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Dáil Éireann debate -
Wednesday, 4 Nov 1998

Vol. 496 No. 1

Private Members' Business. - Pensions for the Self-Employed: Motion (Resumed).

The following motion was moved by Deputy Jim O'Keeffe on Tuesday, 3 November 1998: That Dáil Éireann calls on the Government to introducepro rata pensions for those who were 56 years or over when social insurance pension contributions for the self-employed were introduced in April 1988, and who were required to make contributions but are now precluded from eligibility for the contributory old age pensions which became payable from 6 April 1998.
Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann supports the Government's commitment to addressing the issue of people who narrowly failed to qualify for an old age (contributory) pension and in that context welcomes the decision already taken by the Government to introduce apro rata old age (contributory) pension for those self-employed persons who were aged 56 or over when social insurance was extended to the self-employed in April 1988 and notes that the issue will be addressed in the forthcoming budget.
—(Minister for Social, Community and Family Affairs).

Deputy Penrose was in possession. I understand he is sharing his time with Deputy Broughan who has ten minutes remaining.

I am delighted to have this opportunity to discuss pension provisions. It seems the key element of the motion has been accepted by the Minister for Social, Community and Family Affairs, Deputy Dermot Ahern, and I commend him for that. It is important that when political parties seek a mandate from the public to maximise their seats by making major promises, such as were given in the partly fictional document, An Action Programme for the Millennium, they should keep them.

The introduction of pro rata pensions for self-employed people who had contributed to the social insurance fund for almost ten years but who had missed the deadline by a few weeks is praiseworthy. Deputy Moynihan-Cronin outlined many tragic cases where people missed the opportunity to qualify by one or two weeks. While the Department issued a refund, the capital sum was tiny compared to the security which could have been given to people if this measure had been agreed.

The Government, of which the Progressive Democrats is a member, seems to have had second thoughts about the social insurance fund. When in Opposition, they, particularly one member who is now outside the House, ranted and raved at the Labour Party which was in Government about abolishing that fund. They did not seem to have thought the issue through. The only alternative was to ask people to make their own pension provisions. The Progressive Democrats' suggestion to abolish the social insurance fund was ludicrous. I am glad the Minister resisted that idea.

One of the Minister's great responsibilities is to ensure that the country comes to grips with the pension time bomb. The excellent report by the Irish Pensions Board, entitled "Securing Retirement Income", gave much food for thought. It made it clear that we must make a big effort to encourage younger people to provide for their pensions through some of the mechanisms mentioned in the report, such as the personal retirement savings account.

I understand the Government has finalised its Estimates and in four weeks time we will debate the budget. I hope the Government does not adopt a niggardly, right-wing approach to public sector spending in areas such as housing, education and health or to those who depend on social welfare. It should be called on to meet the target set out in the Fianna Fáil manifesto to raise basic non-contributory pensions to £100 a week as quickly as possible rather than over a lengthy period.

I was happy to be closely involved in the various movements for senior citizens in the last Dáil. I took it upon myself to organise an informal all-party group of Deputies who pursued the key issues for our senior citizens. On a number of occasions, we attended meetings of the former Committee on Finance and General Affairs and other committees of the Dáil. We raised issues such as security, housing provision and pro rata pensions. I hope the Minister will attempt to deal with these issues.

When we talk to members of the seniors parliament and SIPTU's senior group, we hear the same bitter complaints about increasing numbers of senior citizens without adequate housing who feel desperately insecure in deprived areas. Many of them depend on a miserly income, particularly if they are self-employed and have small savings. Many may have to pay significant amounts of tax while others could lose most of their contributory pensions.

I commend the Fine Gael Party for tabling this motion, which is timely, and the Government for accepting it. I hope the Government remedies this unfair situation in next month's budget.

We have reflected on the situation for the self-employed in recent weeks. Last week the farming community marched through the city. As a city representative, I welcome the farmers' attempt to state their case firmly. As a successor of Jim Larkin and the trade union movement, I believe it is our basic right to walk anywhere in Ireland or in this city. The farmers have the same right to make their case.

Does the Deputy agree with them?

Allow Deputy Broughan to speak without interruption.

There are many low income farming families who have a genuine case to make. Your Government should address the issues and not run away from them.

The Deputy should address his remarks through the Chair.

The rumours about the Deputy running in North Dublin at the next election must be true. He is becoming a culchie.

Deputy Broughan, without interruption, as time is limited.

I read a recent extract about the life of the Deputy's brother and I noted that although he lived in Drumcondra, he was familiar with milking cows and various other agricultural tasks. I come from County Dublin where there is also a strong farming tradition, although it is a farm labour tradition.

It is critical for the self-employed and the farming community that we organise a pensions programme which will support them in their later years so that they will not be left in poverty. People who have contributed to our economy for four or five decades should not be left in dire financial circumstances. As Deputies, we meet some of those people every week in our clinics.

I hope to introduce a paper in the near future on the back to work scheme, which will help unemployed people to become self-employed. The Minister is not prepared to properly fund this area. If we want unemployed people to become self-employed, we must provide resources. I might be able to make some suggestions to the Minister.

Fianna Fáil introduced that scheme.

Yes, but speaking as a director of a small business centre, we do not think the Minister is giving us enough support. I welcome the Minister's decision to remedy this unfair provision and I ask him to look again at the 1961 ten year rule as regards the self-employed.

I wish to share my time with Deputies Noel Ahern, Healy-Rae, Carey and Michael Kitt. I am delighted to speak in support of this amendment. As the Minister said last night, this motion is a non-event. Deputy O'Keeffe is abusing the House in tabling a motion when the Minister has already indicated the issue has been resolved. However, it gives us an opportunity to welcome this important measure and to point out that Fianna Fáil in Government is delivering on its commitments and to point to the abject failure of Fine Gael, Labour and the Democratic Left to deal with the issue.

In the Fianna Fáil position paper "Irish Families in the New Millennium", we gave a commitment to make new arrangements to tackle the problems faced by those who are marginally excluded from participation in PRSI pensions. This is an important issue for many self-employed people who are often not in good financial circumstances and who honestly paid their contributions when they were included in the system from 1988. However, when they came to pension age they were horrified to find they did not qualify for a pension if they were over 56 years in 1958. Many people missed out by a few weeks or days.

