important measures for saving and providing for the future. They ensure that when a person reaches a certain stage in life, he or she will have put away sufficient money because he or she will have absorbed the culture of saving and providing for himself or herself.
These are the types of robust values that built the great Sinn Féin movement which secured the independence of this country in the period between 1918 and 1922. The worthy and robust values of self-reliance joined Fianna Fáil and Fine Gael together and united the Irish people. There was no political division between Fianna Fáil and Fine Gael and the two parties, as well as the Labour Party, contributed enormously to the freedom and independence of this country on the basis of those values. The aim was to build and provide for our future, ourselves alone, and to look after ourselves first and look elsewhere when we could influence matters there.
Those values underlie the pension reforms and the savings culture which the Minister is attempting to introduce. We do not want a consumerist culture of continuous spending in which people forget about the bills that loom over the horizon and just spend for today. That can spike consumer spending, which can be a dangerous economic development, to such an extent that it can become inflationary and wasteful of the public and private resources we now undoubtedly possess.
I was intrigued by Deputy Eamon Ryan's contribution. He is already harmonising the Green Party's position with that of Fine Gael with regard to partnership. For many years, including under the leadership of Deputy John Bruton prior to his entry into Government in 1994, Fine Gael was a strong critic of the partnership process.
Earlier we spoke about the values people should have and hold. However, as soon as Deputy John Bruton was in power, abandoned his opposition to partnership and discovered it was something fabulous in which to be involved.
Ms Enright
He had to deal with what was there.
Mr. Crawford
The Deputy should remember the Anglo-Irish Agreement.
The miracle that brought Deputy Bruton to power has yet to be fully explained. However, as I remember, prior to 1994 he was a critic of partnership and of the peace process.
He led the peace process.
He was critical of partnership but was also, avowedly, a Christian democrat who espoused Christian democratic values. However, about a year after he arrived in Government and settled into the Mercedes and Government Buildings, he declared he was a social democrat and that he was leading a marvellous social democratic Government.
The Deputy would also like to be in a Mercedes. That is his problem.
Some people make breath-taking changes in their intellectual, ideological and political policy make up, but this change should be studied in order to understand fully the crisis in which Fine Gael finds itself today. Fine Gael had a leader who was avowedly a Christian democrat but who declared 18 months later that he was leading a fantastic social democratic Government. That is a contradiction beyond comprehension.
It is mirrored in Fine Gael's attitude to partnership. While Fine Gael abandoned its opposition to partnership when in Government, now that it is again in opposition it has declared it is against benchmarking. It is interesting, if we can believe Deputy Eamon Ryan as representative of the Green Party, that the Green Party is now twinning its policy with that of Fine Gael. He is critical of the partnership process, not because the awards were too generous to those who provide our public services but because eco-warriors, environmentalists or cranks of one kind or another are not represented in the partnership talks.
That is untrue. The partnership process is fully inclusive and includes the community and voluntary pillar, the trade unions, employers, farmers, etc. In addition, every partnership deal agreed is voted on and debated by this House. It is not true to say that people such as environmentalists are not represented. They are represented in this House and therefore in the process. Ultimately, the partnership process is sanctioned by the Executive and then put to this House. The predominance of the negotiation may take place outside the House but it must still come into the House to be approved, sealed and rubber-stamped.
Rubber-stamped is the word.
Government Deputies condemn it on the plinth but rubber-stamp it in the House.
It may be the case that Deputy Ryan feels the eco-warriors are not present at the discussions. If I, or Deputy Crawford I suspect, were asked our views, we would be quite happy that the eco-warriors were not at the negotiating table for the partnership talks. They would go on for a decade if those boys and girls were included. There is a limit to the inclusivity one can engender and allow when set against the urgent need to arrive at agreements which will stick and deliver for public servants and others in terms of pay increases.
This Minister has been extraordinarily reforming in the area of pensions and provision for our future. The hallmark of his period in office has been that he has refused to just tinker with the works but has gone boldly for strong reform, even when it hurts. Let us be honest about it. If I was asked what I think of the effects of the legislation on new public representatives elected after the next general election, I would say it is somewhat unfair to them because they will not enjoy the same pension entitlements I or Members of the current Dáil enjoy because we were elected by the sovereign people in the election of 2002. However, it is right that our pension arrangements are harmonised with those that obtain outside the House.
We all know that when there is a glaring mismatch between the way we treat ourselves versus what the public can expect in normal employment, private or public, it leads to and breeds a sort of cynicism about politics. I am glad this change is happening and that our particular pension arrangements will now be harmonised with those pertaining outside the House.
The Minister's enlightened approach shows he is not afraid to discriminate which is an important principle. By its nature economic policy, particularly tax and pension policy, is about discrimination. Many people in this modern, politically correct age believe that everything should be neutral and nothing should discriminate. However, economic and social policy is very much driven by the concept of the State actively discriminating in favour of some and against others. In this respect, this Bill does discriminate in terms of the treatment of the position of the Taoiseach and what the Taoiseach, and future Taoisigh, do and will enjoy. That may be a comfort to Deputy Enright who with youth on her side, may be Taoiseach in 20 years.
And no doubt to the Deputy himself.
The position of the Taoiseach is treated differently. He or she will be fully entitled to his or her pension immediately on ceasing to be Taoiseach. This is proper and appropriate because we should treat the office in a special and particular way. The great fallacy of this modern period of political correctness is that economic policy should never discriminate and nobody should have an advantage to which he or she is not fully entitled over somebody else. This is somewhat wrong. We do have to discriminate. We do have to decide on a policy or priority for the future from 2020.
On Second Stage the Minister said we currently have five people working for every one pensioner but by the year 2021 that figure will have declined to two workers for every pensioner. This illustrates the glaring requirement to move forward and provide for pensions earlier, and the need to help people to work longer and provide for their pensions if they fear they will not have enough for the future. The legislation reflects the confidence of our modern State.
Again I point out the marvellous achievement of this State in the physical life expectancy area. We are close to the average life expectancy that highly developed northern European states have had for 20 or 30 years. This is a great testimony to the people, to those from the Fine Gael and Michael Collins tradition, the Éamon de Valera, James Connolly and great republican and Nationalist traditions which have existed across the benches of this House. I am not so arrogant as to believe that one party, namely, my own, or the other one that claims to be republican, Sinn Féin, have some sort of monopoly on the republican ethos, instinct and outlook of the State. Many parties have that instinct, including Fine Gael.
It is a great testimony to our collective effort as parties, and the parties from which we originated in the foundation and forging of our independence, that we have now reached a stage where life expectancy has been greatly extended. That is a fantastic achievement. This achievement may bring a negative impact in terms of the need to fund pensions for the future. We will have a higher bill. If one took a mean-minded approach, one would say the State would be better off if we all died 15 years earlier, or 20 years earlier in the case of women.
These figures are a sign of confidence in the State. We are now achieving the averages and figures achieved by the successful states of Europe in all areas, such as life expectancy, nutrition, levels of poverty, and this is a tribute to everyone. While we often jealously and selfishly say that Fianna Fáil delivered the success, we must be fair. We must be fair to William T. Cosgrave, Garret FitzGerald and the great people who were not of our political stripe who have contributed to the success of this State.
I wish to share time with Deputy Crawford. I enjoyed listening to Deputy Lenihan's contribution. Perhaps he hoped to flatter me into submission so that I would not respond to him, but I will not take the bait.
It was hilarious to listen to him discuss what he described as a Fine Gael reversal of policy. He then stated that we could not just spend, spend, spend and live for the moment. That is a reversal of the policy adopted by the Fianna Fáil-Progressive Democrats Government in the lead-up to 2002.
It is correct. The public witnessed it.
We kept within budget. The Deputy should look at the facts.
Deputy Lenihan said the Government has never been afraid to discriminate, and I agree with him, but what is important is who was discriminated against. It is evident from the cuts in social welfare that the Government is quickest to discriminate against the weak.
Deputy Lenihan also said that the Minister, Deputy McCreevy, is not always right wing and that he has adopted left wing policies. I would like to hear an example of the latter from the Deputy.
On a point of information, the Combat Poverty Agency——
Order, please.
——which is an independent Government agency, declared that the last budget——
Points of information are not in order. The Deputy has made his contribution.
——redistributed in favour of the less well off.
The Deputy should allow Deputy Enright to speak.
That declaration was probably made prior to the social welfare cuts which came in afterwards.
The budget decision in this regard had some thought behind it. It is a minor attempt at responding to the work of the commission on public service pensions. Will the Minister indicate the reason for this being one of the few commission recommendations he is implementing at this stage?
I accept what previous speakers said about population trends and that we have to respond to them. There has been an increase in life expectancy and a decline in birth rates which effectively means there will be more people of pension age in years to come and probably fewer people for them to depend upon. However, these predictions are not an exact science and population trends, growth and decline can change for various reasons. I accept that we must plan for the future and make decisions now to ensure we can adequately deal with the situation. I regret that the Minister has taken such a short-sighted approach by only addressing certain aspects of the commission's report.
I agree that there should be no compulsion for people to retire at a certain age if they are fit and willing to remain in employment. That makes sense. I will return to the issue of fitness. Deputy Lenihan responded to a point from Deputy Healy on the issue of willingness to retire, which is considerably negated when one considers that 65 is the minimum age for receipt of a pension. Needs must, springs to mind in this context. In effect, people will have to stay in employment until the age of 65 as they will not have a choice without access to a pension. While there is no legislative compulsion, in effect, people are obliged to do so.
The Tánaiste recently made a statement on care of the elderly. At present, many people who retire early do so to look after elderly parents or relatives. If these people have to remain in the system we will have to find an alternative to the home as a place of care. The potential impact of the pension regulations in this regard has not been considered. If both spouses remain working from necessity, what will happen to their elderly parents or relatives? Such people may be forced into nursing homes, which will be a further cost to the State. I would like to hear the Minister's response to this point.
My greatest criticism of the Bill is its lack of flexibility. It is vital the Minister looks at it again to ensure that pension arrangements meet the needs of those concerned. The Bill allows for pension rights to be calculated on the basis of the last three years of a person's employment. Of necessity, this means a person will have to remain at the peak of his or her career in terms of pay, which also implies greater pressure for the last three years of their working lives. It would be preferable to allow people to remain in employment but to take a step back to a less stressful and less demanding job without affecting their pension rights. This would also create promotional opportunities for others and at the same time would allow the workplace to benefit from the experience and qualifications of older members of staff acting in a less demanding capacity. This type of mobility has never been encouraged in the Civil Service, which is both a great pity and a shame.
We also need to look at mobility from the perspective of relocating Departments. The decentralisation process may ultimately create this, but from its haphazard handling so far, it will be by accident rather than design. The filling of top-level Civil Service positions and those of middle management in the past five years have been from within the same Department. Only one in five posts have been filled by persons from a different Department. In theory, the competition is open, but the practice appears to be different. This lack of flexibility and mobility means fewer promotional opportunities for those who are ambitious within the service and I fear these limited proposals will only increase the problem.
A lack of flexibility and mobility has also been evident in the manner in which the Minister announced this matter. While we have an opportunity to discuss issues in the House, they have been presented to employees involved in a take-it-or-leave-it manner. Had there been real discussion with teachers, for example, we could have ensured the Bill met actual needs and, accordingly, would have been far better. This appears to be a recurrent theme in the education sector as far as the Government is concerned. The take-it-or-leave-it approach adopted in the legislation is matched by the same style being adopted by the Minister for Education and Science. His "Yes" theme might stand for your education system, but his philosophy is clearly, my way or no way. The Minister for Education and Science, in launching the "Yes" campaign said it is important that as many people as possible have a say in the way our education system progresses over the coming years. The type of decisions we make now will have a real impact on the lives and well-being of our children. They should be decisions made with the greatest possible level of public participation. While I agree with him, these pension decisions will have a profound impact on the public service with which there has been little consultation.
