Dáil Éireann debate -
Friday, 9 Mar 1934

Vol. 51 No. 4

Public Business (Resumed). - National Teachers' Superannuation Scheme—Motion of Confirmation.

Minister for Education (Mr. Derrig)

I move: That the National School Teachers' Superannuation Scheme, 1934, made by the Minister for Education, with the consent of the Minister for Finance, under the Teachers' Superannuation Act, 1928 (No. 32 of 1928) be confirmed.

In dealing with this important question, which has been the subject of prolonged discussion and consideration, I think it, perhaps, well to explain to the Dáil, in the first instance, what the position has been heretofore. Accordingly, I intend to say a few words with regard to the old pension scheme which the new scheme, at present under consideration, is designed to supersede. It is also necessary to give the reasons which led the Government to introduce the new scheme. The original teachers' pension scheme was set up under the National Teachers (Ireland) Act, 1879. This scheme provided for the granting of pensions or gratuities to class teachers; that is to say, principal and assistant teachers in model or ordinary national schools, but not including lay assistants in convent or monastery schools or the subsequently established junior assistant mistresses. This Act of 1879 provided for the establishment of a pensions fund, out of which all pensions were to be paid. The basis of the fund provided for a capital sum of £1,300,000, the interest from which, at the rate of 3 per cent. per annum, was paid into the fund. Under the Act the British Treasury had power to make regulations regarding the administration of this fund, and also to modify or amend these regulations from time to time. Actuarial valuations were made at regular intervals during the early period of this fund, and also in the later period, though not with the same regularity, so that we are able to see what was the position of the fund and the actuarial deficiencies which occurred during the time that it was in operation. In practically all cases I think in which these actuarial valuations were made, it was discovered that there was an actuarial deficiency in respect of the fund. In the year 1891, for example, we find that Parliament had to vote £90,000 to make up the deficiency which was disclosed in that year. There was another valuation in 1895 which again disclosed a deficiency, and on this occasion the benefits accruing to teachers were curtailed. Their contributions to the fund were increased, while Parliament stepped in, in order to try and make the fund solvent, by giving a lump sum of £95,434, plus an annual grant of £18,000.

There were subsequent valuations when it was found that the provision in the fund was not sufficient. At the same time, as the House will remember, there was a prolonged agitation in the country extending over very many years for better conditions for the teachers, and particularly for the maintenance of pensions. After a time the teachers' pensions were further improved and increased grants were made to the pension fund. In 1914 a definite effort was made to put the fund on a more definitely satisfactory basis. The rules, which I find were then made, provided for a considerable increase in the contributions from the teachers. These meant that the teachers' contributions were then fixed at a percentage ranging for 3½ per cent. to 5 per cent. of their salaries. In 1921 the rate of contribution was fixed at 4 per cent. for all teachers, and this rate of contribution has been in operation up to the present time.

This reorganisation of the fund, which took place in 1914, was designed to secure the solvency of the fund, and undoubtedly would have succeeded in doing so had the conditions which then applied continued, but in the year 1920 an entirely different situation was created. An agreement was made in November, 1920, between the teachers and the representatives of the British Government as a result of which there was a very substantial and, I think, all round increase in teachers' salaries. I think it would be fair to say that there was an increase of more than 100 per cent. in the new scales as against the rates which the teachers were then receiving.

Mr. O'Neill

Was that previous to fixing the rate at 4 per cent.?

Mr. Derrig

The rate of 4 per cent. was fixed in 1921—after the 1920 agreement. It is well known that, as a result of these considerable increases in teachers' salaries, there was a consequent heavy increase in the liability on the fund in respect of pensions, pensions being based on the average salary paid to a teacher during the three years preceding his retirement from the service. I find that the actuary in 1929 estimated that the increase in pension liability under the head of the agreement of 1920 amounted, on the average, to £330 for each teacher in the service. It is no harm to give definite figures showing the increases in saláries which have really given rise to the whole subsequent difficulty in making the pension fund solvent. I notice that whereas the grade salary of national teachers in 1914 ranged from £63 to £185 in the case of men, and from £51 to £151 in the case of women, the scales of salaries in the 1920 agreement were £170 to £460 in the case of men, and £155 to £360 in the case of women.

The effect on the Pension Fund of these increased rates of salary may be gathered from the fact that whereas the average ordinary pension granted in 1914 was only £41 10s., in 1920 it was £63 10s. and in 1932, £164. After a few years it was quite clear that the solvency of the fund could not be maintained under the new conditions, that it could not stand the drain of those increased pensions. The late Government took up the matter and had an actuarial investigation of the whole position of the Pension Fund made as on the 31st December, 1926. When the result of this investigation was published or made known, a net deficiency on the fund of £4,210,364 was disclosed. Once the fund had become insolvent, the deficiency increased with compound interest and it is estimated that at the present time the deficiency must be well in excess of £5,000,000. The expenditure of the Pension Fund has for some years past exceeded the income and it has been necessary to sell out stock in order to pay the pensions. The deficit for the year 1933 was £82,580. What is the position of the fund at the present time? In spite of the fact that it has been insolvent and that stock has had to be realised for a number of years in order to meet pension charges, there is still undoubtedly a considerable amount of realisable assets. We estimate that these assets, in the form of Government securities, amount to about £1,500,000. It seems to be a substantial sum but it must be remembered that if the present position of the fund were to continue and things were allowed to drift— stock having to be realised every year in order to meet the obligations of the fund—the present assets would dis appear completely in about ten years' time.