There must be rules, but there must also be exceptions to the rules when they create unfair anomalies. It is unfair that people should lose out on a pension through no fault of their own when they have paid their contributions in good faith. During the tenure of the last Administration, Deputies Walsh and Woods raised this issue on numerous occasions. Where was Deputy O'Keeffe then? What did the Rainbow Coalition do about this? It copperfastened the discriminatory ten year rule and allowed for a repayment of part of the contributions paid, which amounted to £900 on average. What use is this to a farmer or a self-employed person when what they need is a pension?

Many groups have raised this issue with us and I and my colleagues have in turn raised it with the Minister on many occasions. He has always given this issue a fair hearing and has indicated his desire to bring it to a favourable conclusion. Farming organisations recently made a case for pro rata pensions, to the Fianna Fáil parliamentary party and the social affairs committee. We all know farmers are going through a bad patch. They made a strong case for the extension of the pro rata pension to the self-employed as part of the Government's response to this issue.

I am delighted the Minister last night confirmed the indication he gave last month that the pro rata pension will be paid to everyone who has paid at least five years' contributions from 1988. This is a fair approach to the issue which will be acceptable to the groups who have campaigned for it.

The Opposition must be hard up for something to say if they tabled this motion. The issue has already been decided —pro rata pensions will be paid. All this motion does is to highlight the fact that Fianna Fáil is delivering on the commitments it made at election time. It also highlights the fact that Fine Gael and Labour in Government did nothing about this issue. Now they are in Opposition they promise everything. I am disappointed with the attitude of Fine Gael who seem to have a split personality. Fine Gael in Government does not do anything for anybody and Fine Gael in Opposition promises everything to everybody. When the Labour Party is in Government, nothing is ever their fault and they always want to do the right thing. However, they cannot fool the voters.

The self-employed who will benefit from this measure know that Fine Gael, Labour and Democratic Left were in Government for three budgets and did nothing. They know that before our second budget, Fianna Fáil and our colleagues in Government have delivered on our commitments. We will look after the elderly in every part of this country and in every section of society. This is just one measure in the package of measures to support our elderly in line with our commitments in the action programme.

I agree with Deputy Wade. It is strange that this motion is being tabled when a decision has been made by the Minister. I would have thought the Opposition would use their Private Members' time more fruitfully to bring forward more pressing issues. However, I know Deputy O'Keeffe was more successfully busy in recent weeks so perhaps he was not kept fully informed.

We delivered a result.

Perhaps his colleagues should have told him the Minister issued good news on this matter. Perhaps all the Front Bench were in Cork and were not aware of the good news coming from his Department.

The good news is in Cork.

Somebody could have suggested other good causes that Fine Gael could have raised in their Private Members' time. I am glad the Minister is bringing this measure forward which delivers on a commitment we gave at the last election. The issue has been discussed on numerous occasions in the House when different parties received the Civil Service reply from whoever was in Government at the time. It is good that the Minister has cleared the logjam and will deliver on our promise in the budget.

The present contributory pension system is rather strange. Some people do well from it while others do badly. One comes across many cases where a couple of extra stamps would give somebody ten pounds or £15 more per week. The way in which the system is banded works in favour of some people and against others. Obviously if a change is made there will be winners and losers, which it is hard to face up to.

I am glad to see the sacred ten year rule is being breached to some extent. One could say there is an argument for giving pro rata pensions to those who have paid one year's contribution or more. When the Minister introduces this change, those who have paid just under five years' contributions will probably attack him and his successors. These decisions hold an issue at bay for a while. It is good to see the Government, with the UN Year of Older People approaching, making these decisions and following through on the increases given to pensioners in last year's budget which I hope will be repeated next month.

Given that the economy is doing so well, any benefits should be given to the elderly who helped to put the framework in place. In many cases they do not have large pressure or lobby groups acting on their behalf. The self-employed are represented by groups who took up their cause. However, the elderly are not and we should be fair minded enough to look after them.

There are many anomalies in pension schemes. While I am glad this one has been solved, there is a greater injustice with which I hope the Minister will deal as soon as possible. This is the case of the pre-1953 stamps. There are a great number of elderly people who worked in the 1940s and are now well into their 70s or 80s. They feel aggrieved that the stamps they paid in the 1940s are not taken into account for a contributory old age pension. This is a great injustice although there is the technical consideration that the stamps they paid did not cover a pension contribution. However, when the new scheme was introduced those stamps were given full status for 20 years. It is ridiculous to say 20 years later that a stamp paid in the 1940s was not a full one.

We have all come across people who worked in the 1940s and became self-employed or emigrated in 1955-7 because of the recession. They may have started paying stamps as self-employed people in 1988. However, they are penalised for making contributions in the 1940s and 1950s rather than receiving credit for them like those who only started paying contributions in 1988. The Department should do an in-depth analysis of the cost of giving credit for stamps prior to 1953. It is a grave injustice and the cost would be no greater than that of this measure announced by the Minister. No lobby group is acting on behalf of these people but the move is needed and just. Now that the Minister has grappled with one of these long-term problems I hope he finds the courage, time and money to tackle another one, and brings forward good news in the coming months.

I also welcome the Minister's proposals on pensions for the self-employed. As a member of the Joint Committee on Family, Community and Social Affairs I was asked to report on this subject so it is appropriate that I say a few words.

During the preparation of the report I found that few self-employed people had taken out pension cover. There were a number of reasons for this and we should tackle them in debating this pro rata scheme. There was a lack of education among the self-employed on the need to provide for old age. Pensions were perceived as a sales product of the insurance industry or a means of avoiding tax. Pensions provided by the insurance industry have a poor image. There was a lack of transparency about the costs and benefits of the product, high pressure sales techniques, often with commission or target-oriented sales teams, particularly those from banks, often did not provide correct advice, the initial set up costs of the product were high and there was a lack of flexibility.