The changes that are proposed are serious. In broad terms, as I said, the decision to remove the compulsory retirement age, thereby enabling staff to remain longer in work should they so wish, is welcome. There is a growing appreciation of the contribution that people of any age can bring to the teaching profession, and the public service in general. However, if the Government seriously wishes to encourage later retirement, it must realise that as people get older they may want to move to less stressful employment. A pension that is based on final salary may force people to stay in a stressful position for much longer than would otherwise be the case.
Teaching is a demanding and stressful job, and cases of teacher burn-out occur. We must consider what practical benefit will accrue to students if teachers who wish to leave the profession, or move to a less stressful or intensive role within it, are forced to teach for an additional ten year period. The INTO stated that at present less than 20% of teachers teach until the compulsory retirement age of 65 and 50% of teachers retire voluntarily between the ages of 55 and 65. These facts strengthen the case I made on the lack of consultation with teaching unions. They contrasted this system to that of a generation ago when teachers could and did seek an extension to their career. Teachers are leaving the classrooms for a number of reasons, which to some extent come under the remit of the Minister for Finance, although the ultimate responsibility rests with the Minister for Education and Science. Class size remains too high, classrooms are insufficiently resourced and buildings are in a poor state. Perhaps the most important issue is behavioural and emotional problems among students and a lack of support for teachers in dealing with this.
I referred to the issue of fitness for the job, which goes to the heart of the matter. Forcing people to remain in the system when they wish to leave could have serious negative consequences for the provision of education. How does the Minister intend to ensure or quantify the issue of fitness? If he intends to proceed on this basis, he should respond to the concerns that have been expressed, which the Bill fails to answer. If the issue of fitness is not addressed, students will suffer as a result. This is not a situation with which teachers, parents or students should be faced in the future.
Deputy Andrews offered what he considered to be a way out. Under section 10, teachers suffering from stress can retire on the grounds of ill health. There is no definition of ill health in the definitions section of the Bill. I do not see this as an appropriate way out. Practically everyone suffers from stress at some stage. Reactions to stress vary — what is tolerable to one person could have a serious effect on another. What will be the burden of proof on grounds of ill health? This is an inadequate response to the problem.
Greater flexibility in retirement age could act as an incentive to those who wish to enter the teaching profession at a later stage in their lives, which would be welcome. There are many who could make a very positive contribution to the classroom who are in other professions. Greater latitude regarding retirement may incentivise those entering the system. It is important to note, however, that this type of flexibility could also be used to allow teachers to move to different positions, should they wish to do so, without losing pension entitlements when they reach retirement age.
Fine Gael believes that greater flexibility needs to be incorporated into the system so that pension calculations will not simply be based upon final-year earnings but will take account of the highest salary scale achieved in the course of a teaching career.
I know the provisions of this Bill relate to new entrants to the public service on or after 1 April 2004. The Minister seems to be treating different sectors at entry level differently. I accept that, when one embarks on a teacher training course at whatever age, one does not become a public servant until such time as one engages in a teaching job. However, students embark on their courses in the legitimate expectation that they will get a teaching job. This is a legitimate expectation given that the number of unqualified teachers in the primary sector is such that everybody graduating from a teacher training college is more or less guaranteed a teaching job. However, graduates of teacher training colleges now discover they are caught by the new rules governing entrance to the public service from 1 April 2004.
This is a different system to that which applies to trainee gardaí. I accept that such trainees are on the payroll from the time they enter Templemore, but they are not qualified. Section 2(4)(c) provides a clear exemption for "a person who immediately before 1 April 2004 stood admitted as a trainee Garda to the Garda College at Templemore". The Minister should, at the very least, apply this exemption to existing students in teacher training colleges.
I welcome the opportunity to say a few words on this Bill. I note that the Minister said in his contribution that the Bill offers a win-win outcome when viewed in its entirety. Furthermore, he stated that, not only makes a major contribution towards fiscal soundness, it is also a vital component in making it possible for the State, as a good employer, to provide a reasonable income for its employees at retirement. This is an important point because I can think of many who have not been able to get State jobs and who would be glad to have the security they offer, such as those in Monaghan Poultry Products and the furniture industry in Monaghan. It is important that we guarantee such security.
I am concerned about a number of aspects of the Bill, one of which pertains to the Garda and Defence Forces. We are now saying that public service workers should work longer. I do not fully disagree with this but a garda, for instance, cannot join the force after the age of 26. Will the Minister reconsider this? I have come across several young people who are older than 26 who wanted to join the Garda. I have asked the Minister for Justice, Equality and Law Reform to consider this seriously. If we extend the age at the upper end we should also extend it at the lower end to allow people over the age of 26 to join. We have a problem in this area. The figures show clearly that gardaí are trying to leave the force because they joined too young. They have known no other life and are frustrated. If we are to encourage them to stay in the force until retirement age, we should certainly address this problem.
Deputy Enright dealt with the problems of teachers and I also want to address these. The INTO and others have made representation to us regarding the problems in this sector. Education has been the bedrock of our success. Some experts say otherwise but anyone who believes otherwise is stupid. The good education structures that were put in place in the middle of the previous century have paid off in the longer term and certainly have been of benefit. There should be a common-sense approach. There is burnout in the teaching profession at present and it is unfair that a teacher can only find a way out by using a doctor's certificate to claim or prove he or she is sick. This means such teachers cannot, in the later years of their lives, enter another type of employment that might be good not only for them but for the State. The teachers' unions are disappointed that there was not better discussion on this topic before the Bill was introduced, bearing in mind Deputy Conor Lenihan's statement that negotiations in the partnership process are rubber-stamped in the House.
The issue of voluntary retirement is also important and provision should be made so that those who want to retire early can do so. We must prepare for the greater numbers that will be drawing pensions in the future. Are the Minister's figures really correct?
Mr. Broughan
His figures are always wrong.
The plan to have medical cards for the over-70s was discussed in the House and we were told it would require more than €19 million to implement. A year later we learned that it took €53 million to implement. We were told it would cost €20 million to implement the plan to grant pensions to those who made social welfare contributions prior to 1953, but this turned out to be €100 million. Obviously, the figures pertaining to future pension costs are very much up in the air and depend on many factors. According to a previous Minister's statement, we exported 47,000 of our best young people in 1987. This changed the demographics of the country dramatically and we hope it will never happen again.
The main issue I want to discuss is that of people being encouraged to work until they reach a later retirement age. Deputy Enright has already commented on careers. If everybody, including both husband and wife, must work to 65 years of age, who will look after the elderly? As a member of the Committee on Social and Family Affairs, I have discussed this area at length. It is one of the sectors that has been left behind in no uncertain terms by the so-called Celtic tiger. We can all say that carers received a certain sum more in 2004 than in 1997, but we know the reality is that elderly people cannot get into nursing homes because there are no subventions available for them. Prior to the general election, 264 subventions were available in the Cavan-Monaghan area, and this figure decreased to 156 last year. The figure increased to more than 200 this year because of outrage in the area.
If people must work to a greater age without the possibly of retirement, there is no doubt that problems will arise. According to Deputy Conor Lenihan, women are living 20 years longer on average than they did at the foundation of the State, and men are living 15 years longer on average. If we do away with certain pension entitlements for the elderly, we will have to sustain the elderly by other means. This must be considered seriously.
The Bill states that there should be no compulsion in the system for people to retire at a certain age if they are fit and willing to remain in employment.. The retirement age for new entrants to the Garda is 55, and 65 for teachers. Can the Minister honestly say to us that the provisions in the legislation will benefit those who need care in the longer term?
Given that I, as one approaching 60 years of age, am already a Member of the House, the provisions in the Bill will not make any difference to me. However, regardless of what the other speakers stated about the need for the same rules to apply to Members as everybody else, Members are in a different set of circumstances. The average tenure for a Dáil Deputy is approximately 11 years. That may suit someone who comes in at the age of 25 because he or she then has the opportunity to take up another job afterwards. That needs to be considered. The Minister has introduced a very harsh rule that may have implications for people who want to enter this House for the long term. I urge him to look again at that. We depend on the public to decide whether we get a job. Other civil servants are employed and unless they do something that results in being sacked, they have a job for life so their situation is somewhat different to ours, regardless of what people say. I would like the Minister to consider that before it is too late.
I have a personal interest in the Public Service Superannuation (Miscellaneous Provisions) Bill in that I am a former teacher and a Deputy, both professions mentioned in important ways in the legislation. The Taoiseach said he would need to be mad to continue doing his job when he is in his 60s. He may have been referring to running around Amiens Street, or one of the many other beautiful streets of Dublin Central, on a Saturday morning with a cohort of Fianna Fáil members in tow. Nonetheless, it is interesting that he saw himself doing something different in his 60s and that the minimum retirement age would not refer to him. In the Oireachtas section of this Bill, future taoisigh are excluded under the new entrant rule. The Taoiseach's remark was a double hypocrisy.
It is almost four years since the report of the Commission on Public Service Pensions and six years since the national pensions policy initiative securing retirement income was presented to this House. The Minister had the opportunity yesterday, and a few months ago, to bring forward a comprehensive programme of public service pension reform rather than take a minimalist approach. It is remarkable that he introduced this Bill while we still await implementation of many of the key recommendations of that report. When will the Minister bring them forward? He seems to think only in fiscal terms. He went out of his way yesterday to explain that he did not have an agreed approach from the social partners to bring this legislation before us and to make his announcement in the budget. The Minister of State at the Department of Health and Children, Deputy Brian Lenihan, said the same in the Seanad some weeks ago. The Minister acted in his typically unilateral way.
The Bill is a direct attack on the rights of future public servants in many of the key categories. In the general range of civil servants, nurses, local government staff and others, one might have given more than 40 years service and not receive a pension until age 65. That is a downgrading of conditions. The rule whereby teachers could retire after 35 years at the age of 55 is going and there is a ten year increase to retirement at 65 years of age. This takes no account of the stresses involved in teaching. All members of the public service experience stress, including those who are here today. There are unique stresses in first and second level education. The latter is on the verge of revolutionary changes because of ICT developments and major retraining will be necessary yet the Minister has not provided for that.
It is good that gardaí can continue to work longer given the number who have taken early retirement, resulting in a loss to the public service of many fine officers. I have some concerns about the change in their terms and those of prison officers and psychiatric nurses who also must wait another ten years for retirement. The same is true of the permanent defence forces, where the 21 year rule has been scrapped in favour of 50 years. The commission report did not cover Senators, Deputies and the judiciary but the Minister has chosen to include them here which is fair, in so far as we are all public servants and should be considered together. The minimum retirement age has increased by 15 years to 65.
Section 3 is very welcome, covering the removal of compulsory retirement where a new entrant shall not be obliged to retire on health grounds. That provision is the key element in ongoing equality legislation and at the end of 2006 a major EU directive will become operational which I hope will eliminate all ageism across the workforce. There are operational categories in this Bill requiring certain levels of fitness but in general it seems the disgraceful ageist discriminations, based on the belief that people would die in their mid-50s or early 60s, are being abandoned. People have much to contribute in their 60s, 70s and 80s. It is interesting that the flag bearer for the Democrats in the United States, Senator Kerry, is 60 years of age while his last opponent for the presidential nomination was probably considered very inexperienced and too young because he was only 50. We are moving into a fairer era and I welcome the Minister's recognition of that in this Bill.
The brave new dawn on 29 March sponsored by his colleague, the Minister for Health and Children, when the ban on smoking in the workplace takes effect, and other developments on obesity education and so on will, I hope, give us a fitter, older cohort. In years to come we may have a Taoiseach well into his 60s, maybe even this Minister, like Albert Reynolds in the past. Should we not therefore consider, in line with the commission report, a more innovative and flexible approach for senior and other public servants who would have pension entitlements but wish to continue working? The report recommends flexibility across all levels of pensions for the public service.
David McWilliams, the fine economist and TV presenter, said recently that the Minister has allowed a conspiracy against people in their 20s and early 30s to happen in the housing market. That conspiracy continues against our children, who will one day be our public servants and representatives. When the Labour Party last had some influence in France under Mr. Jospin, there was a Minister for Solidarity Between Generations, which was a good name for a Department. This Minister has displayed a contrary tendency. There is no solidarity. He is saying let the devil take the hindmost and let that young crowd who will be very fit later on work as long as possible before they earn their public sector pension.
