Dáil Éireann debate -
Wednesday, 18 Jul 1962

Vol. 196 No. 15

Additional Estimate, 1962-63. - Vote 56—Increases in Pensions.

Minister for Finance (Dr. Ryan)

I move:

That a sum not exceeding £460,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1963, for payment of Increases in certain Pensions, etc., in respect of public service.

The purpose of this Estimate is to seek the approval of the Dáil for increases in public service pensions. including military service pensions and special allowances, and to authorise payment of the increases with effect from the 1st August next in advance of legislation. The necessary Pensions (Increase) Bill to give statutory authority for the increases will be taken next session.

When introducing the Budget in April last, I adverted to the fact that public service pensions had not been adjusted as frequently as had the pay of serving personnel, even though a number of pensions increases had been given in the post-war period. I had decided to provide a further pensions increase this year to enable pensioners to meet post retirement increases in the cost of living, and a sum of £450,000 was allocated for this purpose in the Budget. I indicated that it was proposed to give priority to those longest retired and to bring all pensioners who retired before the pay revision of the 1st November, 1955, up to the level of their equivalent colleagues who retired with the benefit of that pay revision. The additional estimate now before the House provides for this increase.

Deputies will appreciate that it was not easy to compile an estimate of the cost of this step. There are some thousands of individual pensioners, who had retired at various dates over the past 25 years or so, at various salary points and with varying lengths of service, and it was much more difficult to calculate the amount required to bring each of them to the level of an equivalent 1955 colleague than it was to calculate the cost of previous pensions increases given in the form of percentage additions for various broadly defined classes.

However, I am glad to say that the £450,000 provided in the Budget proved to be adequate, and there was, in fact, a little left over which allows me to give a further increase to the pensioners who have now been brought up to the 1955 level, and as well as this, to give an increase to all the 1955-59 class of pensioners, that is, who got the 1955 pay increase, but had retired before the pay increase which was given in the Civil Service as from the 15th December, 1959, and to other classes on other dates. This further increase will be 6 per cent. and will be given to all pre-December, 1959 pensioners, whether they retired before or after 1955. This second step will cover a good part of the rise in the cost of living since November, 1955, and it should be welcome to the 1955-59 group, whose pensions are now being increased for the first time.

In the case of flat rate pensions, appropriate percentage increases have been determined by reference to increases granted in cognate pensions in relation to pay or cost-of-living movements or other relevant factors. The maximum appropriate increase for these flat rate pensions has generally worked out at about 20 per cent. over the current rates. Special allowances to persons holding military service pensions or Service Medals will be increased by 5s. a week.

The total amount which is being asked for in the additional estimate is £460,000. This is the amount required in the current financial year to meet the payment, as from the 1st August next, of the increases for all public service pensions paid direct to the recipients out of Votes of the Oireachtas. The main classes of pensioners — former civil servants, national teachers, and so on—appear on the face of the Estimate. Local authorities will be empowered to give corresponding increases to their pensioners. Part of the cost of certain local authority pensions, such as vocational teachers' pensions, is recouped by the Exchequer, and the Estimate contains a small provision to meet any claims which may be presented by the local authorities before the end of the financial year. In a full year, the cost of the increases is estimated at approximately £820,000, including a full year's recoupment of the Exchequer share of local authority pensions increases.

The sum asked for is £10,000 more than the £450,000 allocated in the Budget, to enable me to equalise and to round off the appropriate percentages.

I am, of course, very glad to be able to give these increases. Deputies will realise that the superannuation terms provided for public servants by or under the various statutes of the Oireachtas, or under earlier legislation which is still in effect, did not provide for any post-retirement increases in pensions. The Government are, strictly speaking, bound by no obligation or commitment in this respect. What I have been endeavouring to do, in relation to pensions increases, is to disburse whatever money it might be possible to make available, within the limits of Budgetary conditions, to make good the depreciation in the value of pensions caused by the rise in the cost of living. Any future step which it may be possible to take will be in the same direction, subject always to Budgetary considerations.

Mr. Sweetman

The Minister has said that this is merely a detailed Estimate following on the provisions of the Budget and, as such, it will not be discussed by us in any great detail. The Minister is being theoretical when he says that there is no obligation on the Government to provide these increases in pension, having regard to the terms of the Superannuation Acts. That may be so according to the strict terms of the Acts but it has always been the practice, since the end of the last war, that the question of pensions should be revised from time to time having regard to the requirements of the Budget.

