I move amendment No. 14:
In page 29, line 38, after "appropriate" to insert "annual".
This amendment arises from the debate on this section on Committee Stage. Unfortunately, I left the appropriate reference in my office and I cannot quote what was said on Committee Stage. However, I read it in the past few days and I can recall it.
This amendment relates to the pension or superannuation arrangements that will be made under section 41 in respect of those who transfer to the company from the Department. On Committee Stage there was a long discussion on this point and about some of the problems that appear to arise. The Minister of State concluded the discussion by saying that there appeared to be potential difficulties which he thought should be sorted out before Report Stage. He said he would table an amendment or amendments on Report Stage to deal with the points that had been raised. When asked by Deputy Noonan to outline the type of amendment he would table he said the amendment would relate to the question of annual payments by the Minister for Finance. To my surprise no amendments have been tabled by the Minister to this part of the section although the Select Committee agreed to the section on the basis that the Minister would table amendments.
The overall position in regard to the transfer of staff is not satisfactory. More than 600 staff are involved. At present these are civil servants who have all the rights of civil servants. In particular, they have very valuable pension rights but, as we are aware, these pensions are not payable out of a fund. No provision is made for them; they are payable each year as they arise out of current expenditure through the Exchequer. When the 650 people transfer to this company they will no longer be civil servants, they will be employees of the company. Therefore, they will lose their right to a Civil Service pension but it has been agreed that they should not be worse off. In particular they should not be worse off in respect of their superannuation rights but the company will have to establish, as companies of this kind do, a funded pension scheme. Because it is taking on approximately 650 people with varying degrees of service — some were employed as recently as six months ago while others were employed up to 40 years ago and are now reaching retirement age — it will be necessary to make provision for the fact that some will soon reach retirement age and the company will have to start paying pensions quite soon.
It is proposed in section 41 that not later than the end of the seventh year after the operative date, the date of commencement of operations of the company, the Minister for Finance will make a payment or payments to the company in respect of the State's superannuation liabilities to the 650 people concerned. During Committee Stage the Minister of State said that at least 10 per cent of the entire staff of the company would retire before the seventh year on the basis of their age and length of service.
It seems unsatisfactory that, although the Minister is free to make earlier payments if he wishes, he is not required under this section to do so until the end of the seventh year. That this company should have to operate for seven years with a grossly underfunded pension scheme is unfair to the people who work in the company and, in particular, to the people who might retire within the next seven years.
The Minister of State estimated on Committee Stage that the amount which the Minister for Finance would have to pay was likely to be £60 million and that interest would run on that figure from the operative date. The interest rate on that, 8 or 9 per cent, depending on how interest rates run in the future, will be very substantial. It may mean that the entire payment will be as much as £90 million or £95 million. The fact that the bulk of this payment is not to be made for seven years puts the people concerned at a serious disadvantage. When the time comes to make the payment the Government may say that the Exchequer cannot afford to do so because it is too big a sum to be paid out in this way and they will have some very compelling reasons for not paying. That sort of thing has happened in the past, not just in relation to superannuation but to other matters. From time to time devices are used to get round the difficulties, for example, putting the money up through the Central Bank and things of that kind.
This is unsatisfactory. It underlines the unsatisfactory situation in regard to Civil Service pensions. Quite a number of civil servants, particularly the more senior ones, are so concerned about their pensions that they go to some expense to insure them. As I have discovered in the past, when one talks about this issue one is alleged to be suggesting that civil servants not be paid their pensions in the future. The opposite is the case and those who understand the situation realise that drawing attention to the difficulties which may arise in 15 or 20 years time is only doing a service to those who could then stand to lose.
Those who are moving out of the Civil Service are entitled to a properly funded pension scheme and they cannot have that unless the Minister for Finance makes the payment or payments quickly and funds the scheme properly. In the early years the contributions that the company can collect from its employees and will make to the fund from the operative date will be but a tiny fraction of what the Minister for Finance actually owes this fund. I am suggesting that the period within which the final payments should be made be reduced from seven years to two years and that payments be made annually. At the moment it is open to the Minister for Finance to make an annual payment, but he is not obliged to do it. The amendments I am proposing would require him to make annual payments and that would be much more satisfactory. I ask the Minister to accept these amendments. Otherwise there will be total uncertainty about the position of those 600 people.
The popular view is that the State always looks after its own. That may be true when the State is in a position to do it, but will the State be in a position to do it in 15 years time? Present indications are that it will not, and many people are privately aware of that even though it is not talked about much in public. We must also remind ourselves of how the State looked after people who were regarded as its employees in certain State companies. For many years we saw former employees of Irish Shipping parading in uniform outside the gates of Leinster House. The Minister should ask them how they were looked after as employees of a State company and what pensions they enjoy today after many years service. How would the employees fare if this country were to go the same way? It is necessary to face up to these questions and not simply fob them off with general assurances that everything will be all right.