There are other assets in the fund as well as this £1,500,000 of Government securities. In the first place the teachers' contributions of 4 per cent. on their salaries run to about £102,000 per annum. The State is also making contributions. In the first place, we are giving Government grants from voted moneys of £29,326 per annum. We are giving a Government grant which is voted annually, amounting to 15 per cent. of the previous year's expenditure. That amounted to £47,726 in 1933-34. If we were to continue the old system—allowing the present position to continue as well as facing a situation that in ten years there would simply be no assets in the fund—we would also have to make provision for an increased Government contribution because the 15 per cent. Government grant based on last year's expenditure would increase ultimately to a maximum of £90,000 per annum. There is also an income from the Saorstát share of the £1,300,000 allocated in 1879 from the Church Temporalities Fund which amounts to £26,598 per annum. Therefore, as regards the other assets in the fund, excluding the £1,500,000 Government securities, we have the teachers' contribution of £102,000, the State contribution of £47,000 plus £29,000—roughly £77,000—and the income of £26,500 from the Saorstát share of the Church Temporalities Fund. In effect that is a contribution from the State.

Mr. O'Neill

What is the total?

Mr. Derrig

I believe that if we assume that that £26,600 is portion of the State contribution, the position would be that we would be contributing, roughly, half. That is to say, that our contribution from State sources would equal, roughly, the teachers' contribution of £102,000 per annum. The question then that has faced us, as well as our predecessors, is: what steps should be taken to deal with the position that has arisen? Should we attempt to make the pension fund solvent by way of Government subsidy, or by increasing the teachers' contributions, or by a combination of both, or should we, by imposing a cut on the teachers' salaries, be able to make what, I think, may be described as a settlement? Though it has never been accepted by the teachers, they have been in touch both with this Government and with the last Government on the matter, and they have known the main outlines of the settlement that has been proposed in both cases. Our problem was whether to attempt to make the pension fund solvent or whether we should impose what I, at any rate, call a settlement upon the teachers, as an alternative, and take over the whole liability for teachers' pensions as well as teachers' salaries in future and make them a charge on voted moneys. The whole question has been very closely examined during the past five or six years, and we have come to the conclusion, in bringing in this scheme, that the only way to meet the situation in future is to make both pensions and salaries of teachers a definite charge on voted moneys.

Our scheme, therefore, is on a noncontributory basis. The teacher will not make any contributions towards pensions as such. The 4 per cent. contribution is wiped out. Instead of that contribution we are instituting a system of revised salary scales. These salary scales are based on a 9 per cent. cut on present rates of pay except in the case of junior assistant mistresses and untrained assistant teachers who are in a specially low-paid class. In these two cases we are making a cut of only 6 per cent. What is the justification for this cut of 9 per cent.? Well, the Government have had to take into consideration, in the first place, the general circumstances surrounding this whole question of the pensions fund. It can be argued, I think with reason, that the question of teachers' pensions and the question of the contributions which, in future, they must make, if the State is to take over responsibility for their pensions, cannot be dissociated from the whole question of teachers' salaries.

So long as we have the question of contribution there in one way or another the matter of the appropriateness and the reasonableness of the teachers' salaries is also in question. We have also to take into consideration the charges which will be placed upon the Exchequer in future in respect of both salaries and pensions. I find under the present Estimate the cost to the Exchequer in 1934-35 of teachers' salaries would be approximately £3,470,000, and of pensions £79,000, making a total of £3,549,000. Under the proposed new scheme the corresponding charges will be: Salaries, £3,228,000, and pensions £371,000, making a total of £3,599,000; that is to say that there will be an immediate additional cost to the Exchequer of £50,000. We are also taking over a very important liability—it is one that we should take over in all reason, but nevertheless it is a big financial liability—that is, the liability for pensions for junior assistant mistresses and lay assistants. We cannot say what the amount of that liability is, but obviously at the peak period it will be very considerable. There are 1,755 junior assistant mistresses and 732 lay assistants. That is one additional liability.

It has also to be borne in mind that the teachers who were pensioned prior to 1920 are dying off and that there is a rapidly increasing liability in respect of pensions. The teachers who are coming on charge on the Pensions Fund will have much larger pensions to draw than their colleagues who are dying off. As well as having much larger pensions, the number of pensioners is increasing. The total number of pensioners in 1922 was 1,946. It is now 2,514. The actuary estimated that the number at the peak period will amount to 3,300, and this does not include, I believe, the junior assistant mistresses and lay assistant teachers to whom I have referred, who are coming under the scheme for the first time.

Mr. O'Neill

Are they retiring at an earlier age? Is that how we are to account for the increase in numbers?

Mr. Derrig

No.

Mr. Norton

They are living longer!

Mr. Derrig

It is estimated that the eventual total liability of the Exchequer for pensions will rise to a maximum of somewhere between £550,000 and £600,000 per annum, involving an additional charge on the Exchequer for salaries and pensions of from £229,000 to £279,000 per annum. Next year, while our liability in respect of pensions will be £371,000, we have to look forward to the time—it is a good way off, but the State has to take all those matters into consideration—when the eventual charge in respect of pensions will be somewhere in the neighbourhood of £600,000.

Professor O'Sullivan

I do not like to interrupt the Minister as this is a very complicated matter, and I have full sympathy with him in his difficulties. Would he be able to give me any idea of what the pensions would be, not thirty years hence, which I think is about the figure he has given the House, but say about the year 1940?