There were reasons for many of these drawbacks. Pension products for the self-employed are generally contribution-oriented and lack forward planning for the funding necessary for retirement income. An annuity payout system for pensions often provides only a fixed income for the remainder of life. This is unsuitable because the cost of living increases, as does the need to provide for home and health care. It was also noted that increasing lifespan and demographic trends require forward planning at Government level to ensure people become more responsible in providing for their retirement years. An increased retirement age, on a voluntary basis, should also be considered.

There is also a need for more flexible pension product alternatives, such as secure savings or investment schemes, which will assist people in providing for their retirement. Long-term capital investment projects could be financed using pension savings. These products could be secured by Government bonds and made available to pension savers. Tax breaks for pension planning should be increased as people get older. The current restrictions of 15 per cent and 20 per cent are too low for people who start saving for pensions late in life. There should be a limit on the amount of pension contributions qualifying for tax relief, as they are currently being used for tax avoidance schemes. Lower cost and more transparent and flexible pension products are needed from the insurance industry.

The Government should provide an information programme to increase people's awareness of the need to provide for retirement. There is also a need for insurance products which provide for health and home care costs in later life, as these can put a considerable strain on older people's savings. Pension planning in small businesses is critical, as many of them cannot support two families.

We should assist and encourage pension planning for the self-employed. There should be ongoing Government information campaigns on the need to plan for retirement and the level of savings required to provide a pension. We need new insurance and pension products which meet the requirements of people in their old age, such as a pension which would provide for increases in the cost of living or insurance products for health care in old age. The pension industry needs to provide low-cost and easily understandable pension options. The Government needs long-term planning on the consequences for society if self-employed people are not providing enough for retirement. PRSI contributions could be increased to fund retirement costs. I am pleased the Minister has honoured his commitment and whole-heartedly congratulate him.

I compliment the Minister and am grateful to him for his announcement about pro rata pensions. He did not think of this yesterday or the day before — a year and a half ago I confronted him with a number of genuine cases.

It was before that.

I judge people by looking them in the eyes and, having talked a number of times to the Minister about a pro rata pension for people who had paid PRSI contributions for a number of years, I knew he was genuine in paying attention to these cases.

That is the voice of the Government.

He said he was examining them closely and would address the problem at the earliest opportunity.

But did nothing.

I have been interrupted since I started speaking but if those people are looking for interruptions I will do it. They were in power long enough.

What is this vote about tonight? Is it a proposal to stop this pension being introduced? The Minister has made his announcement. I compliment him on giving me a hearing a year and a half ago, and I have the paper to prove I am genuine. This matter touches many small farmers. I received deputations in Killorglin and Killarney from the hills and the byways, asking me to do something about these pensions. Whether it was the Minister or I who did this, I compliment him on what he did. I come from the worst farming areas in the country and I am glad the Minister is assisting people from those places in this scheme.

If there is one thing that annoys me, it is listening to people in this House talking about pro rata pensions when they did nothing about the problem despite having plenty of chances. It is worse to hear people talking about small farmers — if they were put on some of the farms on which people are trying to survive, they would die from hunger before St. Stephen's Day. I thank the Minister for this scheme. He will be remembered by me and by the people I represent in Kerry as one of the best Ministers in the Department.

I also compliment the Minister on this visionary scheme.

Does the Deputy represent any small farmers?

There was one in my constituency but he sold out.

He was a wise man.

It should not come as a surprise that a Fianna Fáil Minister should follow previous holders of this office from our party in introducing a visionary scheme, because in researching my contribution I found that all of the innovations in the social welfare system were introduced by Fianna Fáil Ministers.

It was not a comprehensive trawl.

The Deputy, without interruption.

I went back to 1968.

The record speaks for itself.

Previous speakers mentioned that 1999 has been declared the United Nations International Year for Older Persons. In his contribution the Minister said it is a mark of a progressive society, the way it treats its senior citizens. Many Members will have had an opportunity of reading the comprehensive pre-budget submission by the Irish Senior Citizens' Parliament. I compliment people like Paddy Donegan, Michael O'Halloran and Eddie Fitzgerald in my constituency for the work they have done on that document. In their submission they advert to issues such as those the Minister has addressed.

The Minister, Deputy Ahern, also raised the issue of pre-1953 contributions. It is almost a question of social justice that we are seen to address this problem. For some reason, possibly because the system was less targeted in those days, people now find themselves in an anomalous position in that they cannot benefit from what they believe were genuine contributions.

I welcome that up to 8,000 people will benefit from the free schemes. That will make a great difference to their quality of life in terms of the fuel allowance, free electricity and gas, etc. I compliment the Minister on that measure.

The issue of private pensions will become very important in the years ahead as our ageing population increases. The main point to note in relation to private pension provision for the self-employed is that they are currently restricted to the benefits secured by a contribution rate of 15 per cent of net relative earnings or 20 per cent for those over the age of 55. By comparison, PAYE employees who are members of occupational pension schemes may be provided with benefits at retirement which leave them in a much better position because the only restriction on premiums is whatever it costs to fund the benefits. For example, to fund for revenue maximum approval benefits at a retirement age of 65 for a married male of 45 years of age would require a contribution rate of over 40 per cent of annual earnings. By definition, therefore, the benefits which would emerge for a self-employed individual of the same age would be significantly lower because of the restricted level of contributions allowable for tax relief purposes. The national pensions report has addressed this anomaly to some degree but the proposed personal retirement savings accounts will continue to have an upper limit for tax relief purposes of 30 per cent.

A further aspect of the provisions for the self-employed is that there is no allowance for retrospection whereas PAYE employees with a minimum of ten years' pensionable service may be augmented by the revenue maximum. Indeed employees at the point of retirement can make personal contributions of up to 15 per cent of aggregate earnings to augment their entitlements within revenue limits and claim retrospective income tax relief for up to ten years.

While this country will not face the same difficulties that will be encountered by other EU member states in relation to State pension provision, we will nevertheless incur a 50 per cent increase in the numbers qualifying for State pensions over the next 30 years. This will inevitably give rise to a much higher cost to the State to maintain and improve the level of State retirement pensions in line with Government policy. Generous tax incentives are available to encourage private pension provision. Perhaps the treatment of the self-employed in this regard could be brought more in line with the treatment of PAYE employees.

