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Dáil Éireann debate -
Wednesday, 3 Mar 2004

Vol. 581 No. 3

Public Service Superannuation (Miscellaneous Provisions) Bill 2004 [Seanad]: Second Stage.

I move: "That the Bill be now read a Second Time."

The Government is bringing forward this Bill to give effect to the age-related pension reforms for new entrants to the public service announced in budget 2004. These important reforms are aimed at securing the proper evolution of Exchequer spending on public service pensions over the longer term, while also ensuring that future public servants are provided with an acceptable and fair income at retirement.

In accordance with these objectives, the Bill introduces two key changes which will affect most new entrants to the public service from 1 April 2004. First, it raises the standard minimum pension age for new entrants in the public service from 60 to 65 years and, second, it abolishes the link for new entrants between age and compulsory retirement in most areas of the public service.

These changes will affect new entrants to the Civil Service, local government, teaching, the health sector, non-commercial State bodies, the Dáil and the Seanad and ministerial office. As recommended by the Commission on Public Service Pensions, the special nature of the duties of the Permanent Defence Force, gardaí, prison officers and fire-fighters means that maximum retirement ages will continue to apply in these areas. The Bill does, however, raise minimum pension ages for new entrants to the Garda Síochána and the Prison Service, as well as providing for new pension arrangements to be put in place for new entrants to the Permanent Defence Force.

I would emphasise that the measures in the Bill apply to new entrants only; neither serving staff nor existing pensioners are affected in any way.

The changes set out in the Bill have been decided on by Government following consideration of the report of the Commission on Public Service Pensions. On foot of the commission's report, there were extensive discussions between the Government and trade unions and staff representative organisations in the public service. Despite our best efforts, full agreement was not reached in the course of this dialogue. Following its own examination of the position, the Government took the policy decisions announced in the budget and presented here in this Bill. This is something I will return to later in my speech. I want to make the point now, however, that while the changes in this Bill are urgently needed, they have evolved from a background of lengthy consideration and extensive consultation. Demographic change dictates the urgent need to act to ensure the long-term budgetary sustainability of public service occupational pensions. In particular, the clear and definite trend toward greater longevity is central to the need for appropriate reform now.

We have grown accustomed to thinking of ourselves as a predominately young population with the advantages that come from that. We are fortunate that, while we still have one of the younger populations in the EU, we can learn from the experience of other EU countries now facing immediate "pension time bomb" problems. Significant demographic change will occur in Ireland over the coming decades and decisions on change must be taken now. Either we take moderate, reasonable steps now to secure the future or, like our EU partners, we must face the need for more radical changes in the years to come.

The demographic changes are striking. Since the foundation of the State, life expectancy has risen sharply. In the case of men, it has increased by about 15 years and, in the case of women, it has increased by more than 20 years. It is generally agreed that there will be continued improvement in life expectancy in the years ahead. While this is a welcome development, it will have the effect of significantly increasing the cost to the taxpayer of financing public service pensions in future unless appropriate reforms are put in place now.

Most forecasters agree that pension numbers are likely to treble over the next 50 years. While it is difficult to be certain about the likely size of the labour force at mid-century, especially given the size of immigration in recent years, the labour force would, in effect, have to treble to keep the pensioner support ratio at its present level.

A recent study published by the Department of Social and Family Affairs projected that the number of people of pension age in Ireland will rise from 430,000 currently to 673,000 in 2021, and then to 1.2 million in 2056. This means that our current ratio of five people of working age to every pensioner can be expected to fall steeply to fewer than two people of working age to every pensioner by 2056. The projected increase in life expectancy, combined with a declining birth rate, underlines the necessity for action now to forestall unsustainable impositions on the Exchequer in the future.

It would be irresponsible to ignore the following facts. Public service and social welfare pensions now cost the Exchequer about 5% of gross national product, GNP. Maintaining the present level of provision is expected to cost about 12.5% of GNP in 2056. Over the same period, the public service pension component of this spending is set to rise from 1.4% to 2.5% of GNP.

As Minister for Finance, I have been concerned to ensure that we do everything possible now to prepare for the challenges ahead. This Government has adopted a proactive approach in this area through initiatives such as the establishment of the national pension reserve fund, targeted taxation adjustments and the introduction of personal retirement savings accounts, PRSAs, to foster responsible pension planning by individuals in the workforce generally.

Public service pensions are paid on a pay-as-you-go basis as part of current expenditure at an estimated cost in 2003 of some €1.5 billion. With cost containment over the medium to longer term clearly posing a major challenge, the Bill is directed at lessening the Exchequer burden in years to come through the implementation of moderate and well-founded changes which, in the long-run, are expected to achieve annual savings of some €300 million at current prices. The need for reform of public service pensions has long been acknowledged. This was clearly recognised by the Commission on Public Service Pensions which was set up by Government in 1996 and which issued its report in 2001.

The commission's membership included the social partners, academic experts, pensions industry professionals and departmental representatives. Its terms of reference required it to examine the pension terms of public servants in the light of changes in their working environment and conditions of employment, claims for improvements in existing terms, emerging costs and the operational requirements of the public service. It recommended its package of measures as representing an integrated strategy aimed at securing the long-term viability and stability of public service pensions. In this context, it cited as key aspects the growth in long-term pensions expenditure, changes in the nature of public service employment, the issue of retirement age and claims for early retirement.