The Minister has mentioned local authority employees. On a fairly recent occasion when there was a question before the House, I mentioned to him the position of State company employees or former employees. As I understand it, no question would arise of payments directly out of the Exchequer in respect of such pensions but whether they arise by way of direct Exchequer subvention or not, State-sponsored bodies would naturally consider the view that would be taken by the Minister for Finance in considering how they should deal with pensions of former employees. Some of the pensions awarded to former employees of State-sponsored bodies are so small as to make it difficult if not impossible for these persons to have an adequate standard of living in the evening of their lives. When the step has been taken in relation to civil servants and local authority employees, the Minister should indicate that similar measures will be adopted in regard to the various State-sponsored bodies and companies so that they will endeavour to equate their rates of pension to the pattern laid down for the Civil Service and local authorities.

Mr. Norton

The House will welcome the provision which has been made in this Estimate for increases in pension for persons who retired when the cost of living was substantially lower than it is today and those who have been endeavouring to live on the pensions fixed when prices were much lower than they are today will be glad of any assistance they will get from this Estimate.

There is still much to be done in order to give the person who has retired a pension equivalent to what would now be obtainable by his successor. There is something ironic about the situation in which a person who has served in a post for 40 years and borne the heat and burden of the day, finds that his successor is allowed a higher pension than he, the first occupant, or previous occupants of the post. While the provisions of the Estimate will be welcomed by those who are potential beneficiaries we still have to place this whole question of pensions on a much more equitable basis than exists at present.

The Minister said this State never contracted to grant increases in pensions and that it fulfils its obligation when it gives a pension based on a certain fraction of his salary to a retired servant. That argument died with Queen Victoria. If it did not, it certainly ought to be buried with her because it is as out of date as a philosophy as that old darling herself. The fact of the matter is that more than 40 years ago pensions were adjusted in accordance with the cost of living. Anybody who goes to the trouble to look up the retirement awards made during the first World War will find that salary was tied to a cost of living index figure. When the person retired on pension he got a certain proportion of his salary and a certain proportion of the cost of living index figure. If the cost of living index figure went up, the pension went up as well. Having done that more than 40 years ago it is a bit too novel to suggest in 1962 that the State can now disregard its obligations to make good the shrinking value of the £ and its obligations to the retired officer to see that he gets paid in valuable currency rather than a depreciated currency in the creation of which he had no hand, act or part. Governments very largely influence the strength of the currency; world wide factors also influence the strength, but the retired officer certainly has no power to influence the currency values or the cost of living indices. It is unfair therefore to suggest that the State has no obligation to make good the shrunken value of his pension.

In a number of countries throughout the world it has been found possible to arrange a scheme whereby pensions of retired officers are tied to the cost of living after the officers retire. In other words, if a person retires when the cost of living is at a certain level and the cost of living subsequently increases, the pension of that person is automatically increased. That arrangement operates in a number of countries. The organisations representing the retired officers of this country have urged that their pensions should be put on a basis which will enable them to get automatic compensation for increases in the cost of living.

While this Estimate is introduced today to provide increases for retired officers, force of circumstances will compel us to do the same next year and perhaps the year after and this whole question will continue to be a source of disputation between retired officers' organisations and the Government of the day. We ought to take the long and equitable view of this whole situation and say that a person who has served the country effectively ought to be paid a pension which is related to the value of that pension at the time he retired and not expect him to live on an attenuated pension and deprive him of the security to which when he entered the service he was entitled to look forward on retirement as represented by the pension which was formerly due to him at the date of his retirement.

We can only do that by putting these pensions on a basis which will ensure that they will be automatically adjusted to cost of living increases. Not only should we do that in the case of State, local authority and public corporation pensioners but we should go further and adjust social welfare pensions in the same way so that if the cost of living increased there would be automatic adjustment of social welfare benefits.

The Minister's Estimate indicates that he is moving somewhat in the direction of bringing the pension of the retired officer more closely into relation with the current cost of living. I do not know how far he has progressed towards giving a definite decision that the objective to be aimed at and to be achieved as soon as possible is to relate the pensions of all retired officers from all services to the cost of living index figure which fluctuates and may continue to fluctuate long after the officer has retired.