I urge the Minister to reconsider the pre-1953 contributions issue. If he manages to do that in the lifetime of this Government like Deputy Healy-Rae, I will say he is the best Minister for Social, Community and Family Affairs we have had in a long time.

Many former Ministers will be insulted. Deputy Woods will be very upset.

I congratulate the Minister and welcome his proposals for pro-rata pensions for the self-employed which will benefit farmers and small business people in my constituency as well as those in the fishing industry.

Social insurance was extended to the self-employed in 1988. I am delighted the matter has been addressed by the Minister and that he will provide more details in the forthcoming budget. We are all aware of the hundreds of people, mostly farmers in my constituency, who lost out by mere days, weeks or months on a contributory pension. Suggestions have been made in regard to allowing that group to pay additional contributions or a lump sum. There was even a suggestion that people who reached the age of 66 might be allowed to continue making contributions until they have sufficient to qualify.

The question of contributory pensions has been a major issue with the farming organisations. It has been discussed at every Fianna Fáil agricultural conference I have attended and I welcome the Minister's commitment to address it now, particularly his commitment to the elderly. The Minister referred to changes in the budget and helping people to get the £100 pension by the year 2002, but I would like him to consider the question of a contributory pension for carers, who do very important work, and move towards abolishing the means test for the carer's allowance for those who give continual care.

The elderly have been well supported by the Minister and the Government. I ask the Minister to consider the position of those who made contributions before 1953, which is regarded as the base year. These people are now elderly and have lost out in terms of a pension. I would also like to see pro-rata pensions for widows and widowers, many of whom are short of contributions to qualify for pensions. The Minister provided for a £5 increase in the old age pension in the last budget bringing it up to a basic rate of £83 per week.

In considering a response to the question of contributory pensions, the previous Government suggested a refund of the pensions element of the self-employed contributions. This amounted on average to approximately £900 which is a small amount for people seeking pensions. Will the Minister consider the position of people who got refunds with a view to allowing them a pro-rata pension?

A letter I received in recent days from a small businessman states:

As an employer I paid PRSI for 7 years for myself, and got no pension at the time of my retirement.

I was making a compulsory contribution. At the end of the term I was refunded 53% of my contributions, without interest.

I believe that I am entitled to 7/10 of my pension as it was compulsory. As a result, at the age of 70 I am still working to live and survive.

Is this the way employers are to be treated, after employing staff for years, paying their contributions as well as my own. At retirement age to be told that I was refused a pension, while my employees are entitled to theirs. Surely this is an injustice or discrimination.

That man has put forward the case very well and I am glad the Minister has addressed the issue of pro-rata pensions.

We are in Government with the Progressive Democrats. We made this commitment in Opposition and we are delivering on our programme. The Minister proposes a pro-rata pension for those who have at least five years contributions paid since April 1988. Up to 8,000 pensioners and 2,000 qualified adults will benefit. Some people may lose out but the Minister said the question of additional voluntary contributions will be addressed in the pensions Bill to be published next year.

I congratulate the Minister and I have no doubt he will be regarded as one of the finest Ministers for Social Welfare the country ever had.

I wish to share time with Deputies Hogan, Timmins, Crawford, Belton, Browne (Carlow-Kilkenny) and Neville.

Tonight's debate is important in that we will approve pro rata pensions for our elderly citizens. It is important to note that our elderly citizens made this country what it is. Their contribution over the years has left us in the proud position we are now in and they have given us the economic surplus we hear about so often. It is their contribution to Irish life and society which has made this possible. The very least we should do is reward them in their twilight years.

I was disappointed last evening when a female Fianna Fáil Deputy described this debate as a waste of Dáil time. It is absolutely disgraceful that a Deputy could refer to the approval of pro rata pensions for elderly citizens as a waste of time.

The Deputy is twisting her words.

I commend Deputy Jim O'Keeffe who pioneered moves to bring about the introduction of pro rata pensions since he became Fine Gael's spokesperson on social welfare following the last general election. Time after time the Deputy tabled ordinary and priority questions on this issue. The motion we are debating was laid before the House last April and it must not be forgotten that it was tabled following the debate on the Social Welfare Bill in respect of which Deputy O'Keeffe tabled an amendment to grant pro rata pensions. How many of those on the Fianna Fáil side of the House who contributed to this debate spoke in the debate on the Social Welfare Bill in favour of the granting of pro rata pensions? What did they do when the time to vote arrived? They voted against the proposal.

We explained that we were examining the matter.

They were looking at it.

Those Members made the same speeches this evening as they did in the debate on the Social Welfare Bill but they now state that they will vote in favour of the granting of pro rata pensions.

We must commend Deputy Jim O'Keeffe for his work and persistence in this area which has brought about results. As Deputy Michael Kitt stated, natural justice is being done. In 1988, people were forced by this House to enter and make contributions to a pension system from which no returns were forthcoming. I commend the Government for putting in place pro rata pensions for these people. Justice is being done and it is about time this happened.

I await the Minister's announcement of the small print relating to this matter following the budget. It will be interesting to see the details that emerge. When the small print becomes public, I hope we will not discover that restrictions and small loopholes will prevent deserving people who contributed to the scheme from benefiting from it. I also hope that the people who communicated with Members — particularly the person who wrote to Deputy Kitt — will obtain a little sunshine, a little warmth and a small pension from the Government to help them in their twilight years.

I join with colleagues in congratulating Deputy Jim O'Keeffe on tabling this motion. Deputies on all sides are satisfied with the Minister's announcement in respect of sanctioning pro rata pensions for the self-employed, a development that is long overdue. Many constituents who contacted Members about this matter expressed great anger and frustration that a system was put in place into which they could pay PRSI contributions but from which they obtained no benefits. When the ten year rule was introduced in 1988 by the then Minister for Finance, Mr. Ray McSharry, the Opposition pointed out that problems would arise.