The two Ministers who have conducted this Bill through the Dáil and Seanad, Deputies McCreevy and Brian Lenihan, trotted out the old rigmarole, probably written by the mandarins in the Department of Finance about the pensions time bomb instead of celebrating longevity and that older workers could contribute so much. The bottom line of their mantra seems to be the increasing cost to the taxpayer in 2050, as if we can worry that much about posterity. The old numbers in the commission report were trotted out repeatedly indicating we would have one worker for every pensioner in 2056. I predict that in 2056 it can be taken for granted that there will not be one worker for every pensioner. Society will be considerably different. There will probably be flexibility among workers and pensioners and much older people still working.
The Department of Finance is notorious for its poor predictions. Every year coming up to budget time everything seems to be going haywire and then suddenly a windfall tax seems to slide in and everything is hunky-dory. The Department did not predict the Celtic tiger or the current levels of immigration. A few weeks ago I asked the Tánaiste, Deputy Harney, what would happen to the labour market after 1 May. She has not got the slightest clue. I do not believe it will be the same as when Portugal and Spain joined.
I am not sure if the Minister for Finance attended the recent Progressive Democrats conference on ageing, where he would have found many congenial speakers. No speaker addressed the massive tax breaks for private pension schemes for property owners, who bought 40% of our houses constructed last year to create a nice pension for themselves in the decades ahead.
I give the Minister credit for the fact that Ireland is very well prepared for future demographic development. When debating the Pensions (Amendment) Bill with then Minister for Social, Community and Family Affairs, Deputy Dermot Ahern, in advance of the 2002 general election, I was struck by how relatively well prepared Ireland was with occupational pension schemes and through the national pensions reserve fund, which was an initiative of the Minister for Finance. At the time one of the tables produced by the Generali Group showed Ireland having the most favourable unfunded pension liabilities of about 120% of GDP. In the UK it was about 150% and in the Netherlands it was about 300%. The figure for Italy was a disastrous 400% with Finland and Sweden nearly as bad. Sweden has taken our example in certain respects and made changes.
The opposite of what the Minister claimed in his speech is true. The future is fairly well provided for with the National Pensions Reserve Fund. How big is it now?
Mr. McCreevy
Nearly €10 billion.
It is nice to know that fund is there. The debate needed here is totally different to the one carried out by Chancellor Schröder in Germany. There was uproar when he wanted to cut deferred benefit from approximately 75% to 68% of a worker's final pay, compared with 50% here. As we are well prepared, we should take a measured view of future pension provision and should not react in a niggardly way as the Minister has done.
The basis of the Bill is the final report of the Commission on Public Service Pensions. Three of the distinguished members, Senator Joe O'Toole, Ms Rosheen Callender and Mr. Dan Murphy of the trade union movement, praised the wide-ranging reform aspects of the report, including the retention of defined benefit, plans for integration, the extension of coverage to atypical workers and above all the exciting idea of the new SPEARS allowing public servants to contribute to a higher final income. However, they had grave reservations about the Minister setting the minimum retirement age so high. The Minister did not give incentives to public sector staff to encourage them to work to a greater age if they are fitter, as I hope will be the case for workers in the future. It is nonsense that service over 40 years is not recognised and yet the Minister has this provision in the Bill.
Section 4 addresses circumstances specific to gardaí. It is notable that student gardaí, who effectively have a contract signed, at that stage are exempted from the new entrant rule and are included with existing members of the force. While this seems to be a fair arrangement, it is shameful that it does not apply to other trainee public servants in particular student teachers.
There is a problem with the 26-week provision in section 2(4)(b). Those public servants who were encouraged in the past to seek wider experience in different schemes, including career breaks etc., and who were out of the service for more than six months are not given the opportunity to re-enter after 1 April. This should be extended to September. Some people with many years of public service have left the service. The INTO suggested that 15 years' prior service should be sufficient for a former public servant to be exempted from the new entrant rule.
In several categories the pensionable age has increased by ten years and in the case of new Members of the Oireachtas by 15 years. Exceptions have been made for operational grades like gardaí and members of the Defence Forces. The Minister should also consider other groups with sympathy. I received representations from the Prison Officers Association. In recent times prison officers have provided a relatively easy target for the Minister for Justice, Equality and Law Reform, Deputy McDowell, who has failed to deal with some of the key prison issues. As happened with taxi drivers in the past, the Minister has picked a fairly easy target for reform rather than dealing with his own profession. It will probably be increasingly difficult to get people to consider a career in the public service in the future and this Bill is a further disincentive.
The Bill, as presented, is not a wide-ranging Bill based on the report of the Commission on Public Service Pensions, but a narrow and, in the minds of the Minister's chief advisers, cost-based approach built on the nonsense of looking 50 years ahead. It therefore becomes a relatively straightforward attack on the public service. I would like the Minister to examine the issues I and my colleagues have raised regarding the inequity of some of its provisions.
I would also like the Minister to have a broader look at the actuarial position that may develop over the coming decades, given the dramatic changes that have taken place over the past seven years in particular, and the fact that the labour force is much larger than we thought it would be and may continue to grow in the years to come. The glib assumptions that people made in the mid-1980s, and which they are still inclined to make, are no longer true. The Minister should return to the report of the Commission on Public Service Pensions and examine some of the key and interesting proposals. If we want to encourage people to serve our nation and our communities, there are many good ideas in it. It is the Minister who has responsibility. I hope that in the coming months he will re-examine the issue and consider including some of the suggested amendments.
Mr. Crowe
I am grateful for the opportunity to speak on this Bill. Pensions affect us all, especially people employed in the public service.
Yesterday my colleague, Deputy Ó Caoláin, described the legislation as a step backwards for workers in the public sector. It is one of many steps backwards that public sector workers have been forced to take over the lifetime of the Government. Public sector workers are increasingly undervalued by this Administration which believes that merit exists only in the private sector, that the solution to every problem resides in the free market and that public sector workers are lazy and inefficient.
The legislation before us is being characterised as a noble and courageous effort by the Government to deal with an imaginary pensions time bomb. Someone described it as a children's horror story with some evidence to back it up and a great deal to contradict it.
I speak as the spokesperson on education for Sinn Féin. I wish to concentrate on the concerns of the Irish National Teachers Organisation to which the Minister for Finance, Deputy McCreevy, attempted to respond in a letter sent to all Deputies some time ago. Part of the reason teachers have been so much to the fore in arguing against the proposed changes lies in the early history of this State. Shortly after partition, a nearly bankrupt Government forcibly raided the primary teachers' pension fund and replaced it with the present system. As a result, teachers lost control of their own pension fund, something that has now created major difficulties for them.
Since that time, the job of teaching has changed out of all recognition in this State, largely for the better. We have seen increased numbers of resource teachers, more accountability, and efforts to cater for students with special needs. While not enough is being done, positive steps have been taken and they should be recognised. Teachers have been at the core of delivering these changes and implementing them on the ground, often in shocking working conditions with limited resources. Demands and pressures have increased at a much faster rate than pay and supports. Teachers have also been asked to make changes to their own work schedules.
Primary teaching is an intensive and demanding profession. It is arguable that few professions are more important. The divisions in our education system manifest themselves at an early age. Quality primary school teachers delivering lessons in a progressive and interesting fashion can have a life-changing effect on young people in their care. Students will, in many cases, base their perception of the education system and teachers in general on their experience in primary school. This can make the difference in preventing the alienation of students from the education system.
All of this, however, means rising levels of stress on members of the teaching profession, especially teachers working in disadvantaged areas. The Bill's provisions do not take into account the role many teachers play in providing after-school activities. I am sure most Deputies' first exposure to a range of activities took place in schools where teachers gave their own time to coach young people in football, hurling, debating or dancing, and help to create not only academically gifted but well-rounded individuals who would go on to become well-rounded citizens.
We welcome the Minister's decision to allow teachers and other professionals to work past the age of 65 should they wish to do so. I have no doubt many of the dedicated men and women working in the teaching sector will avail of this opportunity. We must also recognise that a great many are unable or unwilling to continue to the age of 65. Currently teachers can retire at the age of 55 with reduced benefits. According to the INTO, about one in five teachers avail of this opportunity. These figures do not indicate a savage financial burden on the State. It is much less than that created by many of the tax breaks, the cost of which has yet to be estimated.
Why has the Minister singled out teachers? Future gardaí, prison officers and firefighters have seen their minimum pension age increased by five years. For teachers it is another ten. Trainees in each of these three professions are exempt, but student teachers will be discriminated against. This is unjust. To single out certain vital public sector professions to be treated in a discriminatory fashion without providing a real reason for change is an outrage.
Having met the INTO, I remind the Minister once again that, as he is well aware, teachers and their representatives are willing to engage in talks and further negotiation, even at this late stage. It appears that it is the Minister who refuses to engage directly and instead engages in dialogue through the media. It is becoming increasingly clear that, far from being the elected servants of the people, when Fianna Fáil and the Progressive Democrats are elected to power, they consider themselves the masters of the people and are happy to run the country on a whim or a hunch, whether it is the farce of electronic voting, the decentralisation fiasco, the decision to break up Aer Rianta or discrimination in pensions. The Government clearly appears to be drunk with power.
The Minister's decision, taken without agreement with the unions concerned, not only the INTO, exposes the charade that is social partnership. It is a one-way street with concessions and deals hammered out to which the unions must adhere but which can be and often are ignored by the Government when it suits. Instead, we typically have unilateral announcements from Ministers, like the Minister, Deputy McCreevy, who seem to believe themselves blessed with some sort of papal infallibility, unable to say or do anything wrong. This Minister seems convinced that there is no need to compromise or consult anyone. I believe there is. The Minister seems to believe he is free to disregard the social partners whenever he sees fit to do so. Is this his notion of partnership? If it is, it is a sham. I do not believe it is the right signal to send, especially to people working in the public service. Neither does it encourage unions outside the partnership process. This type of lack of negotiation and riding roughshod over workers' rights sends all the wrong messages to those outside the partnership process.
Deputy Ó Caoláin referred to the situation of student teachers. Another group of students will suffer from this change. We received a letter from a student psychiatric nurse at the school of nursing in St. Ita's Psychiatric Hospital, Portrane. Students from Dublin, Meath, Clare, Kerry and other counties, including Kildare, which the Minister represents, wrote to protest against the changes. When they entered the programme they did so in the belief that the rights enjoyed by other nurses would be available to them. The letter in question states:
It is my understanding that this proposal will only affect those currently entering employment. We see our employment with this country's various health boards to have begun 3 years ago, when we entered the training programme, and gave a commitment to practice in our chosen profession. We certainly believe that the many patients we have cared for over the years would agree with us.
Much like teachers, these nurses have been involved in their professions during their training. They have taken care of patients, seen to their medical and personal needs and treated them with the care and dignity that the high standards of their profession demand.
Government Members have highlighted the fact that annual savings in the order of €300 million will be made. Will the Minister to clarify exactly how much he expects to save as a result of the changes to the rights of teachers in respect of pensions and indicate the savings he expects to make as a result of those changes that will affect the current crop of students in the nursing and teaching professions? People need to have that information in order that they can make a decision in respect of this area.
I take this opportunity to discuss another pension issue to which the Bill may not specifically refer but which is an important aspect of the entire matter of pensions. It was the law in this State for some time that if a female member of the Civil Service got married, she was legally obliged to give up her job. This meant forfeiting pension rights for which the women concerned were never compensated and their entitlements were never clarified. In a recent document, Pensions for Women, the National Women's Council of Ireland included a case study of a woman who joined the Civil Service in the 1960s. When she got married she was forced to leave her job due to the marriage ban. Having brought up her family, she returned to part-time work in the 1980s. She does not have a pension from work and she does not have a State contributory pension because, through no fault of her own, she was not working outside the home for long enough. There are many such cases.
In 2002 only 25% of women over the age of 65 received a State pension based on their own PRSI contributions. Restrictions such as the marriage bar placed many women in situations where they were prevented from earning pensions. This means many of them are faced with the prospect of living in poverty in their old age. Will the Minister clarify what, if anything, the Government intends to do in respect of this matter? What measures does he propose to introduce in the near future? There are many women who are approaching retirement age and who do not have sufficient stamps to claim a contributory pension. This is through no fault of their own but through that of the Government laying down silly and outdated laws.