Mr. Derrig

I will try to get the figure. Now there is an important offset against this heavy liability which the State is taking on in respect of teachers' pensions—it will be a continuing offset—and that is, when the fund is turned over for the purposes of the Exchequer. I mentioned that the total value of the Government's securities in the fund amounted to about £1,500,000. I am advised that the market value of the securities held at present amounts to about £1,476,000, with an interest-bearing value of £51,148. There is also the interest from the Church Temporalties Fund amounting to £26,598, making a total of £77,746. That is the interest-bearing value of the securities at present.

Mr. Norton

Might I ask the Minister if he can tell us what was the actual interest received in respect of investments in the pension fund for the year ending December, 1933, as distinct from the market value of the securities?

Mr. Derrig

I cannot say at the moment, but I will get the figure. In taking over this fund we do not propose to realise those securities; we have not yet made a definite decision as to the ultimate application of the interest which will be accruing from it. Coming now to the details of the proposed new pensions scheme, there will be no change whatever in the method of calculating the pensions. As at present, those will be based on one-eightieth of the average annual salary for each completed year of service. There is also no change in the conditions under which teachers may become eligible for pensions. Those are: (a) Retirement on ordinary pension after having attained the age of 60, or after having attained the age of 55 and having served for not less than 35 years; (b) disability pension, after having served for not less than ten years; (c) non-efficiency pension in the case of a teacher who has attained the age of 50 and was removed from the service on the ground of his inability to discharge his duty efficiently. These are the well-known conditions under which teachers are granted pensions on retiring from the service—in any event at the age of 60; at the age of 55, after having served 35 years; disability pension after serving not less than ten years; and after the age of 50, if a teacher is to be removed from his office on the grounds of non-efficiency.

There are other benefits which were available under the present scheme, and which we are providing under the new scheme. First, there is the death gratuity. The death gratuity is equal to the average yearly salary for the three years' ending 31st March next preceding the date of death, where the teacher dies in the service after not less than five years' service. There is also a disablement gratuity. Where a teacher has not the ten years necessary to enable him to get a pension, he will get in the case of disablement a gratuity which is calculated at the rate of one-tenth of his average annual salary for every completed year of pensionable service. There is also a marriage gratuity which will be payable at the rate of one-twelfth of the average annual salary in respect of every completed year of service in excess of one year, subject, however, to a maximum of one year's salary. The teacher, in order to get this gratuity, has to have not less than seven years' service. There is also the point which I referred to that lay assistants in convent and monastery schools, and junior assistant mistresses, who were hitherto ineligible for pension benefits will be included under the scheme. In bringing them in under the scheme, although they have made no contributions up to the present, we are giving them credit to the extent of two-thirds of their back service, provided however that any such teacher who gave no service in the last five years, that is, the five years immediately preceding the appointed day which will be the 1st April, and who enters the service on or after the appointed day, will not receive any gratuity for back service.

If one of these teachers who are coming in under the scheme for the first time left the service during the past five years, he is entitled to get the pension benefits, provided he returns to work within five years, that is to say, that teachers who left the service during the period preceding five years before 1st April next are excluded. About 50 teachers have not come under the present pension rules. They elected to remain under the old pension scheme prior to 1914—they paid smaller premiums and were entitled to smaller pensions, and they have not come in under the 1914 scheme up to the present, although they have been given opportunity for doing so. It appears that they were offered opportunities of coming in under the much better scheme of 1914 but they failed to do so. However, there is a certain amount of hardship on these 50 teachers. They are still in the service and are giving the usual good service, and if they left they would get very much smaller pensions. We are giving them an additional concession; we are giving them credit for pensions based on half of their actual service up to the appointed day, and, of course, they will get the full benefit of their service for the future. This small group of teachers will, therefore, get much better pension terms than they would have got under the old scheme.

There is a further point, with regard to the withdrawal of premiums. Under the present scheme the teacher is entitled to a refund of all premiums paid by him into the fund with compound interest, if he dies in the service, and without interest, if he withdraws from the service before he becomes eligible for pension. In future, such refund of pension will only apply to premiums actually paid up to the date on which the new scheme comes into force, and such premiums will not be refunded if the teacher is eligible for a gratuity, unless the gratuity is less than the amount he would receive by way of refund of premiums. If, after the appointed day, a teacher is entitled to a gratuity greater than the amount of premiums paid into the fund before the appointed day, he will get the gratuity, but if, in any circumstances, there were no gratuity or the gratuity were less than the amount of premiums paid in before the appointed day, he is entitled to a refund of them.

Taking the new scheme as a whole, I think we can definitely claim that the benefits provided are definitely more advantageous to the teachers than those which they at present enjoy. In addition to that, the House must bear in mind that, in future, instead of being dependent for their pensions upon a fund which was insolvent—hopelessly insolvent, I think it could be said—and which would come to an end within a very short term of years indeed, the teachers will have the security of the State behind them for their pensions. That is a benefit which we cannot calculate in terms of L.S.D. but I think that teachers generally will realise that it is a very important benefit indeed. We claim, and, I think, with justification, that we have taken the greatest trouble to give the best terms we could in all the circumstances to the teacher. We regret very much indeed that the teachers, on the different occasions on which we approached them, were not able to accept those terms or that their Executive were unable to recommend to the general body of their members that in all the circumstances, these terms were fair and reasonable. There was no alternative whatever for us but to come forward and the only regret we have is, perhaps, that we did not propose to take this step some time ago. We had been waiting to see whether we could not strike a definite bargain and come to a definite settlement with the teachers. We approached them but, apparently, it was quite impossible to reach agreement. On the present occasion, the teachers are fully aware of the conditions which are now being imposed and which, I hope, the Dáil will consent to unanimously. With regard to Deputy Professor O'Sullivan's point, the actuaries' figures, which do not include the junior assistant mistresses and lay assistants, are: Estimated cost of pensions in 1939, £395,000 and in 1944, £430,000. With regard to Deputy Norton's point as to the interest on stock, £51,000, approximately, is the interest on the stock held for the year ending 31st December, 1933.