I intended to congratulate and give full credit to the Minister for implementing the pro rata pension scheme but having listened to Deputy Healy-Rae's contribution it is obvious that he must take the lion's share of the credit for his involvement in this matter. It is apparent that the Minister did not listen to representations about this matter until Deputy Healy-Rae became a pivotal factor in terms of the Government's survival and, with Deputies Blaney and Fox, he exerted additional pressure to ensure that the Minister was reminded about his obligations. I acknowledge the Deputy's major contribution in this respect. I am sure the Minister will state that pro rata pensions would not have been granted if it had not been for Deputy Healy-Rae.

Inadequate and inaccurate information relating to the cost of granting these pensions was issued in the past. The Minister was one of those who highlighted the huge cost involved in implementing such a scheme. If people consult the Dáil Official Report they will discover that at one stage it was estimated that it would cost £500 million to pay pro rata pensions to the 20,000 people who qualify under the scheme. Grossly distorted figures are often plucked out of the air in order to ensure that a scheme is never implemented. Deputy Jim O'Keeffe consistently stated that the scheme would cost approximately £20 million and last evening the Minister stated it would only cost £18 million to fully implement the scheme.

This is a good day for the self-employed. It is also a good day for the Oireachtas because Members have come together to ensure that a pro rata pension scheme for the self-employed will be introduced. I thank everyone involved, particularly Deputy Jim O'Keeffe, for ensuring that this matter will be finally resolved.

It is an even better day for Fianna Fáil.

I welcome the opportunity to speak on the motion. I congratulate Deputy Jim O'Keeffe for persevering with this issue since he became party spokesman on social welfare. When it seemed that there was no way forward for the people who have suffered as a result of the ten year anomaly, Deputy O'Keeffe kept their hopes up by means of continuous communication. I thank him for the various items of correspondence he sent to constituents in counties Wicklow and Carlow.

Like other Members, I received letters from people pointing out the injustice of this matter and I could not provide answers. I welcome the Government's commitment to address this matter in the forthcoming budget. However, it was important that Deputy O'Keeffe proceeded with the motion so that the group which had been marginalised could see the tangible efforts made on their behalf. This situation should never have been allowed to develop because much unnecessary stress has been caused. I look forward to this problem being dealt with in the budget. I hope the necessary measures will be implemented on budget day and that this group of excluded people will not be obliged to wait for the introduction of the Finance Bill before their anxiety comes to an end. I remind Deputy Healy-Rae that he does not hold a monopoly on concerns about small farmers.

I welcome the introduction of this motion. As already stated, it was tabled last April by Deputy Jim O'Keeffe following the debate on the Social Welfare Bill when the granting of pro rata pensions was refused. I thank the Minister for making it clear that payment of these pensions will be part of the budget strategy. As Deputy McGrath stated, I hope that red tape or the small print will not prevent people from obtaining payment. A number of my friends from Clones visited the House last evening, several of whom paid contributions to the scheme for a number of years and have passed their 66th birthday. However, they will not obtain payment. I ask the Minister to reconsider the position in respect of those who paid contributions for three or more years.

The position regarding farmers and other business people are slightly different to those outlined by the Minister last evening. He stated that this change would encourage them to transfer ownership of their land. If anything, the introduction of the pro rata pension will mean that fewer people will transfer ownership of their lands and businesses. Therefore, we must work towards developing a method to encourage young farmers and business people to gain ownership of their property and businesses at an early stage if their presence in rural areas is to be retained.

While I congratulate the Minister on taking this step forward, he must recognise that further steps are required. I understand a discussion took place today between the farming organisations and the Minister for Finance regarding income support for farmers, which is very important. The family income supplement should be available to farmers and self-employed persons. The Minister said it would cost up to £80 million to solve that problem — an increase from £30 million to £80 million in a short time. We could argue about this matter all night but I congratulate the Minister's colleague, the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, who has put forward a supplementary estimate amounting to £91.5 million, a great deal more than the cost of FIS.

I enjoyed listening to the support the Minister got this evening from our Independent colleague from Kerry, Deputy Healy-Rea. He said at an earlier meeting there was a need to introduce grants for the restoration of houses. I agree with him on that. I will watch him closely because he has claimed he is a wheel of the Government — he is one of the wheels of the car. The Minister has a very important job and it would be a pity if one of the wheels falls off. I will watch to ensure that Deputy Healy-Rea and his Independent colleagues deliver on what they promise. When the other element of the Minister's portfolio, the family income supplement, has been delivered to farmers and the self-employed, we will give Deputy Healy-Rea the full credit he always seeks.

I pay tribute to the senior citizens' organisation who put in a tremendous amount of work, the Irish Farmers' Association and other farm organisations which campaigned for this, the ICA and a former president — who is in the Visitors Gallery — who campaigned and all others who assisted.

The pro rata pension will mean that in the last few years of their lives, people who worked extremely hard and were asked to pay PRSI but received nothing in return will be given the recognition they deserve. All people must be treated equally.

At a meeting of the Joint Committee on the Family, Community and Social Affairs this evening I was interested to hear an official from the Department of Social, Community and Family Affairs say that due to the closure of the Krups factory in Limerick people there will need special help from the Department. That is an example of where the Department sees a need and reacts to it.

There is a crisis in farming and I hope the Minister's officials will react in the same way to that need. The hardship involved is no different whether a factory closes down or a farmer loses income because of the failure of Government to produce it or because of weather conditions. The Minister deserves credit in this case but we await delivery on the other issues.

I compliment all the senior citizens who contributed not only to this scheme but to the State. The self-employed did not seek assistance from the State. When the scheme was introduced in 1988 by a Fianna Fáil Government, it was obvious it was not thought through to its conclusion. Tonight we are witnessing part of the conclusion. The Government has decided to complete the job which was started in 1988. If we have to spend five, ten or 30 minutes complimenting each other across the floor it is a sad day given that the people affected contributed the work of a lifetime to the State and are entitled to benefits, especially from schemes they paid into, and that the legislators made no plans for pensions. We are throwing bouquets at each other and referring to the greatest Minister of all times. This is a disgrace. Instead, let us compliment the self-employed who put their hearts into building up their businesses, their families and the State.

The Deputy supported the Minister.

The Deputy without interruption.