My final point is that the Government thinks it can get away with anything and, regrettably, this seems to be the case. It can force people to rerun referendums when it does not like the result, it can ignore the wishes of the Irish people and support the invasion of Iraq and it can introduce electronic voting in the face of mounting academic evidence opposed to it. The electronic voting system used in the "Super Tuesday" presidential primary this week in the United States disenfranchised 6 million Californian voters. With row after row of compliant Fianna Fáil and Progressive Democrats backbenchers ready and willing to walk through the lobbies no matter what the issue, the Government's in-built majority will not be threatened by outbreaks of principle among its members.
If public sector workers want to defeat this legislation and put manners on the Government, they will, perhaps, see fit to take industrial action. I do not believe anyone wants that to happen. The Government simply does not listen, does not care and, in many instances, does not want to engage in negotiation. I hope public servants are not forced to take that step because it will be the general public, as well as the Government, that will suffer.
Mr. Deenihan
I welcome the opportunity to contribute to the debate on the Bill. The issue of pensions has become extremely topical and it is appropriate that we should have a debate on it in the House because, in one form or another, we are all affected by it. This will be the first of a number of discussions of pensions in the coming years. If those discussions do not take place while the Minister holds office, they will certainly occur during the terms of office of his successors.
The recent "Prime Time" programme on Irish workers who went to England in the 1950s and 1960s really brought this matter home to people. The individuals in question were left without pension rights because they were vulnerable to unscrupulous employers who did not make any arrangements for them. On could draw parallels with people in various occupations here who feel they are vulnerable. Public servants have more security but there are many in the private sector for whom very little provision has been made. People are more interested in houses and cars and are not making plans for their future. However, there is a growing realisation that they must make provision for the future.
People are thinking more about their retirement, probably as a result of the country becoming more prosperous and the fact that they have more money. They have less time to think about the ordinary, mundane things of everyday life but they are certainly focusing more on issues such as housing and nursing home provision. They must also consider pension provision which will be very important in the future.
If we live long enough, most of us will probably end up in nursing homes. When they consider the costs involved in paying for a bed or a room in a nursing home at present and the fact that subvention cannot cover such costs, people realise that their savings and pensions are so important. If a person is not adequately covered, he or she faces a depressing time later in life. No one wants that to happen.
The Minister has addressed this issue and he has referred to it on numerous occasions in the House. We may not agree totally with what he has to say but he has certainly kept it to the fore. The previous Government also sought to address this issue.
The level of prosperity in Ireland in the past 12 years since the economy took off has been based on stress, strain and hard work. There are many people in the private sector who have invested a great deal of work and energy into making their own companies successful and, despite what the critics might say, their counterparts in the public sector have ensured that the public service is more efficient. When I was Minister of State at the Department of Agriculture, Food and Forestry, people worked late into the night preparing documents and policy statements for Europe and to set up schemes. These people are the unsung heroes of the Celtic tiger economy and not enough recognition has been given to them. Many of them are stressed out.
They are people whose health has been affected by that level of commitment, by long hours of work and by staying up late into the night. This burn-out, of which we hear so much, will only begin to manifest itself in the years ahead. In professions like teaching, but also right across the public service, that symptom is appearing where it did not previously.
All facets of life have got much faster and we must work faster now. Technology has brought great changes. It has speeded up life and has put pressure on all of us. Required response time is much quicker. At one time a letter might take a week to arrive and one had two weeks to respond to it. With e-mail, one must respond immediately or otherwise one is not deemed efficient.
The nature of life has changed totally. People in the public service and in the private sector are faced with new challenges. The shape of work has changed so much and expectations are much higher. In the future if we are to remain competitive with the Chinese, the Indians or the eastern Europeans, now that they are coming into the market, we must sustain the current level of work and there will be more burn-out and more casualties.
That is why people are increasingly looking at their future. Whereas some will see that they can work longer and live longer, there will be people who will get out earlier because of the nature of work and the mental and physical stresses on the body, to which people are not used and which they cannot take. People do not appreciate that at present. No doubt studies will be done in the years ahead which will look at this Celtic tiger period and how people coped. We are probably sitting on a medical time bomb and this emphasises the importance of the pensions provision in this country.
I listened with interest to Deputy Conor Lenihan. He is a man of extraordinary contradictions and I have listened to him over the years. Obviously he is preparing for the reshuffle in July. There was a time when Deputy Lenihan would come in here and have a lash off the Government if it suited him, or go to the plinth, but now he is totally different. He is totally changed. He has become a great spokesman for the Government. He is well able, in all fairness to him, because of his background in journalism, to argue his side of it but he would be just as good five minutes later in the bar arguing the other side.
The Deputy spoke about partnership, but of course he ignored the fact that the pensions commission was set up by Deputy John Bruton, although he did mention Deputy Bruton, one of the greatest leaders this country ever produced.
Mr. Finneran
Why did his party get rid of him?
The Deputy's party got rid of poor ol' Albert as well.
It took many scalps in its time.
Acting Chairman (Mr. Sherlock)
Deputy Deenihan, without interruption.
As the Minister for Finance, Deputy McCreevy, once said, he would love to be Taoiseach but he would hate to be leader of Fianna Fáil.
There was a commission report and there was the implementation group, and it was in this context that I wanted to make this point. Deputy Lenihan stated that this side of the House was not in agreement with partnership and so forth. Despite the fact that we set up the commission and operated partnership effectively, Deputy Bruton raised some questions at that time which were not fully considered. It is like any new departure. Partnership certainly saved this country. In one of the first contributions I made when I came into this House I stated that it was time all the organisations should come together, that the unions, farmers and Government should come together and hammer out a way forward for the country, otherwise we would not enjoy prosperity — I remember former Taoiseach Garret FitzGerald, on the change of Government in 1987, saying that while standing here. If one looks back on the record, that is exactly what he said.
It was difficult to bring in any partnership arrangement before that because there were politics and games being played at all times like, for example, the time the INTO was totally manipulated in the mid-1980s to march against the Government, and the other teachers' union objected when there was no money to pay anyone. Whereas there was manipulation, partnership got the support of all political parties when it was introduced in the late 1980s because there was no other option for the country.
In this instance, the commission report was published and an implementation group was set up. As far as I can understand it, the possibility of raising the age of retirement to between 62 and 65 was under discussion at that time by the partners. The Minister, Deputy McCreevy, stood up here in the Dáil on the budget and said it would be 65. Surely that was not the best way of using partnership? Since the age of 65 is so contentious, especially among my colleagues in the teaching profession, why will the Minister not go back to the implementation group before we proceed with this Bill, ask it to look at it again and see if it can reduce the age or give the option of between 62 and 65 years? Perhaps that is a good way to go forward.
I acknowledge that some people will not be happy irrespective of what the Minister does, but there is a case for taking on board my suggestion because of the strong case made by the INTO in particular. We have received the INTO's literature which outlined the reasons for its views on the minimum age. I agree with it because I live with a teacher and I know that teaching is very difficult. I was a teacher for eight years when I had plenty of energy, and I certainly enjoyed the job. From the contact I have with teachers, I know the job is totally changing. It has become a very stressful life. A teacher is at the coalface for what some people may think is a short period, but he or she is in a very tight situation. One cannot take a break because one is with children and one has major responsibilities. One is both trying to keep control and teach young people. Due to the change of lifestyles and the breakdown of the family structure, one often has to deal with young children who are different from those of ten or 20 years ago, and it is far more difficult. One needs to be a sociologist or a psychologist. One needs to have endurance. Nowadays to be a teacher one needs so many different attributes which people who are not in teaching do not fully understand.
The INTO has highlighted and exposed this in its campaign on this provision. As the Minister will be aware, teachers have been hit harder than other public servants in the sense that their minimum has risen from 55 to 65 years. For other public servants, where 60 years was the minimum age, the move is to 65. In the case of the gardaí, the move is to 60. Therefore teachers have lost out most in this change. In the interests of harmony in the future and of partnership, to which my friend, Deputy Lenihan, referred so much this morning, perhaps in this instance the Minister will go back and review this through the partnership arrangement. Then people would be happy.
I welcome this debate. People are becoming far more concerned about provision for their pensions. More information should be available to the public about private pension schemes and so forth. People should consider these more now than previously as it is in their interest to do so. I appeal to the Minister for Finance to consider my request of him to go back to the implementation group on the issue of the minimum age for teaching.
Recently, when addressing young people on future careers, I asked if anyone wanted to be a teacher. Nobody did. For my generation at secondary school, teaching was always considered an option.
That is right. That or a sporting life.
These young people — all males — said they would like to be a teacher but not that they wanted to be one. When I pressed them, they felt there was no great career path in the profession. Only 10% of entrants in teaching are males. It is alarming because there will be an imbalance. Young entrants in teaching would not be that aware of pensions. However, the provision that one could retire at 55 years was a major incentive for people to enter the profession and something the Minister might reconsider in his proposals.
I agree with people continuing to work later in life. People should be allowed to continue working until they are 80 provided they make a contribution and are in good health. In this debate, there is confusion between the minimum and the maximum ages for retirement and whether people should be allowed to continue working after the retirement age. I see people retiring who have considerable energy and could still make a contribution to their office, be it in the public or private sector. That they have to retire at a certain age is wrong. The option should be open to people if they wish to carry on. One of the few professions in which one can carry on indefinitely is politics, as the Acting Chairman is aware. Some issues were raised in this good debate that I hope the Minister for Finance will address.
I am pleased to have the opportunity to contribute to the debate on the Bill and I compliment the Minister for Finance on introducing this important legislation. He is universally recognised as one of the great Ministers for Finance in this State's history. How he has steered the success of the economy over the past seven years is the envy of his counterparts in Europe and throughout the world. His foresight in identifying the pensions time bomb must also be praised. The provisions he put in place to respond to it four years ago when he introduced the national pensions reserve fund is an indication of his understanding of future problems.
This problem was only last week identified by the great US financial guru, Mr. Alan Greenspan. His medicine for tackling the pensions issue is to cut social security. That is a draconian and severe attack on the very system that supports people in their retirement.. Cutting social security is a drastic measure and, while I do not want to contribute on US financial philosophy, it is obscene that, on the one hand, there are tax cuts for the wealthy and, on the other, Mr. Greenspan proposes cuts in social security for the ordinary person. In Ireland, the Minister for Finance has put in place the national pensions reserve fund that will address this considerable drawdown on the Exchequer in 25 years time.
The Bill tackles another problem that will hit this State in 20 years' time. Few countries in Europe have addressed the problem of the declining workforce, which is foolish. We are lucky that the problem has been identified by the Minister for Finance and the necessary legislation and measures to address it are being introduced. There is a back-up fund for the pensions problems. In this Bill, there is an opportunity to move the goalposts, but in a way that does not interfere with those already in public service. All public servants, irrespective of grade, are satisfied that the Minister has not interfered and does not intend to interfere with their employment conditions, as this Bill provides for future entrants.
When I was a public servant with the Dublin health authority many years ago, I recall meeting a 65 year old gentleman who was very upset-——
It could have been me.
——that his supervisor told him not to return to work the next day as he would not be insured. He decried that a young man of 65 years was put out of his work. I was in my early 20s then and I thought it was time for him to retire. However, I now see the logic in allowing those who have their health and are in a position to contribute positively to the public service to continue working after 65. Many of them have a major contribution to make. There are aspects of lifestyle that affect health, but medicine has progressed and people's opportunity for good health into their 70s and 80s has increased. Many of those should be allowed to continue contributing to their jobs or another one into further years than they have the opportunity to do now.
Throughout Europe, the issue of raising the retirement age is being discussed. Some countries have adopted a different approach to the Government and have interfered with the existing provisions for public and civil servants. This has brought protest onto the streets of many of the capitals of Europe because of the way this problem is being dealt with in those countries. In the Bill we are discussing, no such proposal is made. Protection is given to existing civil servants. I might add that the decision of the Government and the Minister for Finance late in 2003 to implement the benchmarking report and pay our public servants under the benchmarking provision has brought industrial peace in our public and Civil Service. The same cannot be said for many other states around Europe.