In 2001, the Government accepted the bulk of the commission's proposals, including those related to pension age. It is worth emphasising that the provisions of the Bill about increasing minimum pension age for new entrants are a direct implementation of specific recommendations by the commission. In endorsing such actions, the commission took a thorough approach. It examined all relevant factors, including in particular the demands placed on the different occupational groups, and cited increased life expectancy as a key factor in its decisions. The Government agreed with the commission's conclusions.

The commission made no general recommendation as such concerning compulsory retirement ages which the Bill will abolish for most new entrant public servants. In my view, however, this is an appropriate accompanying measure to the change in minimum retirement age for new entrants and will facilitate future public servants in continuing to make a productive contribution in the workplace at older ages.

From a pensions perspective, I believe that the forecast decline in the dependency or support ratio as the first half of this century unfolds makes it especially opportune to dispense with mandatory age-based retirement for most new entrant public servants. As the worker to pensioner ratio falls in the decades ahead, people will live longer. In the context of the major impact these changes will have on the labour force, it makes sense to allow people to continue to work and contribute for so long as they are able and willing to do so. The benefit for the Exchequer should be a reduction in pension costs.

In September 2001, the Government agreed the recommendations of the commission in principle and set up a working group with the public service unions to advise on their implementation. The group was established in January 2002 and reported in October 2003. Parallel groups with similar remits were set up in respect of the Permanent Defence Force and the Garda Síochána, and the Government also had the benefit of reports from these groups in informing its decision making.

In addition, individual meetings were held between officials of relevant Departments and representatives of the Irish Hospital Consultants' Association, the Irish Medical Organisation and the Psychiatric Nurses' Association of Ireland. Bilateral discussions were held with SIPTU, the Prison Officers Association and the teachers' unions, ASTI, INTO and TUI, on specific commission recommendations.

Although the trade union and employer participants on the main working group were able to make good progress on several important aspects of the commission reform package, agreement was not reached on some other critical items, notably the raising of minimum pension age for new entrants. Every opportunity was given for agreement to be arrived at in the course of these talks, but this did not prove possible.

Against this background, I considered that action was urgently required following the prolonged phase of study and consultation. To delay further risked missing the opportunity for reform created by the commission's work. The Government agreed that change had become a pressing priority.

Accordingly, I announced in my Budget Statement last December that the Government had decided to implement the bulk of the recommendations of the commission. More specifically, I announced the intention of bringing forward legislation, as now embodied in the Bill, to increase minimum pension age and remove compulsory age-based retirement for most new entrants to the public service.

Given the value to public servants of a guaranteed system of pay-related pension increases, the commission recommended that all serving public servants should make an additional explicit 1% contribution towards the cost of pay-related pension increases. However, in line with the Government's concern to secure a balanced reform package which would not have implications for pay negotiations, I announced in my Budget Statement that the Government would not proceed with this recommendation. Similarly, I decided not to proceed with the commission proposal for the use of a new index for the purpose of determining public service pension increases, a proposal which was generally opposed by both pensioner groups and public service unions.

In addition, I announced my intention of drawing up a further set of pension changes arising from the commission's recommendations in respect of existing public servants. These changes, which are not part of the Bill, may include amendment of the formula used for integrating public service and social welfare pensions to make better provision for current and future staff on lower pay levels, a new single additional voluntary contribution type of scheme for the public service, and the possibility of optional early retirement on the basis of actuarially reduced benefits. It is proposed to examine the feasibility of implementing the commission's recommendation for the payment of survivors' pensions to non-spousal partners. These further changes are the subject of ongoing discussion with the public service unions.

I am sure that this outline of the recent background will have impressed on members that the Bill has its roots in a lengthy and thorough deliberative process and is a measured timely response to the challenges that lie ahead. The provisions of the Bill are in no way rushed or improvised but instead have been developed by the Government in the context of expert independent analysis and appropriate consultation with all the interested parties. I will now deal with the structure of the Bill.

Some public service pension schemes, such as the scheme for established civil servants, are provided for in primary legislation. Others, such as the pension scheme for unestablished civil servants, are provided for by administrative arrangements. However, the majority of public service pension schemes, for example the local government superannuation scheme, are provided for by means of secondary legislation. To ensure that the pension reforms for new entrants have effect across the public service on the same day, this Bill amends the relevant primary legislation and overrides the relevant secondary legislation and administrative arrangements as appropriate.

The first two sections of the Bill deal with definitions, including the definition of "new entrant". These are followed by sections which remove, raise or leave unchanged compulsory retirement ages for new entrants to the public service. The Bill then deals with the design of new superannuation arrangements that will be introduced for the Permanent Defence Force and provides for the chaplaincy service to the Permanent Defence Force. The next sections provide for the increase in the minimum age at which pension may be paid. The concluding sections are essentially technical in nature, covering matters such as removal of doubts and collective citation.

The Bill contains two Schedules. The First Schedule is a list of State bodies, mainly commercial, which do not come within the definition of public service body in this Bill, but the employees of which, in certain circumstances, will not be deemed new entrants on assuming posts in the public service. The Second Schedule lists those areas of primary legislation which the Bill is intended to amend.

To clarify some issues raised in the Seanad debate on this Bill, I point out that the first Schedule is an exclusion list and identifies those commercial State bodies that might, by virtue of the definition of "public service body" used in the Bill, be deemed to come within the ambit of its provisions. It is intended that such bodies be excluded from the terms of the Bill. As noted, however, employees of these bodies will not be deemed new entrants on entering the public service. The Second Schedule, as outlined earlier, amends those areas of primary legislation which state pension and retirement ages.