I may not pay the Minister a compliment. He sat there purring like a cheshire cat when he was being paid compliments.

The Deputy supported Deputy De Rossa as Minister for Social Welfare. He would not allow it.

With all respects I have the floor, not the Minister.

I have asked the Minister not to interrupt the Deputy——

It is obvious he did not hear you.

——and I invite the Deputy to direct his remarks through the Chair.

He could hear everything else, especially the misplaced comments. Some of those who have worked hard all their lives visited my constituency office. In good faith they had paid into the scheme which was introduced by a Fianna Fáil Government. My colleague, Deputy Jim O'Keeffe, has done much to bring the matter to the point where we hope it will be dealt with in the forthcoming budget once and for all.

(Carlow-Kilkenny): I welcome the Minister's decision and that our spokesman, Deputy Jim O'Keeffe, decided to bring this in last April. I listened to Government backbenchers getting into convulsions about hypocrisy and so on. I remind all those backbenchers who were not Members when Deputy Woods was Minister for Social Welfare and when Deputy Healy-Rea thought the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, was a wonderful character in County Kerry, I had raised the matter with Deputy Woods. I can claim with fair justification to be the first Deputy to suggest pro rata payments. The former Minister, Deputy Woods, and I discussed the matter. I understood his position at the time — there was not a great deal of funds and the advice was against it. I am pleased I was ahead of the posse. Although it took until now to introduce it, I congratulate the Minister and give him credit for it. Given that the Government is claiming credit for great ideas since coming into office last year, it is time to let it know we were alive and well four years ago at least.

If the Minister were to act on the following matter he would become a great Minister. In March 1994 I put down a question to a former Minister for Social Welfare, Deputy Woods, seeking an increase in the £5 fuel allowance to which he replied he would keep the matter under review. In the forthcoming budget will the Minister ensure the £5 fuel voucher is increased to something worthwhile. This will show he has concern for the aged. Given the smile on his face I am sure he will increase it and that I can announce it in Carlow tomorrow. This scheme must be reviewed. The £5 fuel voucher which was introduced in 1988 has lost its value. I met a man on the street the other day who asked if I knew about the price increase in briquettes. The Minister should deal with the £5 fuel voucher. Given that he referred to the old in his contribution I am free to mention it.

I am pleased it has been recognised that the concept of a Bill which provided that people should pay into a pension fund only to find they would not qualify for a pension is wrong. This will create difficulties for some people, but at least it has been recognised. I claim some credit for highlighting this issue.

I congratulate Deputy O'Keeffe on introducing this motion, which proposes that the Government should introduce a pro rata pension for those who were 56 years of age or over when the social insurance pension for the self-employed was introduced. Deputy O'Keeffe has spearheaded a campaign to remedy this injustice over a number of years, as have many Deputies from all sides of the House. I also congratulate the Minister on responding positively to Deputy O'Keeffe's initiative by recognising the unfair practice of people paying social insurance and then being denied benefit. We await details of the scheme in the forthcoming budget. It will be interesting to note the procedure that will be put in place to ensure the proposed scheme covers as many people as possible.

Under the current position a group of people who were disallowed a pension under the 1998 legislation were forced to contribute to the scheme without being entitled to any benefit. Like Deputy Browne and others, I have argued for many years that the contributory old age pension scheme is unfair and unjust to people, including farmers and others who are self-employed, who paid partial contributions from the age of 56. During the debate on the Social Welfare Bill, 1997 strong views were expressed on this side of the House on that matter.

We have all met people who have paid contributions, but have not received benefits. How often have we been asked if a person could make up the shortfall in his or her contributions? We have all met people whose contributions have been one, two or three weeks short of the number that would entitle them to pensions. It was blatantly unfair that such people were not entitled to contribute to a pension and I am pleased the Minister recognises the unfairness of that ten year rule. It was not only unacceptable but an insult to tell people they could get a refund of their contributions.

The State has a duty to recognise the work of the older generation in contributing to our relative success. We have a duty to recognise the tangible contribution and sacrifices made by former generations. Reports of a recent conference organised by Fr. Harry Bohan send clear messages that society has a duty to take care of those who are retired and elderly. We must undertake that duty as a State and it should be carried out at local authority level, health board level and at community and family level. If we do not do that, we will let down our old people.

The proposal announced by the Minister will introduce a pro rata pension for those who have paid at least five years' contributions since 1988. Entitlement to such a pension will also include access to free schemes. I note refunds of PRSI contributions already paid will be recovered by the Department of Social, Community and Family Affairs. Those moneys might be recovered by way of weekly contributions from the pensions that will be awarded to those people.

I wish to share the remainder of my time with Deputy Sheehan.

That is agreed.

In 1998 the social insurance net was extended to cover all the self-employed, but entitlement to a contributory old age pension was restricted to only those who had ten years' stamps before they reached the retirement age of 65 years. I did not agree with that regulation in principle. I heard previous speakers state that the previous Government did very little to correct that position. The previous Government was not in office during all of that time. I actively pursued the matter as a backbencher in Government when the then Minister of State at the Department of Social Welfare, Deputy Durkan——

The Deputy should check the files.

——undertook to examine the position, but alas an election was called and the matter was not finalised.

The Government is 17 months in office and it is only now waking up to the reality——

We promised this in our election manifesto.

——that this matter should be investigated and dealt with once and for all. I am disappointed with the manner in which the Minister is dealing with this matter. A pro rata pension will be paid to a group of people who have paid five years' contributions since 1988. Why has the Minister stipulated a cut-off date which discriminates against those who were compelled by law to pay contributions for a period of up to five years after 1988? If they did not do so, they would have been brought before the courts and fined £3,000. That is a point of information for Deputy Healy-Rae. I am amazed the Minister is victimising that section of the community who had to pay contributions from 1988 to 1993 and who will not qualify for a pension under this re-arrangement. Why will he not give that category of people an equal opportunity to pay their contributions so they could benefit from a contributory pension?

Is it a crime that those people were born five years too soon? Did they have an option? If my colleague, Deputy Healy-Rae, had known the proposed scheme would affect those people who are caught in this five year net, I am sure he would have expressed different views a few minutes ago.