At that time, certain politicians questioned whether benchmarking should be paid to our public servants. Indeed, many of our public servants remember the comments that were made at that time. I have no doubt they will not forget them when the opportunity arises for them to have their say in the way in which ordinary citizens can, namely, through the ballot box, either at the local and European elections or at the next general election.
The Deputy is whistling past the graveyard at midnight.
Deputy Durkan is sitting in the usual seat of the person that made those comments. I know from my good contacts in the public service, where I worked from many years, that they have not forgotten the comments made by the person who would normally occupy Deputy Durkan's place.
They have shown they have short memories in the past. I would not be too sure about the future.
They will have their say, and rightly so, on that matter——
As they wait patiently.
——when the opportunity presents itself, either on 11 June 2004 or when this Dáil is dissolved in three and a half years and the people adjudicate on the performance of this Government and the Opposition.
Different groups of people in the public service have made representations about their particular problems. To some extent, all of us can identify with certain problems. I do not want to take away from the comments of Deputy Deenihan about some of the stressful positions in the public service. Certainly there are a number of these today. The teaching profession is a difficult one in this country and internationally. Some of my family are involved in this profession and I know this first hand. The duties of a member of the Garda Síochána are also difficult. In fact, it is hard to believe the uniform of the Garda is treated with such disrespect by some people on the streets of our towns and cities. When I was much younger there was always a great respect and understanding for people who wore the uniform. They carried it with dignity and the public respected that. It appears that this, in many instances, is no longer the case.
We also know that our prison officers are subjected to assault and abuse. In some cases there have been attacks on their homes and their families. This is a sad state of affairs. We must ensure provision is made for people in these stressful and sometimes dangerous positions. At the moment a provision exists whose phrasing sounds rather innocuous, but it must be kept there. People in these professions have the opportunity, if necessary, to retire early. This is essential.
The Bill addresses in a timely fashion the problems we will face in 15 or 20 years. It would be foolish and inappropriate for the Government not to address the pensions time bomb. The Minister and the Government should be complimented on this legislation. I commend the Bill to the House.
I am glad of the opportunity to comment on this legislation. I listened with interest to some of the previous speakers. Like some other Members of the House, I have been around for a while. The first thing I was warned about when I came to the House was what would happen in 2038. I looked up some reference books to find out what this meant. It sounded like doomsday — the curtain would be coming down. I discovered that 2038 was doomsday from the point of view of the ability of the State to pay its pensions. For some unknown reason it has since been postponed. The dates we talk about now are 2056 or 2065. I never accepted that 2038 was a genuine problem and I do not now accept that 2056 is one.
What has happened is that the statisticians have completely failed to recognise the age profile of the Irish people. They have failed to recognise that we have inward migration and take account of that in their calculations. They have failed to recognise that the birth rate is increasing and that large numbers of people will be entering the labour force between now and 2038, 2056 or 2065. I do not know when it will happen — I have no intention of staying around all that time.
The argument at that time was put forward in the same way as the argument being put forward by the Government now. It was said this was a serious problem and needed to be dealt with, and if we did not deal with it we were not being responsible. Anybody who cast aspersions on the proposals of the Government was a brainless lunatic. The thinking has changed; there is no doubt about that. Nobody who carries the responsibility for the original 2038 proposals came forward and said they were sorry, but it was ten, 20 or 35 years out. I do not accept that part of the argument.
People have spent quite an amount of time commenting on partnership and how partnership has done this country proud. There is no doubt this is true — we have benefited from partnership. However, we have also suffered some deficiencies as a result of partnership. There can be no doubt that the area that partnership forgot was that of housing. Housing was completely forgotten throughout the partnership negotiations. There was a second bite of the cherry a couple of years ago when it was realised how serious the problem was and the Government proposed to build 10,000 new houses to meet housing demands. Building 10,000 houses to meet the housing needs of a waiting list of approximately 100,000 families was a peculiar way of trying to solve the problem. In case anybody thinks I am joking, I will point out for the benefit of those on the other side of the House, who are major contributors to partnership, that along with those on the local authority waiting lists, on which there are at least 45,000 families, there are a similar number of people who will never be able to buy a house because of the colossal increase in house prices over the last number of years. In order to achieve a half-chance of buying their own houses, these people must do what the economy does not require — they must seek higher wages and become part of the new vision, the high-wage economy we are hearing about.
I question two aspects of the Government's actions. The first is the validity of its argument about what will happen in 2056 or 2065. How has this date moved so dramatically from 2038? The famous economist John Kenneth Galbraith is the only economist I have read of whom it could honestly be said that he was genuinely human and recognised other things apart from economics. He said, and I know it might seem alarming, that the people who had reached retirement age had a role to play, without a doubt, but that it should be a more voluntary role than the one they played previously. He also went into great detail to explain that it may not be possible for them to devote the same amount of time, accept the same levels of stress as when they were in their 20s, 30s or whatever and give economically to the country in the same way as in the past. He went into that in great detail.
He then, in his own inimitable fashion, suggested that they should be sent to St. Tropez for vacations and to various other exotic, and some erotic, locations in the course of their retirement in order that they would be brought back into the workforce again refreshed and able to make a worthwhile contribution to the economy. I notice that the Minister of State is very interested by the mention of these aspects. I can see his interest immediately perk up and that he already has visions of palm trees and so on. I urge the Minister of State not to go there. He did not mean it in just that way. He was merely illustrating that to get more benefit from those who are experienced in the workplace and encourage them to continue, they would require some inducements. A pension is one of them.
Depending on the degree to which they were catered for it would be possible for them to continue, not in a voluntary capacity, but they would volunteer for work rather than be forced to work. What worries me is that it is a sure sign that there is something odd going on when the Government begins to panic into running off in a particular direction to raise money somewhere down the road. I sincerely hope that this is not part of another election gimmick, some of which we have seen in the not too distant past. The purpose of the exercise could be to save money to ensure that it is possible for the outgoing Government to buy out the people when it comes to an election.
I know this has never been considered on the other side of the House and that they would never even spare a thought for such a plan. However, I have genuine and sincere doubts. They have thought of it. They think about it regularly. Since the last general election in 2002 they have thought about it day and night. Their every waking hour is devoted to figuring out a way to pull the next fast one in the next general election. I have no doubt that this is the purpose of this legislation and a number of other legislative measures. All of them are aimed at extracting money from the people by one means or another for a longer period and in greater amounts, with the objective of having the money at the disposal of Government when the crucial time comes.
That was done very effectively in the past. I have no hesitation in saying that, and I congratulate the Government. In another three years it will have been in government for 20 years with the exception of two and a half years. It has certainly pulled a few fast ones in that length of time, but I am afraid that the public is not amused anymore.
Mr. Parlon
The Deputy must think the people are very gullible.
The fact that the Government proved that they were gullible in the past does not necessarily mean that the malady they suffered from is continuous. It was temporary. It was an acute version, as the Minister of State will find out when the time comes. I want to let him down gently as I do not want him to be too shocked when that time comes. Shocked he will be, but not too shocked. I want to let the Government members down gently because it would not be fair to have them turfed out of office unceremoniously, which is what the people are going to do. They should be forewarned. We are trying to forewarn them just now.
The Deputy better tell some of his own people.
The Minister of State should wait until he has won a second election. That is the difficult one. He can talk to me then. Never mind the third, the second is the one that will count.
Will the Deputy please stick to the Bill?
I will do my best. I sometimes get distracted. This Bill proposes to address a number of issues in the public service. For example, I know that there are exclusions at the moment, but they are only for the moment. Coming from a county that has certain associations with military installations, one of the things we have heard criticism of in the past is that the military can retire at 42 or 43 years of age. I have always supported that notion. It has served this country well. It has ensured that we have an Army that is attractive for people to join.
The exclusions being mentioned at the moment are fine, but I warn that it appears it is intended to go down that route and that at some stage it will be impossible for a person coming out of the military with 20 years service or whatever to achieve the same pension rights as they had in the past. I have no doubt that is the objective. When that happens it will be impossible to keep that Army as an attractive profession or calling — it is a particular calling. After all, the military risk their lives. I accept they are paid for it but there is a risk to their lives at all times. That is generally recognised. We should never get away from the fact that whatever means necessary should be found to make recompense for their being there and for their commitment to the security of the State and security overseas. We need to be very careful not to change the system because we may well find ourselves in the position of being unable to attract adequate personnel into the Defence Forces.
There are those who think that we should not have an army and that military authorities are obsolete. I warn the Minister of State against that thinking, and I hope it has not pervaded the Department of Finance or any other Department. If it does it will have serious consequences for the security of the State. That has been proven more than once. The same applies to prison officers and the Garda. Most other speakers have referred to the fact that there are a number of exclusions at present. I particularly emphasise that it is far better to have a system that brings about a more regular turnover than to restrict in any way the rights of those who could previously retire at a particular age.
I know this does not apply to those who are already employed as members of the various forces. It applies to new entrants, and the definition of new entrants is outlined in great detail in section 2 of the Bill. However, in the event of the average age increasing, in any of the services targeted, as a result of the proposed changes, I am not so certain that will be beneficial either to the particular service or to the economy. I do not accept it.
Much has been said about the teaching profession. I know there has been a running battle between the Government and the teaching profession over the past couple of years and that this battle continues. I have no doubt that it will be fought out again at the next election, and we will see what happens. The Government was very successful in deflecting attention away from those sensitive areas in the last general election. I do not know what it will be like in the next one, but that ongoing debate will certainly be revisited.
What is the benefit for the country, economy and the people served by public servants if, for example, a teacher who has come to the end of his or her normal working life under current arrangements must, as a result of the proposed changes, work another five years or whatever the case may be? Is it for the benefit of children and the community or for the benefit of the Government? I seriously doubt whether it is a good thing. I agree that there will be teachers who will find it beneficial to work on and who may well have much to offer. However, the question must be asked about any aspect of the public service whether the curtailment of the pension entitlement at a certain age will be beneficial to the public servants themselves? A person who has worked for 30 or 40 years will view it in that light. The Minister of State will reply that this legislation will only apply to new entrants.
I note that Deputy Finneran referred to other Governments throughout Europe who are attempting to interfere with the payments that might be due to people in mid-term, as it were, so that their entitlement to pension would be reduced because their original entitlement was pitched at too high a rate. If a Government were elected on the basis of what it proposed to offer the people and then found it was not such a good idea and wanted to offer them less at the halfway point of their working lives, that would a shame on such a Government and on the people if they were to allow such a Government to get away with it.
I do not agree that what the Government proposes is for the benefit of the economy. It is for the benefit of Government by ensuring that it stays in power with as much money as possible in the back pocket to be forked out in the six months before or during an election campaign, as happened in the previous general election. It was nothing unusual for Ministers at the time to sashay around the constituencies offering manna in the form of different allocations to various groups and organisations. I will not go into Parlon country out of sensitivity to the situation. It would not be fair to venture there.
I advise the Deputy to keep out of it for his own sake.
An bhfuil na focail sin bainte leis an mBille?
The Minister of State should be aware that we are working on it. We will find out about that in due course. Incidentally, it could also have a bearing on the delivery of what was promised previously to public servants, and the Minister of State will know to what I refer.
According to the Government on budget day, there was to be a series of local, scenic sites as locations for the public service. Public servants were to be transported or beamed into these sites. I do not understand why, but something went wrong. It was discovered that some Departments, a few hundred of whose staff it was proposed to relocate, only had approximately 120 staff. I know that everything is possible over on the Government side of the House, but I wonder at the situation.
In the context of this legislation, to what extent have there been discussions with the wider public service in the course of the debate on relocation, as I term it, or on decentralisation, as the Government terms it? This great welcome down in Parlon country which awaits them-——
And in every one of the other 23 locations as well, I believe.
When the Minister of State welcomes the first 200 or 300 and they have settled down there, I will be quite happy to say, "Fair play, you did well".