Members will acknowledge that I, as Minister for Finance, and the Government have been very proactive in securing reasonable entitlements for those who find themselves on the benches of either House.

Good man.

That is correct and the Minister is going to undo much of the good work now.

We have been concerned, in particular, that those who embark on very demanding careers as public representatives are properly and reasonably remunerated.

Members will note that the Bill's provisions on minimum pension age extend to new Members of the Oireachtas and office holders, including Ministers and Ministers of State. Although the Pension Commission's remit did not cover Members of the Oireachtas and office holders and, hence, the commission did not make recommendations regarding their pension terms, the Government nevertheless considered that they should be encompassed by the current change.

The reason for including Oireachtas Members, Ministers and other office holders within the scope of this change in minimum pension age is that we are public servants who serve the public in a most fundamental way. Unlike most public servants, however, we do not have security of tenure —this is the nature of the job. We are subject to the will of the electorate from time to time and there can be a considerable change in Oireachtas membership from one Dáil or Seanad to the next. It goes without saying that, in many cases, these changes are involuntary, but this does not change the basic position that we are public servants and, to that extent, should be part of a pension reform package.

The requirement to be re-elected from time to time means that Oireachtas Members are different from the general body of public servants. I consider it appropriate that this special factor should be taken into account in the Bill for serving or former Oireachtas Members and Ministers. Accordingly, the definition of "new entrant" in the case of Members of the Oireachtas and office holders does not include any Member of the Oireachtas or any office holder who was first elected or appointed before 1 April 2004.

This is a reasonable exception on the basis that even the most effective TD, Senator or Minister may not be re-elected and does not have the same security of tenure as other public servants. This is not a voluntary matter and, accordingly, having been once elected or appointed as an office holder before 1 April 2004 should be sufficient to take the person out of the "new entrant" category when he is elected or appointed an office holder in the future.

Persons being elected for the first time after 1 April 2004 will be subject to the "new entrant" age limits. This is entirely consistent and reasonable as individuals going forward for Dáil or Seanad election for the first time in future will be aware of the new age limits and will be in a position to take this into account in considering their circumstances.

Members may also notice that Taoisigh who are first elected to the Oireachtas after 1 April 2004 will be exempt from "new entrant" status. This exemption relates only to the pension in respect of holding the office of Taoiseach —it will not extend to the person's entitlement under the Oireachtas Members' pension scheme. The existing provisions for office holder pensions recognise the status of the post of Taoiseach as leader of the Government. It is appropriate therefore that the respect accorded to the post and to former holders of the post should be preserved.

In the Pension Commission's view, the operational requirements of the gardaí, prison officers, military personnel and fire fighters continue to warrant special treatment in terms of minimum pension age and retirement age provision for these groups. Notwithstanding this, the commission recommended certain changes for these groups, and these changes are being proposed for implementation in this Bill.

In the case of gardaí and staff in the Prison Service, the Bill sets a minimum pension age of 55 for new entrants. Currently, staff in both those groups may retire at age 50 subject to meeting certain service criteria. The Bill retains the current compulsory retirement age of 60 for new entrants to the Prison Service and provides a single compulsory retirement age of 60 for new entrant gardaí, with service in the Garda between ages 55 and 60 being subject to certain health, fitness and competence criteria. At present, gardaí up to and including the rank of inspector have a compulsory retirement age of 57 —for gardaí above that rank, the compulsory retirement age is 60.

For new entrants to the Permanent Defence Force, the commission recommended that payment of pension should be dependent on age and service, rather than on service alone, and that the earliest age at which a pension would be paid would be 50 years. The Bill legislates to implement this recommendation of minimum pension age, as well as providing for the making of an appropriate pension scheme on this basis for new entrants to the Permanent Defence Force.

The commission considered that there should be no change in the minimum pension age of 55 or the compulsory retirement age, also 55, of fire fighters, and the Bill reflects this. The commission did, however, recommend that new entrant officers in the fire brigade should have standard public service terms and, accordingly, the Bill provides for them to have a minimum pension age of 65 and no compulsory retirement age. Fire fighters are defined in the Bill as "specified fire brigade employees" and an explanation of that term is given in section 1 of the Bill.

The guiding principle adopted in the Bill is that a new entrant is a person who is appointed as a public servant, as defined in the Bill, on or after 1 April 2004. The new arrangements do not apply to public servants who are serving on 31 March 2004. A broad scope has been given to the term "serving" in the context of this Bill. The general principle is that anyone who has an employment relationship with the public service as of 31 March 2004 will not be deemed to be a new entrant.

This means that staff on paid or unpaid leave or on secondment from public service bodies on 31 March 2004 will not be regarded as new entrants on their return. A person who has received a written offer of employment prior to 1 April 2004 but has not yet taken up duty will not be regarded as a new entrant. Persons training in the Garda Training College who were admitted to training prior to 1 April 2004 will not be regarded as new entrants on completion of their training.

What about the teachers?

Staff who were employed in a temporary or seasonal capacity will not be regarded as new entrants if they resume duty in the public service within the same employment relationship. Provision has been made that any current public servant who leaves employment but subsequently returns, within a period of 26 weeks, to a public service job will not be regarded as a new entrant. The stipulated period of 26 weeks in this case reflects similar provisions in employment law generally. For purposes of mobility within the public sector, staff who are serving in the public sector on 31 March 2004 and who subsequently take up appointment in the public service will not be regarded as new entrants.