Mr. Norton

That was the actual amount received?

Mr. Derrig

That is the actual amount received. Deputy O'Neill asked what was the reason for the increase in the number of pensioners and whether the teachers now are retiring at an earlier age. The teachers retiring now entered the service, say, about the year 1894, and since that time, the number of teachers in the service has greatly increased. I think that is the chief reason. It may also be that the pensioners are living longer.

Professor Thrift

Could the Minister say whether the estimated figure of £600,000, which he gives as the future cost of pensions, took account of these increased benefits included in the new scheme or was it based on the old benefits only?

Mr. Derrig

On the old benefits.

Professor Thrift

Has the Minister any idea as to what the cost will ultimately be of these new benefits.

Mr. Derrig

The maximum, I think, would be about £620,000.

Mr. O'Neill

The Minister proposes under this scheme to cut the teacher's salary to the extent of 9 per cent. What will the total amount of that be?

Mr. Derrig

About £226,000.

Professor Thrift

So far as the Minister has gone at present, it would appear that the immediate effect of this change is a saving to the revenue of about £28,000 a year, but that will very soon turn into a largely increased call on annual revenue. Is that correct?

Mr. Norton

Could the Minister say what the interest on securities for the year ending December, 1931, was?

Professor O'Sullivan

To start off with a question, what is the proposed cut in the salaries of junior assistant mistresses?

Mr. Derrig

Six per cent.

Professor O'Sullivan

I quite admit that the Minister has had to face a very difficult question, and I also readily realise that it is an extremely difficult position to make clear either to the House or to the country, and I think that anybody who has read pension rules will find it extremely difficult to understand pension rules. I find no fault with the Minister's statement on any of these points. I am quite well aware, as I say, of the difficulties of the task confronting him. There were a couple of points that I think he might have developed a little more. He assumed as something that did not require further justification or further explanation that this was the only way of meeting this particular problem; that, practically speaking, the disappearance of the fund was necessary, merely because it was bankrupt; that the putting of the fund, by yearly contributions, into a solvent state should be ruled out. It was one of the ways in which the difficulty could be met, but the Minister did not give us any reasons why he has adopted the present particular scheme. I think that he himself will realise that there was one particular portion of the scheme, and of his exposition of it, that certainly lacked definiteness; and that is, what is to happen the present fund. All that we have got an assurance of is that the securities for the moment, will not be sold out; he does not tell us or indicate at all what use the moneys of that fund will be put to.

Perhaps, again, the complication of the scheme makes it rather difficult to follow, and I quite understand the difficulties that arise from the point of view of draftsmanship; but I gather that the present position is that the pensions up to the moment—that is, the pensions of the existing pensioners, or the pensioners on the appointed day— will be paid directly by the State. Is that correct?

Mr. Derrig

After the appointed day.

Professor O'Sullivan

Yes. All the future pensions will be paid out of the fund?

Mr. Derrig

Oh, no—out of the voted moneys on the Education Vote.

Professor O'Sullivan

I am a bit puzzled as to that.

Mr. Derrig

They may be paid out of a nominal fund.

Professor O'Sullivan

Existing pensions are not even paid nominally out of the fund.

Mr. Derrig

I am told that they are paid directly on the vote of moneys.

Professor O'Sullivan

The present fund disappears so far as the payment of pensions is concerned. That is the position?

Mr. Derrig

Well, I understand that legally a fund must be maintained in order to meet certain legal requirements, but I think that fund will be really nominal and that moneys may be paid through it. In fact, I think the fund will be nominal and that provision will be made, as I mentioned before, to put the interest to other purposes if such should be necessary. We are not making any definite promise in that regard.

Professor O'Sullivan

So far as the legal aspect is concerned, I gather from the Estimates of this year that the payments are not being made out of the fund any longer to the existing pensions.

Mr. Derrig

Out of the old fund.

Professor O'Sullivan

Yes. Therefore, for the purpose of pensions the old fund has disappeared.

Mr. Derrig

Yes.

Professor O'Sullivan

And a new fund has been put into operation for the payment merely—as a conduit pipe, so to speak—to overcome some legal difficulty?

Mr. Derrig

Yes.

Professor O'Sullivan

I gathered that that was the situation. Has the Minister considered what right he has to put the moneys of the old fund to any other use? I am quite serious on this. I am not quite sure where the legal custody of that fund is, whether it is in the State or not; but I suggest that if it is in the State, the Minister or the Minister for Finance is merely a trustee, and that he is bound by the conditions of the trust, and especially bound so far as the contribution side of the fund is concerned. From that particular point of view I think that it would seem to the ordinary person that they have no right to divert it to any other purpose. I am not sure what the legal position is, and I should like to know if the Government is secure in the position that it has any right to divert that fund to any other purpose, because I think that, strictly speaking, they are morally breaking a trust in that respect, and I doubt if they have the power to do so legally. I merely put forward the doubt because I do not pretend to speak with any legal authority whatsoever, but I doubt whether they have the power without the consent of the beneficiaries of that fund to devote that fund to another purpose.

Mr. Derrig

I am informed that we will definitely have the legal right to do that if we make an order under the Minister and Secretaries Act.