I will remind the Deputy.
I wonder whether the contents of this legislation were mentioned. I am not at all convinced about the Government's objectives in its strategy. Indications have been given to the present generation and those who are likely to enter the public service.
I acknowledge that Oireachtas Members should not speak about themselves. The public will say that Oireachtas Members will welcome the new proposals. It may well happen in four, five or ten years' time that membership of the Oireachtas may not be an attractive option because there will be many other competing options. The young and the not so young may not wish to serve in this House. In the interests of the public and new entrants, the Government will need to keep a close watch to ensure that it is not being penny wise and pound foolish. I wish I had a longer time to speak.
Mr. Neville
I welcome the opportunity to speak on the Bill. Its main objective is to increase the minimum pension age from 60 to 65 years and abolish the link for new entrants between age and compulsory retirement. I wish to speak on the subject of retirement. Society has decided that a person should retire at a certain age. I firmly believe that people age at different rates. A person of 90 years of age can be as fresh as somebody of 60 years because of the differing rates of ageing. Not alone do people age physically at different levels, they also age differently at a mental level. A person may be mentally and physically active at 65 and in a position to contribute for perhaps five or even ten years to their workplace, community or society. There is a perception that everybody should break down at 65 years. While it has been traditional to retire at 65 for many generations, that should now be examined.
There are also people who may age earlier. A person at 60 may be burnt out or may be more physically and mentally aged than someone of 70 or 75 years. I suggest a more flexible approach to ageing.
The Bill offers people an opportunity to work beyond the age of 65 and I am in favour of such a proposition. We should allow and facilitate people who can contribute to society and to their workplace and community to work beyond the age of 65. There are examples of marvellous contributions by older statesmen who are well beyond 65 years of age and who have contributed enormously to the political development of their countries. Mr. Nelson Mandela and others have made significant contributions when they were older than 65, not to mention the Chinese leaders who work until they are in their 90s and are in a position to make a contribution.
The Deputy should mention a few of them by name.
Much of the emphasis in the discussion on this general Bill seems to be on teaching. Media chat shows talk about teachers' holidays and conditions of employment. Teaching is a pressurised and stressful job. Parents among us will have frequently found it difficult to deal with one, two or three children, not to mention trying to control 25 or 30 children.
My definition of a child is the same as the legal definition, that is, a person under 18 years. Teachers are well trained to do their job and the House must compliment the training systems which have served the State so well in the various areas of teaching. Developments in teacher training have been of great value, particularly at second level. The second level teacher training programme in the University of Limerick, for example, takes a holistic approach which involves teaching subjects and developing students' teaching skills, as opposed to the model in which subjects are taught and students then progress to take a higher diploma in education. The course develops the person as a teacher from the moment he or she enters the college to the day students sit their final degree examinations.
People have different temperaments. Some will be relaxed when endeavouring to control a class, communicate to students and achieve targets, while others will find this task stressful and pressurised. Given that some teachers burn out at different times, we should be careful to ensure we facilitate those who believe they have reached the end of their teaching career, but may wish to proceed to do something else.
Some teachers, aged 55 or 60 years, may be no longer able to handle the stress and pressure of the classroom and, as a result, have lower levels of control and communication and be less capable of imparting knowledge. In such circumstances, students will suffer. For this reason, we require a facility which allows us to recognise this process and ensure that the children involved and their education are always prioritised. If this is best achieved by increasing the age of retirement for teachers, so be it, but when a teacher's performance diminishes as a result of stress and pressure and the education of his or her students is affected, the teacher in question should not be compelled to wait until the age of 65 years before retiring.
Some teaching unions have indicated their concerns regarding sections of the Bill. Section 2(4) provides that where a person who was serving in a public service body prior to 31 March 2004 returns to a position after 1 April 2004, he or she will not be categorised as a re-entrant, provided he or she returns not later than 26 weeks following the last day of service prior to 31 March 2004. It has been pointed out to us that while the thrust of this provision, namely, the discounting of breaks of 26 weeks, is welcome, it does not go far enough because it is of no benefit to public servants who have already been out of service for a period of more than six months. In some respects, this provision also applies retrospectively. People who have served in the public service may not be aware of this. Surely a more equitable approach would be to give people currently out of service a six month window of opportunity to return to the service, commencing on 1 April to 2001 and concluding on 1 September 2004. I ask the Minister to consider this proposal before Committee Stage.
The position adopted by the public service committee of the Irish Congress of Trade Unions is that public servants currently out of service who return to the service after 1 April next should not be regarded as new entrants if they have previously given lengthy service to the State, because experienced public servants would be dissuaded from returning to the service if the new terms were to be applied to them.
In the context of decentralisation, it is in the Minister's interest that public servants with skills, knowledge and experience, who have been out of service for a considerable period, would re-enter the service. Considerable concern has been expressed in the House by Opposition Members and outside it by Government Members to the effect that people with high level skills will not move from Dublin to the towns proposed as locations for decentralised bodies. If the Minister can amend the legislation to make it attractive for people with skills and experience who left the public service for a period to return to assist the decentralisation process, he should do so. Although we support decentralisation, we are concerned about its likelihood of success.
Many of the teachers who are currently out of service are women who left the profession temporarily due to family circumstances. The legislation could potentially create problems in the area of equality legislation if such women were to be treated less favourably in terms of pension age than men or others who are not de facto required to leave the public service for family reasons. I have discussed this issue with many career women, notably teachers and politicians, who find it difficult to reconcile their career with their role as mothers.
The day we do not recognise the special role of mothers is the day our society will understand less about the nature of humanity. A mother's special role, her special relationship with her children and young children's special need for their mother means that women leave employment to rear their families with much greater frequency than men. While some men successfully assume the role of house husband, we must recognise that women leave employment to rear families in much greater numbers. Some people believe this should change, and perhaps it should to some extent, but we must deal with society as it is, and the facts show that it is generally women who leave teaching to rear families before returning to the profession. The question which will arise in this context is whether the legislation discriminates against such women. I ask the Minister to examine this matter.
Much has been said about student teachers. I was contacted as late as last night by students attending the University of Limerick who are concerned about the legislation. Student teachers have a right to justice. The Bill specifically provides that persons admitted to a Garda training college before 1 April will not be regarded as re-entrants though their period of training may extend beyond 1 April 2002. Student teachers of colleges of education are seeking a similar exemption. While it is accepted there is not a direct contractual comparison between trainee gardaí and student teachers, surely there is a special relationship between student teachers and the State.
Student teachers embarked on their careers with certain expectations of conditions of employment. The small cohort of people who had such expectations on taking up a career in teaching should have their position recognised. They should receive the same treatment as trainee gardaí. The number of student teachers is determined by the State and currently stands at approximately 3,200. Those numbers relate directly to the State's future teaching needs. The bachelor of education course for primary teachers qualifies a graduate for only one occupation, a teacher in a primary school. This cohort of students has already embarked, at the State's expense, on their careers as teachers and should not be considered new entrants following graduation and subsequent employment in national schools.
Further evidence of the special position of student teachers is contained in the rules for national schools. Rule 155 requires that candidates for admission to colleges of education must be assessed by the college medical officer and certified as being of sound and healthy constitution and free from any physical or mental defect likely to impair his or her usefulness as a teacher. A similar medical process is required at the end of the training period. Approximately 1,000 student teachers will graduate from the various colleges in May 2004 having completed three years training. It is grossly unfair to apply the new position to them because their courses will not conclude until May. They will lose out by one month in terms of their expectations of conditions of employment on retirement. These students should not be denied, because of one month, their expectation of a condition of employment on retirement following three years training to become a teacher.
I want to draw the Minister's attention to the concerns expressed by the Irish National Teachers' Organisation which has pointed out that, historically, teachers have had the option of retiring from 55 onwards, having completed 35 years service. It is proposed in this Bill to increase the retirement age for teachers from 55 to 65 years. Other categories of the public service have had their minimum pension age increased by only five years. Is it fair to increase by ten years the age at which teachers may retire when the age of retirement for others is being increased by only five years? Surely the same upward adjustments should apply in each case.
This is necessary legislation. I will conclude my remarks by returning to where I started. People age at different times of their lives. A person 70 years of age could be mentally and physically as fit as a person of 50 years of age.
Mr. J. Higgins
This Public Service Superannuation Bill 2004 is reactionary legislation which proposes to raise the standard minimum age of retirement in the public service to 65 years. This is neo-liberalism in the extreme as far as the Irish Government is concerned.
The Tanáiste who is close ideologically to the Minister for Finance — not that there is anything ideological between any member of the Cabinet in reality — stated this morning at the Forum on Europe when referring to services now in the public domain that it did not matter who held ownership of our services. She said ownership was not a matter for concern; it was more important to ensure the services were available. That epitomises the philosophy of the current Government which does not care who has ownership of our services so long as they are taken off its hands. However, ownership is absolutely critical to ordinary people because it will determine the level of access to or restriction of access to services. When ownership passes from the public arena, as is rapidly happening throughout the European Union, the criteria for people accessing those services are pitched at whether they will be able to pay sufficiently to make a killing for the multinational and other corporations and financial interests that move in to purchase the services.
Given the Tanáiste's attitude, is it any wonder this type of reactionary legislation which is going backwards in terms of workers' rights, is being brought before the Dáil by the Government? Incredibly, and the Minister says this with a straight face, this legislation is being enacted to save €300 million per annum in 40 years time. The Minister for Finance, in his budget speech in December 2001 slashed corporation taxes to the effect of €329 million in a full year. A year later he gave a further €305 million to major corporations in another tax cut. A total of €634 million in cuts was given to big business. What will be the impact of those cuts in a full year?
The Minister for Finance is now seeking to chain public servants to their places of employment until they reach 65 years of age to provide for a saving of €300 million in 40 years. That is incredible. It is extremely reactionary because it is dragging working conditions backward instead of propelling them forward. He should be ensuring we have working conditions better suited to human well-being and human comfort.
We have to go back to the 1880s when the industrialised world was convulsed by the struggles of millions of workers to reduce the working day to eight hours, from ten, 12 or 14, such as existed even in the heartland of capitalism, the United States of America. The date of 1 May 1886 was set as the deadline by the Federation of Organised Trades and Labour Unions in the United States by which a powerful movement of working people was to be put behind that demand, and so it happened, with major strike movements and mobilisations of working people which were reacted to viciously by the authorities in the United States. Workers were shot down participating in peaceful protest. Agents provocateurs threw bombs into the crowd to blame it on the organisers, and the Haymarket martyrs, those workers' leaders, were framed and hanged as a result of that huge struggle. Those struggles reduced the number of hours in a working day to a tolerable limit, and that was a very important reform for working people throughout the industrialised world, and beyond in some cases.
In this legislation the Minister is trying to reverse a similar reform that gave workers in the public service the right, after a lengthy working life, to retire at 55 or 60. The Minister presumes to force them to stay at their posts until they are 65, thereby extending the working life by five or ten years in some cases. In this modern day and age, with technology going forward and labour-saving devices, that beggars belief, and the reactionary nature of it should be fully recognised.
What is it about? It is about the agenda of neo-liberalism currently dominating the thinking of all Governments within the European Union and driving the policy and actions of the EU Commission. This is the agenda of the major multinational lobby groups that have the ear of the EU Commission and the Governments which currently rule the EU, and which have ready access to the Government which has the Presidency of the EU at any time.
Undoubtedly this Government will also have its regular meetings in the course of the remainder of this Presidency with the European round table and the rest of the lobby groups of big business which deploy tens of millions of euro in lobbying to drive their agenda as the one accepted within the EU. Their agenda is to pare back pensions as far as they possibly can in order to maximise their ongoing profits, and to pare back public spending on pensions and on the public services so they can go cap in hand and demand even fewer corporate taxes than they are paying currently, certainly in the case of this country which is probably the lowest in the EU. What the Minister for Finance and the Government are doing with this Bill is implementing in legislation the agenda of big business inside the European Union. Let that be recognised.