When a similar scheme was introduced in Great Britain, the people affected were given an opportunity to pay extra contributions to enable them to qualify for pensions. What was right in Great Britain should be right in this country. Given that this is the era of the Celtic tiger and we have a buoyant economy, surely the Minister will reconsider the matter and give those people, even if some have paid only 12 months' contributions, an opportunity to qualify for pensions. Why would the Minister want to discriminate against those few thousand people? To do so would be penny pinching and the Minister should stop that.

I congratulate the Minister on what he has done to date, but a job half done or badly done is not good enough. To include those who have contributed up to five years' contributions, which they were compelled to pay by a law passed through the Houses of the Oireachtas would involve a cost of only an additional £1 million.

I ask the Minister, in the coming season of peace and goodwill, to open his heart, not be penny pinching and not to stumble at the last fence. I ask him to reconsider. I congratulate my colleague, Deputy Jim O'Keeffe, on his foresight in moving the motion and I ask the Minister to be Santa Claus to the people who have paid less than five years contributions. I also ask him to be magnanimous as he approaches Christmas and not to forget that section of the community that has been victimised for the sake of a few paltry pounds.

I thank Deputy Jim O'Keeffe for giving us the opportunity to outline the manner in which the Government has fulfilled its commitments to exclude self employed pensioners. We on this side of the House are delighted that we have been able to deliver on our commitments to the people who matter, those who, through no fault of their own, were excluded from the right to a pension because of their date of birth. In equity this is a fair and balanced approach to take. We proposed this in Opposition, we promised it before the election and we are now delivering on it in Government.

Deputies raised a number of questions as to how the pension will operate. As the Minister has said, the full details, including the amount of the reduced pension and the starting date for the pension, will be announced by the Minister for Finance on budget day. However, in his speech last night the Minister confirmed that the free schemes will be payable with a pro rata pension in accordance with the general rules. In addition, I assure Deputies that those who would otherwise qualify for a pro rata pension but who have already claimed a refund of contributions will not be disqualified from the new pro rata pension.

This is one in a range of measures which we have and will introduce to improve the position of older people in our society. In our action programme we recognise that older people through their hard work and dedication have made this country what it is today. We must make this a good country for our older people.

In the action programme we gave a guarantee that we would increase the old age contributory pension to £100 per week by 2002. We made a major step in this direction in our first budget. The Government has also published the report of the national pensions policy initiative which, for the first time, sets out a comprehensive plan for the future of our pensions. This comprehensive report contains a number of recommendations, which include the development of strong first pillar social welfare pensions based on social insurance and significant improvements in occupational and personal pension cover aimed at increasing the number of people over the age of 30 at work with second pillar pension coverage of 70 per cent, compared to the less than favourable 50 per cent currently.

The Government accepted the main thrust of the report in principle and the Department of Social, Community and Family Affairs, in conjunction with the Department of Finance and the pensions board, are currently examining, via three working groups, a number of key recommendations from the report, including the proposal to pre-fund, at least in part, the future cost of social welfare pensions, the mechanisms put forward for achieving additional second pillar coverage, the personal retiring savings account and the proposal to introduce more simple and flexible tax arrangements for pensions with a view to introducing appropriate legislation in all these areas.

On the pre-funding issue, the pensions board pointed out that there would be significantly increased budgetary pressures in the new millennium. By 2046 there will be one pensioner for every two people at work compared to one for every five today.

It is impossible to predict accurately that far in advance.

It recommended that an explicit mechanism should be found to fund the prospective substantial growth in social welfare old age pensions. This makes sense. Pensions must be paid for. We either put aside something now when things are going well or we can wait until the pensions bill falls due and the demographics are much less favourable. The Government looks forward to receiving the report of the working group as soon as possible.

On the question of pensions legislation, examining all the complex issues covered in such a comprehensive report will necessarily take time. However, the Minister intends to publish a new pensions Bill in the last quarter of 1999 with a view to enactment in 2000. The Government intends to build a strong first tier contributory pension with coverage which is as close to universal as possible. The extension to this group of self-employed people helps to achieve that objective. On this solid basis we will build a high level of second tier pension coverage through personal and occupational pensions.

I am pleased that what has been announced has been welcomed on all sides of the House. On behalf of the Minister I thank the many groups who have raised the issue with him and the many Deputies on this side of the House and elsewhere who made proposals on the issue. Again on behalf of the Minister, I take this opportunity to thank the civil servants in the Department for their constructive approach to resolving the issues raised by this anomaly. I commend the amendment to the House.

Before replying I wish to make way for Deputies Boylan and Enright.

This is an important debate. I regret statements by some Members that we have been wasting Dáil time. Such remarks are unfortunate because we are dealing with people whose pensions rights were not forthcoming through no fault of their own. That has now been put right and I welcome the Government's conversion. I will withhold my final verdict until I hear the Budget Statement by the Minister for Finance. The pre-budget leaks have indicated sunshine one day and doom and gloom the next. Today's pre-emptive statement by the Minister was full of doom and gloom. In view of this we do not know what to expect. The Minister has not made up his mind so we cannot be sure of the Government position, despite the announcement by Deputy Healy-Rea that matters have been finalised.

People are very worried about their pension rights. The Minister needs to consider the whole issue of pensions. I listened to an interesting discussion last night when it was indicated that falling interest rates, which are to be welcomed, are not accumulating the pension benefits people might expect when they retire. Long ago small farmers, business people and other self-employed made savings. However, these have no relevance to pension entitlements and these people have found that when they retire their savings are soon eroded.

It is important that a structure is in place so that a growing ageing population can look forward to retirement incomes in peace and the rewards to which they are entitled, having worked diligently and hard and having handed over a State to others of which we can all be proud.

I am happy there has been a significant breakthrough on this issue. The Minister should be magnanimous and accept that Deputy Jim O'Keeffe's continuing pressure was of immense importance in encouraging the Government to see the light on this issue. People were compelled by law to make contributions, yet they were then denied their proper entitlements at a later date. What occurred was unfair, unjust and inequitable. At last there has been a recognition of what is right and proper, that people should be paid their lawful entitlements.

