I move that the Bill be now read a Second Time. I do so on behalf of the Minister for Finance, who is unable to be present.
This Bill provides for the payment of the increases in civil pensions payable from the Exchequer or other public funds, including the funds of local and harbour authorities, which the Minister for Finance announced in the Budget last April. Under the authority of an Additional Estimate passed by this House on 21st July last, increases have already been paid in most cases with effect from 1st August last. This Bill now provides permanent statutory authority for the payments. Army Retired Pay, Disability Pensions and Military Service Pensions are not covered by this Bill; the increases in these pensions will be covered by separate legislation.
The Bill provides increases of 6 per cent. on pensions that were calculated on the salaries payable prior to the general Civil Service pay increase of 1st November, 1948, and 4 per cent. on pensions calculated on the salaries payable during the period after the general pay increase of 1st November, 1948, and before the pay increase of 1st November, 1952. In some instances the pay increases corresponding to the Civil Service pay increases of 1st November, 1948, or 1st November, 1952, were granted on other dates. In such cases the actual date of the pay increase will be adopted to determine whether a 6 per cent. or 4 per cent. increase is payable, and provision has been made accordingly in the Bill. In speaking of the 1st November, 1948, and the 1st November, 1952, I should wish to be understood as referring also to any alternative dates that are prescribed or may be determined under the Bill.
This year's pensions increases are directed to the relief of those whose pensions were calculated on salaries below the rates which came into effect with the general pay increase of November, 1952. The pre-November, 1948, pensioners, who are longest retired, will get the higher increase of 6 per cent. so as to bring their pensions further towards the 1952 level. No increase is proposed for pensions which were calculated wholly on the increased rates of salary payable on or after the 1st November, 1952. As a corollary, any pension which has already been brought up to the November, 1952, level by a previous pension increase will not get any further increase under the Bill, and no pension may be increased under the Bill beyond the amount which would be payable to a colleague of identical rank and service who retired on the 1st November, 1952, and whose pension was calculated wholly by reference to the higher salary rates introduced on that date.
The classes of pensions to be increased are described in the Schedule to the Bill. Part I of the Schedule covers the pensions of retired civil servants, teachers, gardaí, etc., whose pensions were fixed by reference to levels of remuneration obtaining prior to the pay increase of 1st November, 1948, or the appropriate alternative date. These pensions will be increased by 6 per cent. Any other pension which was included in Part I of the Schedule to the Pensions (Increase) Act, 1956, and which has not yet been raised to the November, 1952, level, will be increased by 4 per cent. subject to the application of the overriding maximum to which I have already referred. The percentage increases will be calculated on the pension as it stands, including any increases under previous Acts.
Part II of the Schedule covers the pensions payable to the widows and children of Ministers and holders of parliamentary offices and to the widows of gardaí, etc. Most of these pensions are payable at fixed rates which do not vary automatically with pay increases. The basis rates of these pensions were fixed prior to 1948; they have already been increased under the Pensions (Increase) Acts, 1950, and 1956, and they will now be increased by the 6 per cent. appropriate to pre-November, 1948, pensions. The increases establish new fixed rates which will be effective for future pensions as well as for pensions currently in course of payment.
Most of the pensions to be increased under the Bill were calculated on the annual salary payable at the date of the officer's retirement. In a small number of cases, however, pension was calculated on average salary for the three years preceding retirement. Special provision has been made in Section 7 of the Bill to allow part of the 6 per cent. or 4 per cent. increase, proportionate to the part of the three-year average period which fell before the 1st November, 1948, or the 1st November, 1952, respectively, to be given in such cases. Any similar cases among local authority or harbour authority pensioners have been provided for in Parts III and IV of the Schedule to the Bill.
A small number of pensioners, mainly higher civil servants, who retired prior to the pay increase of 15th January, 1951, received pensions which were affected by the salary reduction known as the "supercut". The supercut, which originated as a reduction in the cost-of-living bonus on higher Civil Service salaries, continued over into the consolidated salary rates which obtained from 1946 onwards until it was removed partially in 1948 and completely in January, 1951.
The pensions payable to officers who retired while the supercut was in force were based on the lower salaries. Under Sections 3 and 4 of the Pensions (Increase) Act, 1956, these pensioners were given either a revision of pension to restore the supercut reduction or the appropriate percentage increase under the Act, whichever was the more favourable. Following representations from the pensioners concerned, these provisions are now being amended by Section 2 of the present Bill to restore the supercut reduction in all cases and to allow the appropriate percentage increases under the 1956 Act and this Bill. The effect of this will be to bring the basis of these pensions into line with the pensions of other ranks of the Civil Service whose pensions were based on salaries in which the cost-of-living bonus element was not subject to reduction.
Sections 3, 4 and 7 of the Bill authorise the appropriate increases in the pensions payable from the Exchequer. Sections 5 and 6 empower local authorities and harbour authorities to grant increases in the pensions payable by them which are specified in Part III and Part IV of the Schedule. The increases will be subject to the approval of the Minister for Local Government or the Minister for Health in the case of local authority pensions and to the approval of the Minister for Transport and Power in the case of harbour authority pensions. The increases allowed will be similar in amount and will be generally subject to the conditions and limitations governing increases in Exchequer pensions.
Section 8 of the Bill provides the commencing date of increases, which will be the 1st August, 1959, or the date of commencement of pension if later.
Various consequential provisions will be found in Section 10 which provides, in particular, for the application to the pension, as increased, of the statutory provisions as to payment, etc., applicable to the original pension. It also provides that any increase in the Bill shall not be assessed as means for the purpose of an old age pension or a widow's non-contributory pension.
The cost to the Exchequer of the increases provided under this Bill is estimated at over £70,000 in a full year, including Exchequer payments to local authorities to cover part of the increase payable by them. In the current year the cost will be over £38,000. The balance of the £72,000 voted by this House in July last will be required for increases in Army and Military Service Pensions which will be covered in separate legislation. Including the increases in these pensions, the total cost to the Exchequer of the 1959 pensions increases is estimated at almost £130,000 in a full year.
I recommend this Bill to the House for its approval.