It is shameful that the leadership of the trade union movement here is not up in arms about this type of proposal. Many in the leadership of the Irish Congress of Trade Unions, unfortunately, have become far too close to the Government. They are far too comfortable in the present arrangement between the Government, the bosses and the leaders of the trade union movement. Since 1987, they have made concession after concession, many of which have not even been seen and are not publicised in the media. For example, the amount of national production which now goes to working people on wages and salaries is far less as a proportion than it was in 1987 and the amount of production going to profits, rents and speculators is far greater. That is the result of so-called partnership but it is not partnership. It is a fraudulent pretence at partnership, and the trade union leadership should have rejected it out of hand as a thoroughly reactionary and backward proposal as far as workers are concerned.
The Bill goes on to make certain exceptions for members of the Garda, the Army, fire-fighters, etc. It is obvious on the face of it that in regard to these professions which need people who are young, active, agile, etc., the Government felt obliged to put in these exceptions, although if I were these workers I would be watching my back over the next period.
The Deputy is right.
I am opposed to this for all workers in the public service but I want to single out the case of teachers. This Government's contempt for the teaching profession appears to have no bounds, and we have seen many examples of that over the year. It is incredible, with all that we know about the difficulties, stresses and strains of teaching in our society, that this is being implemented strictly in regard to their profession. The Minister is forcing teachers to remain in the classroom until they are 65. What of the high-stress schools across the board? What will the Minister have in terms of teachers' health and morale at the age of 65 when this measure finally works its way through? He will have quivering wrecks in the classroom rather than vibrant educators, which is what is needed now. The fact that this is decades away should not in any way lessen our hostility and opposition to it. It should entrench that hostility and opposition because 30 and 40 years from now the conditions of life and work for working people should be much more favourable than they are currently, not dragged back in the direction of the 19th century.
In the Bill we have rather prominently displayed the fact that politicians, Members of the Dáil and so on will be subject to it. It states that providing superannuation benefits for Oireachtas officeholders and Members of the Oireachtas or European Parliaments will not be payable before the age of 65 other than on grounds of ill-health or death, or where provided for in a scheme or enactment that applies to a new entrant and which is approved by the Minister for Finance after 31 March 2004.
I could make a bet now. I will probably not be around in 30 or 40 years to collect it.
Like myself.
I bet that is one enactment that will be made on condition that we have the same right-wing political forces in charge at the time. I sincerely hope and work everyday to ensure that will not be the case. One can be sure that if they are, it will be changed.
It will, without a doubt.
All over the European Union labour relations have been convulsed in the past two years by the issue of so-called pension reform. Millions of workers have gone on strike and mobilised in opposition. The opposition is only beginning. I predict it will continue and intensify because workers understand the implications of the neo-liberal agenda. They will mobilise in response.
In Ireland only the teachers' unions have expressed opposition. I urge them to become far more vocal. Rank and file members are extremely alarmed, even though it will not affect them, which is to their credit. They are thinking of their colleagues and the students of the future. The trade union movement should, therefore, take up the cudgels against this legislation.
The other issue is the abolition of the mandatory retirement age. The Minister was lucky he had that little sweetener to put in to cover the more despicable aspects of the legislation. Nobody objects to the abolition of the mandatory retirement age which is a nonsense. When they reach 60 or 65 years of age, if they feel sufficiently healthy and have the morale and thirst to continue to make a contribution to society, whichever area of the public service they are in, people should be encouraged and facilitated in every way. Where it is appropriate and they are of the mind and have the capability to do so, their enormous experience will continue to be a boon to the public service. This should not, however, in any sense, be confused with coercion which the Minister is seeking to enforce. What will happen, unless there are many changes, is that teachers will be forced to leave the classroom long before normal retirement age and seek work elsewhere because they will not be able to maintain the requisite level of intensity.
Mar focal scoir, an dhá pointe atá sa mBille seo, an chéad ceann, deireadh a chur leis an aois scor éigeantach darnálaithe áirithe an trálacha sa tseirbhís poiblí: aontaím ar fad leis sin. Níl aon chiall ann in aon chor go gcuirfí amach go h-éigeantach daoine ón tseirbhís phoiblí gur theastaigh uathu leanúint leo ag obair agus go bhfuil an-chuid le tabhairt acu i seirbhísí áirithe. An dara chéim mar gheall ar méadú na haoise in-phinsean darnálaithe áirithe an trálacha nua, tá sé sin gníomhach, amach is amach. Is síor ráiméis é seachas é dul ar aghaidh. Chaithfear cur ina aghaidh. Ba cheart go gcuirfeadh na ceard cumainn ina aghaidh agus ba cheart nach ligfidh isteach ar chor ar bith aon chéim i dtreo an rud seo atá i gceist ins an mBille.
Minister for Finance (Mr. McCreevy)
I thank Deputies on all sides of the House for the their valued and constructive contributions to the debate on this Bill. As I said in my opening remarks, we tend to think of ourselves as a young population, with all of the benefits derived from this. It is a fact that we have one of the youngest populations in the European Union. However, this will change fairly quickly. Notwithstanding the difficulty of demographic projections, we cannot ignore the stark reality facing us over several decades in terms of an ageing population, greater longevity and a projected deterioration in the dependency ratio. In the context of these challenges and by comparison with many of our EU partners, we have breathing space in which to put in place the measures and balanced reforms necessary to ensure the future viability of public service pensions without adversely impacting on existing employees.
Reform is essential. Maintaining the status quo is simply not an option. In this context, some contributors to the debate have raised the matter of the pension commission's recommendation of a 1% contribution by all staff, both serving and new entrants, in respect of pensions. While the Government decided to accept the bulk of the commission's proposals, it did not accept this particular recommendation. Neither did it accept the commission's recommendation to establish an index to determine public service pension increases. Its decision in respect of these recommendations is in keeping with the decision not to change the pension and retirement ages of existing public servants. The 1% contribution recommendation had been referred for consideration to the public service benchmarking body which stated in its report that research had been commissioned into pension arrangements in the public and private sectors. Cost differences between the sectors were considered by the body and taken into account in its recommendations of salary and pay levels.
In deciding on its package the Government took into account the comments of the body and the fact that its recommendations had been put in place following agreement with the public service unions. For the information of the House, a 1% pay contribution from all public servants would raise an estimated €130 million per year in 2004 terms. Based on a standard investment fund assumption of a real return of 3% per year, this could be expected to accumulate to an estimated €6.5 billion in constant 2004 pay terms by 2044. However, the net effect of any such contribution may not be considered in isolation from its impact on pay, particularly in the light of the report of the benchmarking body. Any extra pension contribution levied on public servants would almost certainly be factored into future pay determination negotiations. In this context, an additional 1% levy would be likely to result in rates being fully adjusted to allow for this contribution. If that were to happen, there would be no net benefit from the additional contribution and a considerable impact on existing pay arrangements.
Mr. R. Bruton
Will the Minister accept a query?
Why did the Minister not make arrangements for the benchmarking body to publicly report on the issue of comparability of pensions which would have been important and relevant to this debate?
As the Deputy knows, the purpose of the benchmarking body was to explore differentials between workers in the public and private sectors. That was its main remit and the basis on which it reported. Anything additional was taken into account by it, including this issue.
We need that analysis.
As the Deputy knows, there was a debate about the background documentation to the benchmarking body's report. I have answered parliamentary questions on a number of occasions on the reason we decided not to publish.
The Bill builds on initiatives implemented in the general pensions area. They are both reasonable and straightforward and will prove in time to be both timely and appropriate forms to help ensure budgetary stability in the decades to come. I will now turn to some of the other issues raised by Deputies during the course of the debate.
Some Deputies expressed concern about the validity of the demographic estimates quoted. I agree there can be great uncertainty about any projections 50 years into the future. However, most forecasters agree on at least one item: pension numbers are likely to treble over the next 50 years. I accept there is a wide range of opinions on the likely size of the labour force at that time. However, it would have to treble to keep the pensioner support ratio at its current level. In effect, the population would have to treble to 12 million. I doubt if anyone thinks this will happen. It is reasonable to plan on the basis of the comprehensive reports being carried out. The projections I quoted in my opening speech are underpinned by forecasts in the actuarial review of the financial condition of the social insurance fund carried out by the British Government's actuary department in June 2002.
Several EU countries, such as France, Austria, Germany and the Scandinavian countries have to take action which adversely affected the pension position of serving staff. They left it too late. We need to learn from their experience and take limited action now. I confirm that the work of Dr. Fahy, published in 1997 and referred to by Deputy McGrath, was one of the major works consulted by the pensions commission in arriving at its recommendations and is listed in the bibliography contained in the commission's report.
Deputy Burton and others suggested changes to the definition of "new entrants" in the Bill. The approach adopted is balanced, allowing a reasonable interim period within the overall context of a clear and practical definition. It takes account of staff on career break, secondment or any form of leave where the person has a right to return to the employment. Where such a person returns at the end of the period of leave, he or she will not be a new entrant. Account has also been taken of existing temporary, part-time, seasonal and contract staff and staff whose training is being carried out within existing employment arrangements. To extend these exceptions further would introduce inconsistencies that would dilute the impact of the measures the Government wishes to implement in this legislation.
Some Deputies suggested that there is no distinction between a trainee garda and a student taking a course in a teacher training college but the distinction is clear. The student in the teacher training college does not have a contractual relationship with an employer and does not, unlike the trainee garda, move directly into employment on successful completion of training. Trainee teachers must apply for positions as they arise and they are appointed only if successful.
Deputy Connaughton raised the position of new entrants to the psychiatric services. The pension arrangements for all new entrant psychiatric nurses will be brought into line with those applying to new entrant general nurses and psychiatric nurses in the voluntary hospital sector. This equalising measure is fully in accordance with the recommendations of the public service pensions commission. The special terms enjoyed by some psychiatric staff under the Mental Treatment Act 1945 derived from old prison officer terms but there has been a shift from a psychiatric institution based service to a community based service integrated with other health services and this has impacted on the work content and context of psychiatric nurses. The trend is increasingly towards voluntary admission to psychiatric facilities, which is obviously not the case in prisons. Generally, nursing now has more similarities and the pensions regime for new entrants into psychiatric and general nursing will be the same in future.
Deputy Devins referred to the practice of giving hospital consultants added years to augment their pensions, an issue that is not dealt with in the Bill. The pensions commission recommended that schemes of notional added years be abolished for new entrants and should be replaced with other forms of recruitment incentive. Rather than abolish the scheme immediately there are proposals to continue it with a modified form for an interim period. There have been discussions with the unions concerned and other staff representatives. As regards hospital consultants, serving consultants will not be affected and I am well aware of the fears expressed by the future entrants.
Deputy Paul McGrath asked about fast accrual for gardaí. This is not affected by the Bill. While it may be the case that certain new entrant gardaí will have accrued the maximum 40 years reckonable service before minimum retirement age, all of them will require the fast accrual facility to accrue maximum pension at minimum retirement age. The current trend is to enter the force at later stages and many new recruits will not have accrued full pension until their mid to late 40s. The fact that some new entrant gardaí will have accrued maximum pension some years before the minimum retirement age is no different from the position of staff in other areas of the public service.
Deputy Burton referred to the refund of pension contributions paid by overseas doctors working here. She criticised the fact that such refunds are now payable for up to two years service only when previous refunds could be paid for up to five years service. It is not a matter comprehended by the present Bill. The reduction in the vesting period was introduced in the Pensions (Amendment) Act 2002, which was sponsored by the Minister for Social and Family Affairs. It applies to all pension schemes, not just public service pension schemes.
The Deputy inquired if ministerial powers under the Superannuation and Pensions Act 1976 could have been used to implement the changes in the Bill and in a related point she expressed doubt about the constitutional propriety of the Bill, citing the Carrickmines judgment. On the first point, this Bill covers the public service in its entirely whereas the Superannuation and Pensions Act 1976 limits the authority to amend legislation to certain specified legislation only, primarily related to pension arrangements for established civil servants. On this basis there could be no question of using the 1976 Act to accomplish the changes set out in this Bill. On the second point, the Carrickmines judgment was available when this Bill was drafted and the parliamentary counsel had regard to it. Any primary legislation amended by this Bill has been fully identified and the details of the proposed amendments are included in the second Schedule and in section 5.