I am fully aware of the views of the public service unions. There have been discussions between officials of my Department and the unions on this issue. In drafting the legislation, I have been as sensitive as possible to the unions' concerns about the definition of "new entrant". I am confident that the definition contained in this Bill is fair, sensible and workable. The approach adopted is a balanced one, allowing a reasonable interim period within the overall context of a clear and practical definition. In this context also, account has been taken of existing part-time, temporary, seasonal and contract staff.

I remind the House of what this Bill sets out to achieve. The removal of compulsory retirement ages will heighten the necessity for strong management and performance control in the public service, and, in this regard, guidelines on these issues are in preparation for the Civil Service in the broader context of human resource modernisation in the public service. The proposed measures in this Bill will not only lighten the burden on the Exchequer over the decades to come, but they will also ensure that the pension packages on offer to potential new recruits to the public service will continue to be a very attractive feature of public service employment.

The Bill therefore offers a win-win outcome when viewed in its entirety. Although it does not make a major contribution towards fiscal soundness, by making future pension outlays manageable it is a vital component in making it possible for the State, as a good employer, to provide a reasonable income for its employees at retirement. Seen in that light, I am sure Members will conclude that the case for change is incontrovertible, and as such this Bill is the right means of delivering that change. I commend the Bill to the House.

I welcome the opportunity of addressing the House on the Public Service Superannuation (Miscellaneous Provisions) Bill 2004. Fine Gael and I recognise the need to plan for the future and examine pensions provisions and how we look after our population as it gets older. The Pensions Board was set up to do that. However, I disagree with some of its conclusions. It seems the Minister has accepted everything the Pensions Board has said and gone ahead to implement it with a few small exceptions including the 1% provision about which he talked. However, he has accepted the general principle that, by the year 2050, we will have serious problems and a serious pensions crisis. I want to make it clear that I disagree with that. Not all the researchers and people who have looked into the question agree with that pessimistic forecast.

I will give a blunt reason we must be careful in how we assess it. If one is to set up research into pensions provision in 20, 40 or 60 years, one can predict with reasonable accuracy what will happen in 20 years, with less accuracy what will happen in 30 or 40 years, but the predictions for 50 or 60 years are to a great extent a shot in the dark. Why is that? If we examine society and how it has changed so dramatically in a short period, we can see that many of those projections will depend on where one starts from. It reminds me of the countryman who was asked how one gets to Dublin and replied that he would not start from his current location.

Imagine one is starting pensions projections, taking as one's base data the early 1980s. Consider the high level of unemployment we had, our economic prospects at the time, the high number of children at school and the population of elderly people. It was very different from the situation even a short time later, for example, in 1987. In the period between 1987 and 1991, there was enormous emigration. We were sending tens of thousands of our best young people abroad. The year 1987 sticks in my mind, since 43,000 young people left this country in that year to go elsewhere and find work. They were economic migrants. If one takes that year as one's starting point, or even together with the early 1980s, what results will one get?

Then we entered the 1990s, with economic growth, a declining birth rate, an increase in the number of elderly people, and huge numbers of Irish people returning here to live. If one takes that as one's starting point, one has a totally different set of figures. I direct the Minister to a report compiled by Tony Fahy of the ESRI for what was then the Oireachtas Joint Committee on the Family. It was published in 1997. Dr. Fahy is an eminent researcher who put tremendous work into the report, and the truth of many of the predictions that he included in it in 1996 is being borne out now. He predicted that, in general terms, there would be a huge increase in the numbers employed, and that has proved correct. He also said there would be a decrease in the number of dependent children and an increase in the number of elderly people. He said that, because so many additional people were going to work, the dependency ratio would improve dramatically. He further predicted how that would improve over the next 20 to 25 years.

I will move away from that, but I want the Minister to bear that in mind. I will quote three pieces from Dr. Fahy's report. I refer to the interim report of the Joint Committee on the Family, The Elderly, The Family and the State in Ireland, published in January 1997. The final paragraph on page A.6 addresses the issue of whether we are facing a crisis and must do something about pensions. It says:

Nobody denies that population ageing will be a continuing trend in the future, but many consider that when a number of other trends are taken into account (such as growth in economic output and productivity, the fall in the child population, the fall in unemployment consequent on a stable or shrinking labour force), the consequences of population ageing appear much less threatening.

On page A.8, under the heading "Distinctiveness of the Irish case", Dr. Fahy says:

However, there are a number of grounds for arguing that anxiety and pessimism along these lines are not warranted, at least for the foreseeable future.

He was commenting on people saying that we face a major problem. I quote further from page A.9, whose first paragraph reads:

However, recovery from past adverse circumstances, including population decline, has been a feature of the past thirty years in Ireland and is continuing with new vigour in the 1990s. This recovery is likely to yield positive results for the elderly population, both in the short-term and the long-term.

The Minister has heard one view from the Pensions Board, and, being the independent man that he is, perhaps he should examine other available research and material before he swallows, hook, line and sinker what has been put to him. We on this side of the House recognise that it is important to examine developments relevant to pensions. We recognise the need for flexibility. What one proposes for one group may not suit another. One must be able to change course in one's career. I am one of those who were very lucky in that, aged approximately 40, I got an opportunity to change course and career. I am enjoying it —thanks be to God —and look forward to the day when I can put my feet up. In that regard, it is very important that there be flexibility.

The very first line of the explanatory memorandum says:

The purpose of this Bill is to give effect to the age related pension reforms for the public service announced in Budget 2004.