I should like to ask the Minister, apart from the classes mentioned here, what it is proposed to do with the employees of State-sponsored bodies who have retired on pension and who to a greater or lesser degree have suffered the same hardships as the classes who are now getting increases under this Estimate. I should also like to know whether legislation will be needed to enable local authorities to adjust the pensions of their retired officers in the same way as this adjustment is made in the case of the classes referred to in the Estimate. If it does need legislation, would the Minister say whether the Government have approved of the introduction of legislation and whether any indication is being conveyed to the local authorities that they may now proceed to make the adjustment, in anticipation of the legislation being put through the House?

Mr. Ryan

I wish to support very briefly what has been so ably said by Deputy Sweetman and Deputy Norton. So long as we retain the archaic system of pensions for State servants, a dreadful amount of official time and effort must be wasted in calculating pension structures. The mere fact that we have had to wait three months from the date of the Budget before the Minister can present a scheme to the Dáil under which he will allocate the moneys is an indication of the colossal amount of official time and effort unnecessarily used to apportion, under the archaic system, the money we are to give to people who have done some considerable service to their State and country in their time.

As Deputy Norton said, many of the more progressive countries of the world have long since accepted that State pensions of former employees or pensions of employees of public authorities should be directly related to the salaries currently earned by people who still remain in the service. There is certainly no administrative reason why the pension of any State servant should not represent a proportion of the salary paid at any time to a certain official of a rank equivalent to the rank held by that public servant when he or she retires. If and when that day comes, a great deal of official time and money and effort will be saved which could be put to much more useful purposes.

As has been pointed out, depreciation in the value of money occurs mainly through inflation and inflation is something which is largely caused by the working and spending section of the community. The working and spending section are certainly not those who are retired and living on small pensions; certainly not the people who have to adjust themselves to living on a smaller amount of money than that to which they have been accustomed, certainly not the section of the community who, by reason of age and lack of mobility, no longer get around as much as they used to. That being so, so long as society allows inflation to continue and money to depreciate in value—and it seems to me it is something which in any thriving society will continue—society has an obligation to the people who have completed their term of work to compensate them adequately and see that they do not suffer if, by reason of those who succeed them, inflation should in any way depress the value of their money.

The Minister may say that the pension structure is based upon the argument that pensions are in fact only postponed pay and that therefore the pensioner has no right to claim a greater amount than the pay which he or she might have received at the time when a certain amount of it was being put aside for pension purposes. What annoys me in what is regarded as the orthodox approach, is the emphasising of the question of postponement and not that of pay. What we need to emphasise is the question of pay and to see that if it is something that is postponed, that if a man is paid money, it shall represent the real value rather than the purely nominal value of the pay. If retired public servants were paid at a rate equivalent to the spending power of their money when they were working, they would certainly have to get a greater amount than the Minister is now offering.

What has been said by Deputy Sweetman and Deputy Norton in relation to former employees of State companies cannot be over-emphasised. The pittance offered by CIE to the pensioner, a pittance which is reduced as soon as the State pension becomes payable at 70 years of age, is so miserable as not even to be worthy of the name of pension. Even though it may mean an extra charge on those who have not yet retired, I think we must accept, once and for all, that the working element in the community should maintain during their working days the section of the community that is not working. The day will come when each one of us will be on the retired list and then it will be an obligation which will lie on those still working. The difficulty I can see for any Minister for Finance is the change-over. It will mean perhaps a considerable increase in outlay but rather than postpone it indefinitely, I think we should do it and the sooner, the better.

I observe that the Minister for Finance met the Garda pensioners last Monday and it was subsequently announced that he had under consideration the question of the rent allowance. I hope the Minister will expedite this consideration and that the result will be favourable, thereby putting an end to the unfair differential which operates against members of the Force who retired prior to 1960.

There has been a great deal of retirement from the Garda in recent years because a very large proportion entered the Force in the 20s and in the last decade, the greater part of those reached retiring age. On and from December, 1960, the rent allowance of serving members of the Garda is included as a pensionable emolument but those who were unfortunate enough to retire prior to December 1960 do not enjoy that right. My information is that the cost of giving this right and making the rent allowance a pensionable emolument in the first year would be £80,000. That is a figure that would fall year by year because those who would immediately enjoy this concession would in God's good time, have to go to their reward. It is a charge on the State that would not increase but rather diminish. It is a very small portion of justice to which these people are entitled and I hope the Minister will see his way in the very near future to introduce that benefit for those people.