Deputy Burton also had the impression that the 1980 regulations were used to give legal authority to the proposals announced in the budget. I merely announced in the budget my intention to introduce legislation to implement the age related forms which I am now doing in this Bill.
Several speakers in both Houses have criticised the proposals to increase the minimum retirement age to the general new standard retirement age of 65, expressing concerns about the capacity of teachers to cope adequately. An alternative approach suggested in both the Seanad and the Dáil is that five years be added to minimum ages across the board. It will allay Members' concerns to know that the majority of teachers already opt to work until age 60 or over rather than retire between 55 and 60. This trend is set to continue and become more pronounced in future given that new entrants are joining the labour force at a later age than heretofore, notably because of the introduction of degree courses for some teachers and later school leaving ages. Some teachers are also taking breaks from service and choose to accumulate the service later. In the circumstances, the proposal to increase teachers' minimum retirement age from 55 to 60 would have little impact. It would, however, maintain existing relativities.
In line with its terms of reference, the pension commission conducted a more fundamental review of pension terms across the public service, having regard to historical background, fairness in terms of other groups, operational requirements, the changing environment and improvements in health and life expectancy. It was against these criteria that the commission recommended that standard terms apply to new entrant teachers. I agree with the commission's more fundamental approach and decided against simply adding five years to the minimum retirement ages of all employees across the public service.
Deputies also expressed concern at the abolition of special early retirement facilities where teachers experience professional difficulties. The proposals in this Bill will have no impact on existing targeted early retirement facilities. Such facilities will have to be reviewed from time to time and that applies also to the teachers' pilot early retirement arrangements, which are due for review in a couple of years.
The pensions commission received and considered a wide range of submissions from groups seeking early retirement terms given the stress being experienced by employees in the relevant areas. This applied to numerous areas in the public service. Stress is widely recognised as a factor in modern day working and must be addressed in various ways. In terms of pension provision, the pension commission, having considered all the submissions made to it, considered that the appropriate response was to introduce additional flexibility in the public service to enable public sector employees to plan to retire earlier if they wish, for example, through a combination of purchasing additional pension, known as SPEARS, and an actuarially reduced early retirement, or reverting to a lower level in the years before retirement without suffering a pensions penalty. The range of options is under discussion in a joint union-management group at present. The measures outlined allow people to plan ahead if they wish to retire before 65.
Deputy Paul McGrath commented that the provisions of the Bill for Oireachtas Members and office holders were at variance with the terms of my budget speech. I do not accept that the Bill amounts to a change from my budget statement. Anyone who joins the Oireachtas for the first time after 1 April will be a new entrant. Anyone who becomes an office holder after 1 April having joined the Oireachtas for the first time after 1 April will also be a new entrant. The Bill represents the detailed implementation of my budget statement but takes account of the position of Members of the Houses where, as Deputy Paul McGrath himself said, there is less security of tenure than for any other group of public servants.
I welcome the comments of some Deputies during the debate, including Deputies Twomey and Boyle, who saw no difficulty with the proposal to bring the pension age for new entrant Members into line with that for new entrants to the public service generally.
Deputy McGrath commented that new entrants to the Oireachtas will be able to qualify for full benefits after 20 years' service but could have to wait a further 20 years to get those benefits. As I said in my opening speech to this debate, it is entirely reasonable and consistent that persons joining the Houses after 1 April be subject to the new entrants' terms, as they, unlike serving Members, will be fully aware of the new age limits before they join and will be able to take them into account in considering their circumstances.
Deputy Boyle referred to the impact of proposals in the Bill on how current Members who have not yet attained ministerial office will be treated. I assure Members that any person who is currently or was in the past a Member of either House will not be considered to be a new entrant if he or she should become a Minister at some stage. The Bill introduces measures only for new entrants to the public service and removal of the compulsory retirement age is part of that set of measures. As stated in the Seanad, I am open to the removal of the compulsory retirement age for public servants, but in a context other than this Bill, which is to apply only to new entrants.
Deputy Burton asked for figures regarding gardaí, teachers and nurses retiring early or on the grounds of ill health. In the two years 2001 and 2002, the number of primary and secondary teachers who retired under the limited early retirement scheme was 252. The number who retired on the grounds of ill health over the same period was 270. I am advised that the number of gardaí who retired on the grounds of ill health in 2001 and 2002 was 64. Given the multiplicity of employers in the health services, my information is that it is not possible to compile the number of ill health retirements in the time available.
Deputy Mulcahy referred to increased pensions mobility between the public and private sectors. I agree with the concept of improved portability. It is not an issue covered in this Bill, but there are already provisions for the acceptance and payment of transfer value payments by public service schemes, subject only to the conclusion of a reciprocal arrangement with the other employers. Amendments were also made by my colleague, the Minister for Social and Family Affairs, Deputy Coughlan, which improved provisions for such payments to non-funded pension schemes. The question of ageism was raised, and my colleague the Minister has responsibility for pensions in the private sector, including equity aspects, which is why I am dealing only with the public service in my legislation.
Deputies Bruton and Enright expressed disappointment that this Bill dealt only with age-related issues. However, as stated in my budget speech and elsewhere, the Government has accepted the bulk of the recommendations of the Commission on Public Service Pensions. My officials are involved in detailed discussions with union representatives and officials from other Departments on the introduction of various reforms mentioned in my budget speech. Those include changes in the calculation of pensions for lower-paid staff to increase their occupational pensions and the introduction of a package of flexibilities to facilitate employees in planning to retire before 65 through a combination of purchase of service and actuarial reduced pensions, as well as the option of a reduced level of responsibility in the years before retirement.
Several Deputies referred to SPEARS. In keeping with the commission's recommendation, it is the wish and intention of the Government that SPEARS, which should furnish a more flexible method of providing the additional benefits than existing public service AVC and purchase schemes, apply to both serving public servants and new entrants. Discussions are already under way with the staff associations about that. Those developments will take time to introduce, and the Bill, which relates only to new entrants, is not the appropriate means.
Deputies O'Sullivan and Ó Caoláin voiced concern about a lack of agreement with the social partners. It is true that it is not possible to get agreement on the proposals regarding the minimum retirement ages contained in the Bill, although considerable progress has been made on other non-age issues, and discussions are ongoing. As I emphasised in my speech, there have been lengthy discussions with the unions over two years, and all relevant issues were considered. However, it became clear that there would not be general agreement on increasing retirement ages, and the Government had to decide whether to take responsible, modest steps now or do nothing and face the prospect of taking more radical steps in future which may affect both existing staff and pensioners. The Government must have the right to decide policy in the national interest. We allowed every opportunity for agreement, but when that proved impossible, the Government had to take action.
Deputy Deenihan raised the question of bad faith on the part of management in the implementation group discussions with the teachers, noting the discussion on compromise proposals for a minimum age that the teaching unions said they thought had been agreed. I understand that the management side was prepared to consider some reduction in the minimum retirement age of 65, subject to an overall agreement with all the union representatives. However, it was repeatedly made clear that nothing was agreed until everything was agreed. That was documented in the agreed report to the Government on the discussions. Unfortunately, it was not possible to reach agreement on key proposals, notably those related to minimum retirement ages. The working group was formed in January 2002 and reported in October 2003 following extensive discussions. I am satisfied that every opportunity was available to the unions to reach agreement with the management side in the working group. Unfortunately that was not possible.
Deputy Joe Higgins raised the matter of corporate taxation. It is obvious to anyone that lower tax rates are conducive to the creation of more jobs, increasing incentives to work, and generate larger tax receipts. Without what has been done regarding corporation taxes, we would be facing an even greater problem meeting future pension costs. It cannot be stressed enough that we must take action now on the pensions issue. I have been concerned for some time that we in Ireland may be complacent. As I said in my speech yesterday, we are used to thinking of ourselves as a country of young people. For some in Ireland, it is other countries that must face the problems of ageing, and increasing dependency ratios do not affect us. I have heard comments that we do not really face a pensions problem in Ireland, that estimates of population change are always open to doubt, that increased migration flows will alter the picture, and that some way will always be found to tackle the problem.
We must recognise that the issue is far too significant to be sidelined in that way. It is true that our population is younger than that of most of our EU partners, but it will age. The key point is that Ireland must use the opportunity that it has now to prepare for the future. I was very glad to see Brendan Keenan's article on pensions in this morning's Irish Independent, and I draw it to Members' attention. In light of a new study on the issue by various European experts, Brendan Keenan lists policy issues about the funding of pensions which must be faced by Ireland and our EU partners in the years ahead. However, the main point is that he makes clear that we must take action.
We have no excuse for surprise when our population begins to grey. Now is the time to decide how to deal with the problem in the most effective way.
He states that "Ireland is not a mere interested spectator" and concludes that the "pensions burden will double by 2050 and increase by more than half in the next 25 years".
I assure the House that the Government is not complacent on the pensions issue. As Minister for Finance, I must take steps now to secure the future position. I have already introduced several initiatives such as the national pensions reserve fund and major changes in the taxation code to encourage people to take out pension provision for themselves and their families. The changes in the pension arrangements for new entrants to the public service contained in the Bill are a further significant step in that process.
Question put.
The Dáil divided: Tá, 58; Níl, 37.
Tá
Ahern, Dermot.
Ahern, Michael.
Ahern, Noel.
Andrews, Barry.
Blaney, Niall.
Brady, Johnny.
Brady, Martin.
Browne, John.
Carey, Pat.
Carty, John.
Cooper-Flynn, Beverley.
Cregan, John.
Cullen, Martin.
Curran, John.
Dempsey, Noel.
Dempsey, Tony.
Dennehy, John.
Devins, Jimmy.
Ellis, John.
Finneran, Michael.
Fitzpatrick, Dermot.
Fleming, Seán.
Fox, Mildred.
Gallagher, Pat The Cope.
Glennon, Jim.
Grealish, Noel.
Hanafin, Mary.
Haughey, Seán.
Keaveney, Cecilia.
Kelleher, Billy.
Kelly, Peter.
Kirk, Seamus.
Kitt, Tom.
Lenihan, Conor.
McCreevy, Charlie.
McDowell, Michael.
McEllistrim, Thomas.
Moloney, John.
Moynihan, Donal.
Moynihan, Michael.
Mulcahy, Michael.
Ó Cuív, Éamon.
Ó Fearghaíl, Seán.
O'Connor, Charlie.
O'Donovan, Denis.
O'Flynn, Noel.
O'Keeffe, Batt.
O'Malley, Fiona.
O'Malley, Tim.
Parlon, Tom.
Ryan, Eoin.
Sexton, Mae.
Smith, Brendan.
Treacy, Noel.
Wallace, Dan.
Wallace, Mary.
Walsh, Joe.
Woods, Michael.
Níl
Allen, Bernard.
Boyle, Dan.
Breen, James.
Breen, Pat.
Broughan, Thomas P.
Bruton, Richard.
Burton, Joan.
Connaughton, Paul.
Crawford, Seymour.
Cuffe, Ciarán.
Durkan, Bernard J.
Enright, Olwyn.
Gilmore, Eamon.
Gormley, John.
Gregory, Tony.
Harkin, Marian.
Healy, Seamus.
Higgins, Joe.
Higgins, Michael D.
Kehoe, Paul.
McGinley, Dinny.
McManus, Liz.
Mitchell, Olivia.
Morgan, Arthur.
Murphy, Gerard.
Neville, Dan.
Ó Snodaigh, Aengus.
O'Keeffe, Jim.
Penrose, Willie.
Rabbitte, Pat.
Ryan, Eamon.
Ryan, Seán.
Sargent, Trevor.
Sherlock, Joe.
Shortall, Róisín.
Stagg, Emmet.
Wall, Jack.
Tellers: Tá, Deputies Hanafin and Kelleher; Níl, Deputies Durkan and Stagg.
Question declared carried.
Diseases of Animals Act 1966: Motion.
Public Service Superannuation (Miscellaneous Provisions) Bill 2004 [Seanad]: Referral to Select Committee.
© Houses of the Oireachtas 2020
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