That is not correct. I will read from page B.16 of the budget document of December 2003. The third part of that document says that "the minimum pension age will be increased to 65 for members of the Oireachtas and Office Holders elected or appointed on or after 1 April 2004". I put it to the Minister that this Bill contains a change to what was announced on budget day in that regard. He changed it, and I know why; I agree with the change. He was approached by many people in his and other parties who pointed out that we Members of the House, if ever lucky enough to be appointed Ministers or Ministers of State, would not get a pension accruing from that until 65. I am thankful that, when the Minister introduced the legislation, he had changed it. I must express an interest here. It might be interpreted by journalists or others that I am feathering my own nest and looking after myself, but I am not. Nothing in this Bill affects me at all, either as a politician or in regard to my former career as a teacher. It is entirely for new entrants. We may all talk about it here, since it will not affect us, and it is important that we say so.

It is also important to point out that the changes proposed by the Minister, especially with regard to politicians, are far-reaching. He should reconsider them. The pension arrangements up to 1992 for Members of the House were that Members could get a pension on retiring if they had eight years of service. In 1992 there was a change in the pension provisions when the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act 1992 was passed. Members had the option of remaining in the old scheme or changing to the new scheme. The new scheme was much better than the old scheme for many people and most Members opted for it. Some younger Members, however, remained in the old scheme.

The new scheme provided that pensions would not be paid to Oireachtas Members until they had reached the age of 50 years. There was some murmuring about it at the time so some of the younger Members joined the old scheme. The age of 50 would be considered fair enough where Members had a number of years' service. What the Minister is doing now will not apply to us but it will apply to future Members. We speak for them and it would be negligent not to do so. It is unlikely that it will affect my family. I do not believe they will become a political dynasty so I cannot be accused of having that consideration in mind. However, many Members of the House will probably start political dynasties and this will affect their families in future. The pension scheme will change for new entrants.

The change is dramatic. Take the example of some younger Members of the House such as Deputy English, who is 25 years of age, Deputy Peter Power or Deputy Andrews. I hope they do not mind me using their names in this context. They are young men and are in their first term as Members. If new Members in the same age group are elected in the next general election, they might work as Members for 20 years but, if they leave or are not re-elected by the public, they might have to wait another 20 years until they draw their pension. Is that fair?

It is not right.

The Minister said earlier that Members are public servants and, as such, must face up to their responsibilities and so forth. However, we are special public servants, if one can use that term. We are special because our work rate and efforts are reviewed, on average, every four years. Every four years we return to the interview board and it puts us through the wringer. If one is not doing one's bit, it is a case of "Goodnight, Irene". Does that happen to other public servants? Does it happen to the gardaí, whose retirement age is also being changed, Defence Forces personnel or teachers? It does not.

They are rewarded.

They are in a different situation and do not have the same insecurity. Does the Minister know the average length of time served by Oireachtas Members? I asked that question of some civil servants yesterday and I was not surprised to discover that they did not know. The figure for average length of service by Members of this House is 11.4 years.

It is dropping.

If one removes from the calculation some of the senior citizens who have been Members for a long time, such as the Ceann Comhairle —fair play to him, the figure is nearer to 9.5 years. This must be taken into account when considering pension provisions for Members of the House.

What has the Minister done? I must acknowledge, as I have done previously, that the Minister has been good to Members.

The best.

Yes. I have previously told the funny story about a certain Deputy from this side of the House who said, as the election approached, that he did not mind who won as long as Deputy McCreevy was Minister for Finance afterwards.

That was unanimous.

He believed the Minister had looked after the Members. Now, however, the Minister will undo much of that good. Changing the pension terms by 15 years for future Members of the House is too much. It is being changed from 50 to 65 years of age. The Minister is changing the retirement age for gardaí from 50 to 55 years. I agree with that and I told the Joint Committee on Justice, Equality, Defence and Women's Rights that the Garda retirement age should be increased to 57 years. The change in that case is five years. The Minister is also changing the retirement age for prison officers by five years.

An interesting situation will arise in this area and it is not dealt with in the legislation. The Minister will be aware that the first 20 years of service by gardaí count as single years for the pension. The next ten years, from 20 to 30, are counted as double years. A garda who serves for 30 years, therefore, is deemed to have served 40 years for pension purposes. That is not covered in this legislation. What will the Minister do to resolve this? Will a garda with 35 years' service receive the same pension as a garda with 30 years' service? Will the Minister change the structure of the pension scheme?

The same applies to prison officers. They can retire after the same amount of time and in the same manner. What about psychiatric nurses? The Minister did not refer to them. Psychiatric nurses can also retire after 30 years of service and, I understand, a number of the later years of service are also counted as double years. Why are they omitted by the Minister? If he is to take the broad brush approach, that everybody must be brought to the same standard, why is he ignoring some sections of the public service and lashing others, such as the politicians?

Then there are the arrangements for the teachers. Again, I must proclaim a disinterest, as it were, in that I was a teacher for a number of years before, thankfully, getting a career break at the age of 40. I am stating that now in case I am accused of seeking to feather my nest. Any changes in the pension arrangements for teachers will only affect new entrants. None of my children is in the teaching profession so I cannot be accused of looking after their interests. The Minister's proposals for the teaching profession, to change the retirement age from 55 to 65 years, are unacceptable.

I do not know if the Minister has been in a classroom recently but I occasionally return to the school in which I taught. I only left teaching 15 years ago but the atmosphere in the schools now is different from then. The job of teaching has become much more difficult. There are extreme difficulties in some classrooms. Years ago there were ways of dealing with those difficulties but, unfortunately, that has changed. The Minister is forcing teachers to stay working until they are 65 years of age.