Professor O'Sullivan

I gather that the Minister got information, but I wonder if that information is correct. You are dealing with moneys that belong to private individuals, and you are doing that without an Act of Parliament, and it seems that, prima facie, an Act of Parliament would be necessary.

Mr. Derrig

If there is any doubt about it, there would be an Act, of course.

Professor O'Sullivan

Actually, the thing can only be justified by a test in the courts; in other words, that any person who is paid, if he feels he is aggrieved, has the right to test it in the court.

Mr. Derrig

Did the Deputy bear all these considerations in mind when he himself was negotiating with the teachers? Was there not a decision come to?

Professor O'Sullivan

The Minister knows that we came to no decision on the matter. The late Cabinet could not come to a decision owing to an unfortunate election—I mean unfortunate for the country—that took place in the meantime. Certain plans were put up from various sides, but there was no decision on that point by any member of the Cabinet, or by the Cabinet. It was a matter that was under discussion at the unfortunate time of the catastrophe that happened to the country.

Mr. Derrig

Was there not an offer conveyed to the teachers?

Professor O'Sullivan

There was nothing in reference to the fund. There was an offer to them on certain lines not connected with them, and a portion of the offer was that the "cut" was not to be effective so far as they were concerned if a similar "cut" did not apply elsewhere. Now, of course, we have, from the teachers' point of view, undoubtedly, the full application of it to them, independent of a lot of other services in the community that have had to bear share of the contribution; but so far as the fund was concerned it never got as far as discussing with the teachers what could be done with it. I suggest again that even the National Teachers' Organisation or the Executive of that Organisation have no power and could have no power, so far as the fund was concerned, to determine the fate of the fund. There may have been many teachers in the country who were not members of the organisation at all, and yet who were beneficiaries under that particular fund.

Mr. Derrig

Is the Deputy basing that on advice he has received, or merely on an opinion?

Professor O'Sullivan

So far as anything connected with the law is concerned, I can assure the Minister that it is purely and absolutely a matter of opinion on my part; and I may suggest that any advice the Minister has got is probably pure opinion also. There is only one place where this question can be tested really, as Deputies know, and as any member of the Government ought to know, and that is in the court. I suggest that where you have a case in which private individuals are concerned, the only way to deal with it is by Private Bill legislation. However, I do not want to stress that more fully, but I think it is a point that the Minister would be well advised to bear in mind thoroughly.

Mr. Derrig

It has not been overlooked.

Professor O'Sullivan

I have no doubt that it has not been overlooked but I wonder whether the Minister, to use a common expression, is not "chancing his arm" on the legal side of this particular matter. However, as I say, if anybody is dissatisfied with this particular scheme and the method of dealing with it, he has his remedy and the thing can be tested from that point of view if people are serious in their opposition to this particular scheme. I do not know how far they are serious in their opposition. After all, the Minister regards this as a settlement. Coming from the Fianna Fáil Benches he used a very extraordinary phrase—"an imposed settlement." I thought the Fianna Fáil mentality could not grip anything like an imposed settlement of any kind. I thought that one of the essences of an imposed settlement is that it has no binding value on anybody. However, I am not quarrelling with that particular matter.

Let us look at the matter both from the teachers' point of view and from the point of view of the State. The teachers say that this is not as favourable a settlement as was suggested before. That is their opinion and I am not canvassing it for the moment. In reality, judging by the extraordinarily vague position we are in as regards the position of the existing fund and what may happen it, it is very hard to avoid the idea that the Government in this matter are mortgaging the future rather than the present; are avoiding facing up to this particular obligation at the moment and putting the burden on the long finger. There is a danger, and of course, a danger can always be on two sides. The two sides in this matter are the teachers, on the one hand, and the State on the other hand. Looking at it from the teachers' point of view, there is the fact that no provision is now being made to make the present fund anything like solvent. The 5 per cent. extra to be contributed by the teachers is really a cut in salary, not a contribution. It is equivalent to a contribution of about 6 per cent. anyhow. I used that particular figure in that roundabout way because the actuary, when dealing with the fund at the end of 1926, calculated that 8½ per cent., not necessarily taken from the teachers, of course—that is a matter of policy which he did not go into——

Mr. Derrig

Plus the existing 4 per cent.

Professor O'Sullivan

Plus the existing 4 per cent. He said that 8½ per cent. extra would be probably sufficient at the time. Probably now it would require something in the nature of 9½ or 10 per cent. from what I gather from the Minister if the fund was to be made solvent on the basis of contribution. In reality, what the Government have done is to turn the 4 per cent. contribution into a cut in salary and, therefore, a corresponding cut in the pension. The additional 5 per cent. is not a contribution either—it is a cut also in the salaries. But if you are to try and compare two figures which might be comparable, it seems that the extra 5 per cent. cut will be equivalent roughly to a contribution of 6 per cent. on the old lines; whereas in reality to make the fund at present anything like solvent would require probably a contribution of about 10 per cent., whether it comes from the State or not. What the Government, therefore, are doing is: they are deliberately refusing to face the obligations now and pushing them into the future. That is a danger undoubtedly. So far as the State is concerned, it can be argued that it ought to be rejected on that ground.

There is the further danger from the teachers' point of view that, as this bill piles up and has apparently to be met by the State, there may be an agitation, if things do not better themselves quickly, to have a further cut. Unfortunately, the fund is not being put into a state of solvency. I suggest, therefore, that there is a danger, whether to the State or to the teachers, as the present obligations are being transferred to the future. That is really the consideration. Unfortunately, although the Minister did try to give a considerable amount of information, and did give a considerable amount of information on important points, the House is still in the dark about this scheme both from the teachers' point of view and from the point of view of the State.