I am glad we have achieved this. We must await the measures announced in the budget. Beyond the significant number of people in the Visitors' Gallery there are many who have been badly treated over recent years. I hope that at last they will be paid their due entitlements.

We are now in the final stages of a worthy campaign in which many fought the good fight. Many people on all sides of the House, and many organisations outside the House, have been involved in this fight. When the battle is over the tendency for anyone to grab the laurels is rather childish, to say the least. On behalf of Fine Gael, I have been delighted to spearhead the campaign within the House since I became spokesperson on social welfare. I do not think the campaign would have been successful were it not for the many organisations that were so actively involved. Many of them are represented in the Public Gallery today. I compliment them on the effort they put into this campaign. At the end of the day a just cause is always worth fighting for. Although I am a lawyer, I see a wealth of difference between law and justice. This was not a question of law but of justice. An injustice was done when this scheme was introduced in 1988. It was pointed out at the time that there was a lacuna in the Bill which would lead to injustice. It was also pointed out that no transitional arrangements were made for those who were forced to pay contributions, but who could not benefit under the terms of the legislation. All efforts to change the legislation at the time were turned down and that lacuna remained. That was the position I found when I took over as Opposition spokesman on social affairs. I was glad to have been involved in what I consider to be a very just and worthy campaign. I was very glad from the point of view of the Opposition to be able to give it priority.

The issue became even more acute from last April when the first pensions came on stream, and the first people who had their ten years paid and had attained the age of 66 after 6 April — not, by the way, the person who attained that age on 6 April and whose claim was shot down, but those who reached that age on 7 April — got their pensions. The House will recall the many parliamentary questions and priority questions concerning this issue. Indeed, an amendment to the Social Welfare Bill was tabled to try to get the issue dealt with. That was what led to the tabling of this motion last April. An effort has been made to suggest that this motion was tabled last week, but it was tabled in April.

It was taken.

It was postponed for the convenience of the Minister on one occasion.

That is right — to give him time.

That is true.

It was postponed otherwise because of the recess. It was postponed for the last month because I was otherwise engaged in Cork South-Central.


The Deputy obviously did not read the newspapers when he was down there.

Having returned from the battlefield in Cork South-Central last week, I was very glad to immediately give notice of my intention to go ahead with this motion.

Winner all right.

The principle has now been established and I am delighted to congratulate the Minister on having at long last accepted it. I am rarely too critical, but the tone of the Minister's speech was quite ungracious, ungenerous and childish in many ways. It was in marked contrast to the tone of the speech from my fellow Corkonian, the Minister of State, Deputy Dan Wallace, which highlighted the broad picture. There were a number of inaccuracies in the speech by the Minister, Deputy Ahern. The refund arrangement was originally provided for when the scheme was introduced in 1988, but that is neither here nor there at this stage.

I was also concerned during the campaign by the efforts to suggest that this pro rata scheme could not be introduced from the point of view of cost. I still recall the references in the newspaper to the sum of £756 million which, it was alleged, would be necessary to fund this scheme. Scathing remarks were made about me at the very thought that I would urge the Government to spend that much money on such a scheme.

Following that, I tabled a priority question on Tuesday, 10 March 1998 on the issue of the alleged sum of £756 million. I asked the Minister whether he would accept my view that a pro rata scheme could be introduced for less than £20 million a year. The response from the Minister was quite interesting. He said:

As I indicated recently during the debate on the Social Welfare Bill [when he turned down my amendment] the additional cost of paying an old age contributory pension to all this group would be of the order of £50 million per annum, capitalised at £475 million.

The Minister went on to talk about the right to a refund, saying:

I would like to assure the House that any self-employed person who has contributed and does not qualify for either a contributory or a non-contributory pension, receives a refund of the pension element [53 per cent, if you please] of his or her PRSI contributions with interest, which is a fair arrangement.

Those were Minister's own words last March.

What did I say in the supplementary replies?

The suggestion expressed and implied now that the Minister was at all times totally in favour of this approach is entirely unacceptable.

I said I would look at the figures.

I will not say any more.

The Minister went on the road to Damascus after that.

The Minister's conversion is noted and is something for him to be congratulated upon. I am delighted that he has accepted the approach.

The Deputy will be voting for me from now on.

When I introduced this motion yesterday, I said that I accepted the approach from the Minister in principle.

However, as David Trimble said once so memorably, the devil is in the detail.

The Deputy should not compare himself to David Trimble.

The full details have not been spelt out. I want to mention three issues raised by the Self-employed Persons Association, which has fought such a worthy battle in this campaign. The association raised the issue of recompense for the years during which people had been denied a pension — four years for those who are now 70 years old. The association also raised the question of those, mentioned by my colleague Deputy Sheehan, with less than five years' contributions. They are still, apparently, to be denied a pension because of their age. Thirdly, the association questioned the Minister's estimate of the total cost at £170 million. The association said that is incorrect as the annual cost will be reduced every year because of the unfortunate annual death toll which reduces the number of pensions. We have to accept that.

I raise those issues because that association has been in touch with me many times about them. It is appropriate that they should be raised and considered by the Minister before the final detail is announced.


I am concerned that while a legitimate case was made by the Opposition and supported by organisations outside the House, the answer early on denying the case was made by way of figures which appear to have been totally inflated. Surely, when such issues are raised we should be in a position to obtain more accurate figures.

I am worried that the current campaign in relation to the family income supplement is being dealt with in the same fashion. It is an issue to which I will return. The exact cost of these schemes should be available and should be fully and factually correct when presented to the House. They should be available to the Opposition at all times.

I congratulate all those who have been involved in this campaign. I am delighted to have been associated with them all both inside and outside the House. I have been asked what I will do about this motion. I do not believe in silly parliamentary activity. I accept that the pro rata pension has now been established in principle and on that basis I will not put the issue to a vote. I will reserve my final position until I see the detail. As far as I am concerned, the pro rata pension campaign has been brought to a successful conclusion and I am delighted to have been involved in leading it.

The Minister is on reprieve.

Amendment agreed to.
Motion, as amended, agreed to.