One cannot lightly treat the Minister's remark that he and the Government are under no obligation to increase pensions. There may not be a statutory obligation because the Oireachtas failed in the past to discharge its moral obligation but the moral obligation is there and is as real as any moral or social duty ever was. On that account, it would be much better if the Minister would say: "We realise we have an obligation and this is the best we can do." That would be a more honourable approach than the approach adopted.

Mr. Sherwin

I am interested in the Defence Forces side of the increases. I listened to Deputy Norton stressing the need for some system other than that of haphazard increases depending on the goodwill of the Minister or circumstances and I fully agree with him. In fact, I have a motion on the Order Paper for some nine months which I hope will come up in the autumn and which is actually based on that principle. That motion reads:

That Dáil Éireann is of opinion that, following a general increase in wages, a proportionate increase (apart from budget increases) should be granted immediately to all those in receipt of social welfare benefits...

Although it refers to Social Welfare benefits, the principle should also apply to other benefits and pensions. The motion continues:

...because a general increase in wages is usually followed by a general increase in the cost of living.

I hope that the motion will be accepted and likewise it should be accepted in the case of State pensioners.

As the Minister said, he has no statutory obligation but he has a moral obligation. If people retire with a certain pension and if in time the cost of living jumps considerably, it is only fair that they should not be worse off in terms of value than they were originally. The principle should be accepted. We are improving as we go along. We are no longer living in the days when people who had no means had to go to a workhouse. We have to organise all aspects of society now. I hope, when my motion is taken, the principle will likewise be accepted in the case of those pensioners.

In regard to the increases in the wounds and disability pensions, military service pensions and special allowances, I have advocated since I came in here that the OLD IRA were badly let down—those who did not qualify for active service pensions. According to the Act, "active service" means that you must have taken part in armed combat. That has been debated over the years. Pensions are granted only to persons who can show that they took part in armed combat. The majority—I would say 80 per cent. —did not take part in armed combat but they were serving. They were on parade and they served just as much as those who took part in armed combat.

If in the British forces men go to a battlefield, those who were on the battlefield, whether they took part in the battle or not, are on active service for all purposes. Here there is the differential in regard to armed combat. You would imagine that those men opted themselves and that the other fellows funked it and would not go out on a job. There was nothing like that at all. Both classes were just the one group on parade but some were privileged nice and privately. They were told they were wanted for a job. The other fellows were not informed. There was no question of anyone backing out.

An Ceann Comhairle

The Deputy is discussing qualifications for pensions.

Mr. Sherwin

My point is that they got a raw deal. When it comes to special allowances, I am trying to bridge the gap. These men have served anything from three to six years and they have got nothing. They are now permitted a special allowance if they happen to be unable to work or are over 70 years of age. In those circumstances they get a limited amount called a special allowance. I am asking the Minister to be more generous in regard to that special allowance, particularly when he considers that those to whom I have referred have given from three to six years' service and never received a penny. At least it should be made up to them in their old age. I built up the first part of my argument to demonstrate the claim they have on the State's generosity in their old age.

What is granted to them is not a lot. The objectionable feature is that there is a strict means test. The means test at least ought to be considerably eased. That is my point. These people are dying out. Last year there was a saving of £18,000 in the Pensions Estimate. That saving will increase considerably as time goes on. The Minister should be more generous as far as special allowances are concerned. At one time I advocated that those old IRA men should get a gratuity for the service they rendered, if not a pension. I do not expect that to happen but what I am expecting to happen is that the Minister would be more generous than heretofore on account of the obligation on the State in regard to these men who gave anything from three to six years' service. The majority of these men not only went through the Tan war but were victims of the Civil War.

Altogether they had about six years' service. A great many of them suffered imprisonment but they got nothing for the ills and troubles through which they went. The State is under an obligation to treat those people generously in their last few years. The means test should be eased in regard to this pension which is not up to much. I am an old IRA man. I represent them. I want better treatment for those people, particularly for the disabled and for those who will qualify for the special allowance.

Dr. Ryan

With regard to State employees, they would not be covered by the Estimate. It is a matter for each State body to do what they think is right and what they can afford, which is a very cogent argument. I mentioned that the Government had no obligation. I mentioned that just as a fact. I did not want to say that any Government should escape its moral obligations to look after these pensioners who have fallen behind in relation to the cost of living. Deputy Norton was wrong in one thing. He said that pensioners in the past got an increase when the cost of living went up and that the pension was reduced when the cost of living went down. I believe it never went upwards.