There is one matter I might refer to in this connection and as to which I might make an appeal, namely, the question of retirement on marriage. When that suggestion first came out it was put before the teachers in the form of a rule so that they could discuss it. The matter has no propagandist value at the moment and, therefore, my word can be taken that that was meant to form the basis of further discussion on that particular rule. But the organisation actually published the thing in the midst of the political excitement of the moment when the ex-Ministers of the Government were far away at other work. It was actually published during the election. Even there I do not think a definite position was taken. Undoubtedly, my opinion was veering towards that question of retirement on marriage. I put it to the Minister that he might give serious consideration to a matter that I promised many teachers at the time to give full consideration to, as I thought they had a just case, namely, that the rule should not apply in the case of any people who had started their career, and that the starting of the career should be dated not from the time they entered the training college but from the time they had made up their minds to follow that career, namely, at the time they entered the preparatory college. They entered the preparatory college at a time when the rule did not exist. They deliberately turned from other professions to this profession. I suggest to the Minister for his favourable consideration that the rule should not be applicable to those who had entered the preparatory college. I think it is only fair to them that the new conditions should not be imposed.

The Minister gave a history, and I will admit that it was correct so far as it went. As well as I can remember—it is not easy to remember all these things—the teachers have always contended that their side of the fund was always solvent. In any discussion that I ever had with them I refused to go into the history of the matter. Probably, like the Minister, I said that I had to face up to a practical problem at the moment. I never entered into a discussion of that particular matter with the teachers.

I thought, candidly, that so far as the history of the matter was concerned, they could bring forward a remarkably cogent—I do not say compelling evidence, but certainly very strong—evidence in that way. They could quote British statement, and they could quote not only British statesmen but even Acts of the Free State Government itself when it was dividing the fund between the Free State and Northern Ireland Government showing acceptance of the fact that the ratio was one-fourth to three-fourths. I think they could put forward a very good case on that. The Minister has passed over that point. The teachers' contention has always been that their side of the fund has been solvent. The Minister, in his answer, seems not to have touched that question. I do not know whether he admits their contention or not, but, solvent or not solvent, the present condition of the country has to be the basis, as he put it. Did I gather from the Minister's statement that the insolvency of the fund is due to the increases in salaries? He certainly conveyed that impression. Does he hold that? Does he hold that the fund was solvent in 1920 and 1921? Has he calculated when the increases of pensions following the increases in salaries began to be effective? I think it is open to considerable doubt whether the fund was solvent as far back as 1921, and whether it was altogether due to the increase of pensions, and due to the increases in the salaries. That is the contention of the other side. The case has always been that the fund, so far as increases of pension is concerned, looking at it from the actuarial point of view, that the teachers' contribution would meet the payments for a considerable number of years. It was not the teachers pension that made any increase, because again and again before that increase came on, the fund became insolvent and the British Government had to come to its assistance. Whilst I accept the Minister's statement, so far as it went, there were certain very obvious lacunae in that statement. I have no doubt that that point will be made clear by the other speakers.

Mr. Norton

The most noticeable part of the debate, so far, has been the feeling of fellow-sympathy between the Minister for Education and the ex-Minister for Education. That fellow-feeling has been demonstrated in a remarkable way by the fact that the present Minister for Education steered clear of the fact that was always recognised that the teachers' side of the fund was liable for 25 per cent. of the pension liabilities and the State side, or the endowment side was liable for 75 per cent. of the liabilities. We had the ex-Minister saying that he saw that difficulty in the past. He knew there were cogent arguments to support that, and that British statesmen could be quoted ad naseum in support of the contention that there was a liability on the teachers to bear a contribution which would be 25 per cent. of the whole liability, and would put the other 75 per cent. on the State. It is because those who are speaking for the State are unwilling to recognise the responsibility of the State to meet 75 per cent. of the cost of the pensions that it was necessary to introduce a motion of this kind imposing a permanent cut of 9 per cent. on the salaries of the teachers. The Minister gave us some information as to the origin of the fund, and he told us of the unscientific way in which the fund was financed. Whatever difficulties there were about financing the fund, these difficulties showed themselves entirely on the endowment side, and even on the State side of the fund. There was no difficulty about financing the teachers' side of the fund. Any insolvency in the fund has not been insolvency on the teachers' side of the fund. About 36 years ago, when the teachers' fund was divided into two parts there were the teachers' account and the endowment account. But the teachers were definitely made liable— and that fact was definitely accepted at the time, and it has not been challenged since, not even by the present or by the ex-Minister for Education—for 25 per cent. of the pensions, and liable also to meet any charges that would arise as the result of having to refund premiums to persons dying while in the service or retiring. That was a definite liability on the teachers' side of the fund. The State side or the endowment side accepted definite liability to meet the other 75 per cent. of the charges. One could understand a motion of this kind and a set of statutory rules and estimates of this kind if it had been found that the whole fund was insolvent and unable to meet its liabilities. But in 1923 there was an actuarial investigation of the fund as a whole, and it showed a considerable deficit. The fund as a whole on actuarial investigation showed a surplus on the teachers' side of £1,250,000, and such insolvency was shown as was disclosed on the State or endowment side. Why, therefore, the teachers should be asked to make good the deficiency which does not exist on their side and which only exists on the Government side, is more than I or the teachers' organisation can understand. In order to show the position in that respect and to show that far from the teachers' side becoming even insolvent, the figures will show the tendency is in the other direction. On the teachers' side the teachers' contributions showed assets amounting to £532,000 in 1923, and this figure had increased in 1932 to £1,387,000. So that, from the period of 1923 to 1932 the teachers' side of the fund had increased from £532,000 to £1,387,000. What was the position on the endowment side of the fund? In 1923 the assets on the endowment side amounted to £1,791,000. In 1932 these assets were reduced to £1,163,000, showing that while the assets on the teachers' side were increasing considerably, the assets on the Government side were considerably reduced during that period. The teachers' side of the fund increased by £855,000 while, on the other hand, the value of the Government assets decreased by £628,000 during the same period. The result was that the teachers who were liable only under statutory regulations for one-fourth of the pension liability had their assets in such a position that they exceeded the Government assets by the sum of £224,000, although the Government side of the fund was liable for three-fourths of the pension, whereas the teachers' side of the fund was only liable for 25 per cent. That shows clearly that, so far as the teachers' side of the fund was concerned, it was in a healthy financial position, its assets amounting to £224,000 more than the State side. Therefore, any patching up necessary is necessary on the State side of the fund. It is not necessary on the teachers' side, which, as the figures show, is not only in a healthy position with much lesser liability, and with much greater assets, than on the Government side. As the actuarial investigation in 1926 showed the teachers' pension fund had a surplus of £250,000.