Can the Minister imagine a 64 year old man or woman in an infant class of 35 pupils? Those of us with families know how hard it is to cope with three or four children at a time and can only imagine what it is like for the older teacher in that situation. At the other end of the scale, can he imagine the same teacher going in to teach honours chemistry or physical education? The Minister is not being realistic. Some people would be able to cope and would be willing to go to the age of 70 if allowed, and it is good that the Minister will allow that. Those people love teaching and are able to continue. However, what about the teachers who are burned out or cannot cope? What about the teachers who would do the State a service by not going into class at all?

As a teacher, I have come across teachers who would be better off finding another job and getting out of the classroom. However, no provisions exist for them so what can they do except stay? If they walk away the Department waves goodbye to them and they have nothing until they can claim their pension. The Department now says that it will wave goodbye to them unless they stay until they are 65 years of age and only then will they get their pension.

What about the proviso in the public service for a full pension after 40 years' service? That proviso remains. Most primary school teachers enter the classroom at approximately 21 or 22 years of age and by the time they reach 62 years of age have 40 years' service. Now they will be told that they must work another three years to ensure they get their pension. Is that fair? It is not. It is an over-the-top reaction by the Minister to the Pensions Board and he should do something about it.

I will help the Minister by suggesting a way for him to alleviate the difficulties of some of the people mentioned in the Bill. The pension age for politicians is to change by 15 years, teachers by ten years and members of the Garda and the Army by five years. I suggest he makes an across-the-board change of five years for everybody. That would be fair as he would not be picking out a particular sector of the community, pointing the finger at a particular group or making it unduly difficult for any particular group to continue working for a reasonable length of time.

I talked to people on all sides of the House and found most people turned off by the Minister's proposals. They feel the change is unnecessary, unwarranted and an attack on certain professions, including the Minister's. If he talked to backbenchers, front benchers or even some Ministers, he would discover much support for changing what he is doing.

In the teaching profession the proposal is seen as an attack on teachers. They see themselves as being singled out for the Minister's ire and cannot understand why. It is strange that the Minister, or somebody on his behalf, was in negotiation with teachers until just before Christmas but although the negotiations broke down the Minister has ploughed ahead. Is it not strange that there were no negotiations with the politicians?

We cannot go on strike. We cannot get the red or blue flu or anything.

The matter was never mentioned at the Members' services committee, nor discussed in advance, and the first we saw of it was the Minister's announcement on budget day. As I pointed out earlier, he rowed back on part of his budget day announcement, probably in response to pressure from some of his colleagues. Perhaps the Minister will comment on that later or perhaps it will be part of his next best-seller about which he often talks.

The Minister proposes the change in pension age for all new entrants but he has declared that trainee gardaí will not be deemed new entrants. Why then are trainee teachers deemed new entrants? Are they different from trainee gardaí in Templemore or why are they treated differently? They are in college training for their chosen career in the same manner as a trainee garda in Templemore. Why is the Minister changing the goalposts for them and treating them differently from trainee gardaí? I do not know how he can justify it.

Again, I offer help to the Minister. The solution is to push out the goalposts and cover all the students in college, thereby getting rid of the anomaly which they would have to carry round their necks for the rest of their lives. When the time comes for the teachers currently in training to collect their pension, they will be angry that their next door neighbour who is a garda and who was in Templemore at the same time as they were in teacher training college can retire earlier because of what the Minister has done in this legislation. Teachers will be hung out to dry because of this unfair legislation. The Minister has the opportunity to do something about it and I hope he will. He should bring forward a suitable amendment to change the proposal in this regard.

Politicians of this House have a good record of public service. Over the years many career politicians gave their lives working in the House. I respect those who have managed to get elected, who have gone before their peers and managed to get between 8,000 and 11,000 votes. They deserve respect. We are now changing the goalposts. We need people of ability who are prepared to give good public service. However, young able people who might be tempted to go into politics will now stand back and ask whether they should set aside their chosen career, give up their business interests or career and go into politics and then find themselves on the scrap heap and have to go back to work some place else to feed their hungry family because the Minister has changed pension conditions.

The Minister can make a change and he should consider seriously the suggestion I made regarding a change of five years. I live in hope that he will bring forward these amendments on Committee Stage.

Only time will tell whether the Minister's announcement in the budget concerning changes in public service pensions was one of his most significant decisions as Minister or a ball of smoke which will never be sustained. It is difficult to say which. At this point it is difficult to make any accurate forecast about the rate of pension numbers or what the desirable rates of compensation and so on should be.

When Deputy McCreevy was Minister for Social Welfare some 12 years ago, figures were bandied about on the impending explosion of costs in regard to certain areas. At that time there was a fear that classrooms would soon be empty of schoolchildren and concern existed about what to do with the surplus of teachers. Thankfully the demographic forecasts proved to be completely inaccurate.

While the work of the Pensions Board is necessary, I have not yet reached a conclusion on the quality of its performance. It has promoted the pensions industry, which is charging a fair old whack for as yet unproven services to people who are anxious to make additional provision for their retirement, which they should be.

The various tax breaks available to pension scheme arrangements are costing the Exchequer a fortune in tax foregone. The impetus for many people is not only due to general doom and gloom pensions talk, but also the lucrative and attractive tax breaks the Minister has provided. The associated costs are significant, but there has been little cost benefit analysis of the actual value they will have in the long run.