Mr. Norton

Those who decided to retire under Article 10 of the Treaty will have reached skyhigh levels from the point of view of the cost of living.

Dr. Ryan

I could not speak for them. As the Deputy knows, they got special treatment. In any case, I do not think you could refer to this thing as a Victorian idea—the idea that we had no obligation. No Government as far as I know took any steps in this matter until after the last war so that it is a comparatively modern idea that pensions should be adjusted on account of the cost of living.

Local authorities will be enabled to pay their pensioners and these pensioners will be in much the same position as our own pensioners. We intend to pay the increased pensions from 1st August. We will get legislative sanction, we hope, in the autumn session. The same will apply to local authority pensioners. The Minister for Local Government can sanction any proposals put up by local authorities if they want to pay increased pensions on the same lines as paid to State pensioners.

Mr. Norton

Will it need formal legislation?

Dr. Ryan

They will be sanctioned in legislation afterwards, just like our own. Reference was made to the colossal amount of time involved in preparing the scheme. Up to this any increase given was given on a percen- tage basis. It was a simple matter and we thought we should lay a proper foundation. We made an estimate that £420,000 would enable us to bring everybody up to the 1955 increase. To prepare that was a very big matter because practically every individual had to be considered. They varied. They were on varying scales at varying times. Some of them had not full service. It could also be said that even some of the grades that were there were abolished and new grades put in their places. It took a lot of time to calculate what a particular individual might get if he retired after 1955 instead of retiring in the early 1930's or the 1940's. Having got that foundation, there will not really be so much trouble in the future. If there is money to expend in future Budgets, it will be an easy matter to bring them to the 1959 level. Having brought them so far, anything that might be done after can be done on a percentage basis on the cost of living. There would be no great administrative trouble.

Mr. Norton

Does the Minister accept the principle of doing it?

Dr. Ryan

That would depend on the money available. The six per cent. on top of the 1955 award will bring in all those who retired up to 1958. There might be a very small number not covered—I am not sure. We have gone a long way. These are pensioners who retired 25 or 30 years before the 1955 increase. I met not only the representatives of the Garda Síochána but also the representatives of the Civil Service, the teachers and the Army and discussed this scheme with them. I told them the amount of money we had to distribute and what we were able to do. As one might expect, they were grateful for what was done but would like to see more being done. We can always expect that from any group on a deputation of that kind.

I do not know if I could agree altogether with Deputy Sherwin that the old IRA have been let down. I have not been ungenerous to the IRA. Between military service pensions and special allowances, about £1,000,000 a year is distributed to them. That is a fair amount of money. It is true, as Deputy Sherwin says, that only a small number qualify for pensions because they have to prove they took part in an armed engagement. It is difficult to avoid that definition because it is very hard to define exactly an IRA man at that time. Some of them drifted in for a while and went out again. It would appear to be going a bit too far to grant an IRA pension to every man who applied for it.

Some test, therefore, had to be devised. The test was that he must have taken part in an armed engagement, and of course that had to be verified by his officer. That may have been severe in certain cases. I know it has been because, as Deputy Sherwin pointed out, there are very good men who never had an opportunity of taking part in an engagement but who still played a big part. In more recent times, we brought in the scheme of special allowances. In that case, a certificate that he had served as a soldier for three months before the Truce qualified him. Then, if he had been either disabled or reaches the age of 70 and has no means, he is entitled to a special allowance.

In the general review perhaps I may not have stated generally what they were getting. A man with a military service pension gets a 20 per cent. increase and a man with a special allowance gets 5s. a week. It must be remembered that many of the special allowance people will also be getting an increase in social welfare benefit so that there will be a fairly substantial increase, comparatively speaking.

Mr. Sherwin

If they get one, will they not lose part of the other?

Dr. Ryan

No. In the case of a man getting a non-contributory pension or a widow getting an increased pension, the means will not be changed either way. I am not sure in the case of the contributory pension. We have not made the regulations yet. There may be some slight count taken of the contributory pension in the case of the person also getting an increased special allowance.

Mr. Norton

Would the Minister say whether he can hold out any hope to the Garda Síochána pensioners that the rent allowance will not be taken into account?

Dr. Ryan

That was raised at the conference by the representatives of the Garda Síochána. I said I had to avoid all sorts of special claims by every section on this occasion and discuss things as they are. Special claims will have to be postponed to another time.

Mr. Norton

Merely postponed?

Dr. Ryan

Only postponed.

Vote put and agreed to.