To follow further the point as to the liability of the teachers for payments towards pensions, it has always been accepted that the teachers' liability is confined to making good the cost of one quarter of the pension liability. At present the contribution of the teachers on a basis of 4 per cent. is, approximately, £102,000. With the new clauses added, and the pension contribution 4 per cent., that sum would be increased by another £15,000, making it £117,000. So that even on the basis of a 4 per cent. contribution covering the 2,500 about to be brought in, the teachers would be contributing £117,000. The liability for pensions, for the financial year ending on the 31st March, 1935, would amount in all to £371,000, showing clearly that the teachers, when they pay £117,000 out of the total superannuation liability, would be making a much greater contribution towards pension liability than the 25 per cent. so far expected from them. The teachers are perfectly willing that the 4 per cent. arrangement should be continued for pension liability to maintain their side in a healthy condition. It has a surplus of £250,000. They are willing to contribute the present rates for pension liability, and to accept the present method of superannuation, with such additions as are necessary on a fairly ascertained basis. They think that it is unfair, with the pension fund showing a surplus of £250,000, to impose on their shoulders the further obligation of giving a further 5 per cent. towards pension liability.

The real difficulty in this matter is that the State fund is insolvent, that it is bankrupt, and unable to meet the obligations which the State always accepted as its responsibility, namely, to accept liability to pay 75 per cent. of the pensions. The Government propose to solve that difficulty by imposing a cut of 9 per cent. on the teachers. On the Minister's figures it is estimated that the sacrifice which the teachers will make under a 9 per cent. contribution for pensions will be, approximately, £260,000 a year. Not only will the State recoup itself to the extent of the cut of £260,000 in the remuneration of the teachers, but it will take other assets of the teachers, such as the fund which amounts to £1,387,000. The Minister has not told us what is going to be done with the £1,387,000, which is now on the teachers' side of the pensions fund, and which is computed actuarially to be £250,000 in excess of the obligations imposed upon the teachers in the matter of meeting pension liability. Instead of continuing the old method of financing pensions through the Pensions Fund, in future it is proposed that the salaries of teachers shall be met by an annual Vote to defray the cost of pensions, and that a certain new class of individuals, numbering between 2,500 and 2,600 will be brought into the scheme.

In Northern Ireland this latter class was brought into the scheme many years ago, and pensions were provided for them on a scale as satisfactory, if not more satisfactory, than that provided by the Minister in this scheme. These people when brought into the scheme in Northern Ireland were not made liable for the 6 per cent. contribution imposed here. They were allowed to continue on a 4 per cent. contribution and, in addition, no one else was asked to bear a 9 per cent. cut in order that the people the Minister proposes to bring into the new pensions scheme should obtain pensions on a scale that the Minister could never defend withholding. The new classes came in in Northern Ireland without making the 6 per cent. contribution required here, and without the rest of their colleagues in the profession being asked to shoulder a cut in order that the junior class would get pensions.

We must go back to the June offer of 1932. At that time it was contended by the Minister for Finance, and I think he was supported in that view by the Minister for Education, that the June offer of 1932 represented a substantial advance in the offer made to the teachers by the late Government. At all events, so far as the Government spokesmen were concerned, they took good care to ensure that that particular point of view was adequately ventilated in the Press. It was said that the June offer of 1932 was a better offer than that made by the late Government. I wonder if it is contended now that this offer to the teachers—this imposed settlement, as Deputy O'Sullivan rightly remarked—is a better offer than the one made in June, 1932. As a matter of fact, I think, in some respects, it is a worse offer than that made by the Cumann na nGaedheal Government in 1931, which was assailed by the Minister for Finance when he was on the Opposition Benches. The Cumann na nGaedheal offer was made in 1931. In some respects the Fianna Fáil offer of June, 1932, was somewhat better. In my opinion—and I think Deputy Breathnach will bear me out—this new offer is worse than the offer of Cumann na nGaedheal in 1931 and worse than that of Fianna Fáil in 1932. Under the Cumann na nGaedheal offer of 1931, and the Fianna Fáil offer of 1932, the pensionability of the old salaries was maintained. It was true that under the previous proposal, a person who might have to suffer, as was proposed by the Minister for Finance in 1932, a cut of 9 per cent. or 10 per cent. for the purpose of superannuation, the salary would be regarded as the pre-cut salary for that purpose, whereas in the new proposal there is to be a 9 per cent. cut in the salary of teachers, which, in effect, means a 9 per cent. cut in superannuation. To that extent this offer is very much worse than the offer of June, 1932.