The announcement in the Budget Statement on the restrictions in pension entitlements for certain categories of worker struck the wrong note in the context of our society's move to a high-wage, high-skill economy. Such an economy also implies good pension entitlements. Most people who choose to work in the service areas of the public service such as teaching and nursing tend not to be high-income earners. Even a school principal who does a tough job earns a relatively modest salary in view of the level of responsibility involved compared to the proprietor of a small to medium-sized business. People who go into what used to be called the caring professions still provide a great deal of care and attention in their jobs for a much smaller reward than the comparative financial reward they would get in the financial services sector. In a sense that is the gain for the Minister for Finance, but it is an issue we need to address. In the long run, young people will get a message that if one chooses to be a doctor, teacher or nurse one had better like those jobs because for the most part one will not be as well paid, especially those working in the public service, as one's classmates who opted for a job in the private sector. People make those decisions all the time.

I am not sure why the Minister should choose to worsen the conditions, except perhaps as a mark of the Government's lack of meas for the public service, or the notion of the public service not being entirely determined by monetary reward in regard to a chosen occupation or career. It is foolish to decide to unilaterally disimprove significant conditions of service for people on the essential caring side of the public service and not to offer them an incentivised quid pro quo for what they give up. This may be due to a failure of imagination on the part of the Minister. Ideologically it is of a piece with what we have become used to from the Government, the relentlessly downward drive of public service pay and conditions, especially on the caring side. These people who work, effectively, in a vocational capacity rather than simply being employees, are expected to accept this without any objections. I pointed out to the Minister and other ministerial colleagues of his that the legislation should come with a toxic legislation warning. The purpose of the Bill is to give effect to the age-related pension reforms.

In future the minimum age for receiving a pension will generally be 65 with no upper limit, which we welcome. I heard a journalist refer to the notion of supercops at 80 patrolling the streets of the inner city and coping with the drugs menace. It was also said that we will have nonagenarian doctors zipping around to nursing homes. This is a great vision of the future. Let us hope we will even have some octogenarian Deputies —or perhaps not, that may be too much.

The Bill refers to superannuation benefits, pensions, gratuities and other allowances payable on resignation, retirement, discharge or death or in respect of a member or former member of a public service pension scheme. A public service pension scheme, in turn, but subject to certain scheduled exclusions, means an occupational pension scheme or pension arrangement for any part of the public service which is provided for under the Superannuation Acts 1834 to 1963 and other similar enactments. The Superannuation Acts are the governing legislation for most public service pensions. There is a significant number of these Acts as well as implementing regulations.

The Superannuation and Pensions Act 1976 was described as an Act to amend or repeal certain provisions of the Superannuation Acts 1834 to 1963. Section 3 of the 1976 Act provides that the Minister may by regulation provide for the cesser of, or otherwise amend, any enactments relating to the superannuation of civil servants.

The Minister can also provide by regulation for the cesser of, or otherwise amend, any provision in any statute or statutory instrument where it appears to him that the provision is inconsistent with, or has become unnecessary or requires to be adapted, modified or otherwise amended in consequence of, any provision of his regulations. That must be where the Minister got his budget authorisation from.

The Civil Service Superannuation Regulations 1980 set out the bulk of the amendments purportedly made to primary legislation in the exercise of this power to amend statutes by ministerial order. Unfortunately we have too often been in this territory before. However, having regard to the judgments in the recent Carrickmines case and the case which dealt with the Aliens Act, this power to amend primary legislation by order is challengeable as unconstitutional. The Minister is aware of this, as are his officials, but he has decided to take a flyer on this.

The legislation vests power in a Minister to amend a statute by order. Even if that is permissible —and the recent court decisions implies that the Judiciary no longer smile on this idea —the exercise of the power is not limited by references to guiding principles and policies set out in the parent Act. Effectively, the Minister is at large and is able to act as a legislature, with power to override Acts of the Oireachtas. The problem with this Bill is not that it repeats the error in the cases to which I have referred and in other recent cases but that the Minister has decided to ignore the issue. Sooner or later, the problem with the 1976 Act and the 1980 regulations will be stumbled upon and someone will litigate and have the rules struck down.

I do not know if the Minister has had an opportunity to discuss this in any detail with the Office of the Attorney General, but he would be well advised to do so. It is wrong to come into the House yet again and put Members to the trouble, in terms of time and intellectual effort, of developing a response to his legislation when the legal advice is that it is flawed to such an extent that it is more than likely to be struck down by the courts at the first opportunity.

The Minister is a great one for talking about value for money in the public service. It is time that the Government treated the Opposition with a little respect and gave us a proper opportunity to address fundamental issues regarding the likely unconstitutionality of proposed legislation. As I stated, the reason we have no idea whether all this stuff is a ball of smoke is because there is no certainty and because the Minister has not addressed any questions about his legal advice from the Attorney General or other sources on how this Bill will stand up. I am sure the Minister's response will be that it will be the job of whoever is Minister for Finance at the time to address the problem, should he or she so wish. This is not good enough.

The minor difficulties associated with the State's temporary loss of power to have the Garda ask non-nationals for their papers will be insignificant in comparison with the State's loss of the power to pay pensions to its retired civil servants in accordance with their pension schemes. Will the Minister outline in some detail his legal advice on the constitutionality of this legislation? Deputy Paul McGrath and the Ceann Comhairle will be thankful to hear that the pensions of Oireachtas Members fall under separate legislation. While others may be out on their ear, former Members of the Oireachtas will not.

We have a long way to go before we look for our pensions.

A Bill that fails to deal with such a major structural flaw in the public service superannuation scheme should be withdrawn and rewritten.