The Minister has not told the House why the pensionability of the salary is not maintained in accordance with the offer made in June, 1932. If it was right to make that offer in June, 1932, I cannot understand why that portion of the offer has been dropped. It cannot be pleaded that that portion of the offer was anyway excessively generous. Certainly the Minister is doing nothing under any other head to entitle him to say that the dropping of that portion of the offer is deserved in the circumstances. Deputy Thrift and Deputy O'Sullivan asked what was the ultimate liability on the State in respect of the responsibility for the payment of teachers' pensions in the future. In the Estimates for 1934-35, the cost of superannuation of teachers is set down as £371,000. Let us see who, in fact, is going to pay that sum of £371,000. From the speech of the Minister for Education—quite a skilful speech from his point of view—one would imagine that the State was simply prostrate in an effort to find this money to finance teachers' pensions. What is the position? This 9 per cent. cut will yield the State an annual saving of £260,000, made up of 4 per cent., the normal contribution towards pension liability, plus the extra 5 per cent. imposed by this scheme. Under the scheme which the House is asked to assent to now, the teachers, in the year 1934-35, will contribute £260,000 by way of the 9 per cent. cut. But that is not all. In the same period, the Minister will secure, according to the information which he gave me earlier to-day, income from investments in respect of the teachers' pension fund amounting to £51,000. We can assume, therefore, that, for the year 1934-35, out of a liability of £371,000 in respect of teachers' pensions, £260,000, made up of the 9 per cent. cut in teachers' salaries, plus £51,000 as interest on investments, will be received, showing clearly that, in respect of that year, the teachers will pay £311,000 out of the £371,000 necessary for pensions. I cannot reconcile that fact with the statement of the Minister to-day that this was a very good scheme. While he had not the hardihood to say outright, he almost suggested that the teachers were fools not to accept the scheme.

Let us see what the State is getting out of this settlement—and when I use the word "settlement" I am merely quoting the term used by the Minister. Last year, the State's contribution towards pension liability amounted to £77,000. Next year, by reason of the fact that the teachers will pay £311,000 out of the £371,000, the State will be only liable for a sum of £60,000, as compared with the £77,000 which it had to make good last year. It is quite clear from that that this is a bad bargain from the teachers' point of view and an extremely good bargain from the point of view of the State. Since I might be accused of taking a particularly favourable year by taking next year when the liability will not be as heavy as it will be in future years, I want to take two other figures mentioned by the Minister. The Minister told Deputy O'Sullivan that in 1939 the liability in respect of teachers' pensions would amount to £395,000. Of that sum, £311,000 will be made good by the teachers and £84,000 will be made good by the State, showing clearly, when they pay £311,000 out of a total pension liability of £395,000, that the teachers are not merely discharging 25 per cent. of their former pension liability but are, in fact, discharging more than 75 per cent. of their pension liability. Instead of the State being responsible, as in the past, for 75 per cent. of pension liability and the teachers for 25 per cent., the State is going to get out of this settlement with a liability of 25 per cent. Those are the Minister's figures for 1939.

The Minister gave further figures for 1944—ten years hence. These figures show that pension liability in 1944 will be £430,000. Of that sum, the teachers, according to the Minister's figures, will pay £311,000. Paying £311,000 out of £430,000, the teachers will be paying approximately 72 per cent. It is because the teachers are aware that they will have to accept that rate of liability that the Minister cannot get the teachers to accept this settlement. The difficulty which the Minister has experienced in getting the teachers' organisation, represented by Deputy Cormac Breathnach, to accept a settlement is because the Minister wants to swop his liability of 75 per cent. in respect of pensions with Deputy Breathnach's organisation for a 25 per cent. liability. No teacher capable of teaching arithmetic would accept a settlement of that kind. It would be only on the basis that a teacher did not know anything about arithmetic that he could be got to accept this scheme, so skilfully and nicely shoe-horned on to him by the Minister to-day. No teacher with a sense of responsibility to his colleagues or with any capacity to understand and analyse figures could be possibly got to accept the Minister's scheme. The Minister knows that the pension scheme, while a good bargain from the point of view of the State, is a very bad bargain from the point of view of the teachers. The Minister told us to-day that, in accepting this scheme, they are accepting a very heavy liability for future pensions for teachers. It is so heavy that, as between the year 1933-34 and the year 1944, they will swop a liability for 75 per cent. of teachers' pensions for a liability of 28 per cent. They are swopping a 75 per cent. liability for a 28 per cent. liability and the Minister tells us that that is a very heavy burden on the State. The Minister wonders why it is not possible to get agreement on a scheme of this kind. In the Estimate for next year the Government will be swopping a liability of 75 per cent. for a liability of 20 per cent. and the Minister knows that no responsible teacher could accept a settlement of that kind. Even twenty years hence, the Government's liability for pensions will not be 75 per cent. but will vary from 25 per cent. to 40 per cent. and all along, during the ten or 20 years to come, the Government's liability for pensions to teachers will decrease substantially.

Under the new scheme, the Minister has told us that the teachers will receive a pension on the basis of one-eightieth of salary and emoluments for each year of service. That is expected to be a full discharge of the responsibility of the State for the pensions of teachers.

I move the adjournment of the debate.

Debate adjourned.

The Dáil adjourned at 2 p.m. until 3 p.m. on Tuesday, 13th March, 1934.