I have a number of questions on the Minister's speech because the provisions in the Bill are obviously quite technical. He spoke about the definition of the new entrant. I do not fully understand his logic in this regard but maybe he will send me a note on it or talk about it on Committee Stage. He stated that staff on paid or unpaid leave or on secondment from the public service bodies on 31 March will not be regarded as new entrants on their return. This is good news because it is contrary to what people had understood. However, later in his speech, the Minister stated that provision has also been made that any current public servant who leaves employment but subsequently returns to a public service job within a period of 26 weeks, which is a very short period, will not be regarded as a new entrant. Can we imply from this statement that, if the leave-taking period is more than 26 weeks, one's permanent employment status will be compromised?

A career break or study break.

Yes. The Minister will recall that I spent three years on a career break with my husband working on an Irish development project in Africa in the 1980s. Many Members and their children have done so. The ability to take such leave has been of much benefit to organisations such as Concern and Trócaire which are able to benefit from the skills of those on career breaks, especially those in local government, such as engineers, whose skills are important in times of disaster. When I took my career break, I lost my pension entitlements but did so with my eyes wide open. During the term of the Fianna Fáil-Labour Government, this anomaly was corrected, partly at my request, to copperfasten the entitlements of people who took career breaks. All sorts of mechanisms were created to pay people's pension contributions while they were away, either through their original Department, local government body or the Department of Foreign Affairs and the Irish Aid programme.

I do not believe the Minister has thought through the implications of what he has said. As a country, we did something simple to enable something we are good at, namely, the transfer of certain kinds of technology, medicine and engineering skills to the Third World for periods of three to five years. This is all up-ended by the Bill. Will the Minister address this on Committee Stage?

I believe the Minister wanted to encourage the principle of going on a career break because he wanted to encourage a more flexible public service. I believe he wanted to offer a different career path to those who began teaching in their early 20s, for example, and found that they did not like the profession by the time they reached their 30s. The ultimate cost of closing down options will be more expensive than that of having a more flexible approach. Therefore, this legislation is to be regretted.

I hesitate to mention the word "women" to the Minister any more because I have done so frequently in recent times. It is perhaps no accident that some of the careers most affected by the changes being introduced are dominated by women. Those affected include teachers, some doctors, psychiatric nurses and, to a lesser extent, gardaí. The majority of nurses, doctors and teachers are women. There is a problem of gender balance in that we lack male participation in these professions rather than female participation. Is it because sectors of employment with significant numbers of women are regarded as a softer touch in the sense that women may be less militant and because of their desire to have a balance between work and family life?

Women in their mid-20s often consider stepping down from work for some years to have a family. We need to ensure young people can afford to have children and bring them up in a reasonable attractive family environment, yet every provision in the Bill is retrogressive in this regard. One would probably need to take time out to have three or more children, but a mother or caring parent could not do so unless she or he was quite wealthy because she or he could not afford the child care costs. Is the Minister saying a woman in one of those professions must choose between having one child and bearing the cost of stepping out of her profession for a time and losing entitlements if she has two or three children? That is the wrong approach. I hope in the detailed debate on this Bill the Minister will share his thoughts on how women with families in the next decades will participate in the workforce, as we want them to, and have a reasonable amount of time to spend with their families.

The Minister's decision to treat people in training for some jobs differently from others is regrettable. The most obvious example is the difference between people in training for the medical, nursing and teaching professions who will not qualify as new entrants even if they are in training. Someone training to be a doctor may train for five or six years, someone training to be a teacher will train for four years and it will not be taken into account. However, a trainee in the Garda college will have the training period taken into account as part of the new entrants period. Those training as teachers, doctors and nurses will be consciously discriminated against, as opposed to gardaí. Why? I agree with Deputy McGrath that this will cause the most bitter resentment. In families of five or six children, each entering a different job, the one training to be a garda will have a favoured arrangement lasting into old age as a consequence of the Minister's decision to privilege the gardaí over everyone else.

We are often keen to attract older entrants to teaching particularly in disadvantaged areas because they may have other valuable life experiences. For instance, someone with experience of work in theatre may turn to teaching children with disabilities. By the time that person has travelled for a time, done a few courses, tried various jobs, he or she might be 25 or 28 years old when starting to teach. Many applicants for graduate entrance into primary teaching are 24 or 25. We are delighted they are entering the profession yet they will suffer discrimination. All agree these people are necessary yet the Minister has not offered them any additional scheme by which we could boost their contributions. The teaching unions and the INTO have looked for something similar to the scheme for public employees additional retirement savings but despite all the consultations there is no sign of this.

Although the teaching and other professions have enhanced early retirement provisions for someone no longer able to cope with the job these are not widely adopted. Could the Minister tell the Dáil how many members of the Garda force, and the teaching and nursing professions take part in the enhanced early retirement schemes, either through illness or an incapacity to perform a job they once did? I am not sure whether many doctors avail of this option. In a large office, corporation or civil service department it can be easy to move someone for whom the job has become too tough into a less stressful job. That is not possible in teaching or psychiatric nursing because these are one-to-one jobs involving an intimate service delivery. There is no room in such a job for someone who cannot function. It disturbs the team, the patients in the ward or the children in the classroom. Recent efforts through the partnership process to provide schemes and means for dealing with such people have been quite helpful and expensive but the cost to the children of having a non-functioning teacher, for example in a primary school, where a class might be unlucky enough to have such a teacher from second class through to fifth class, is incalculable. Although schools and good principals try to make up for it, there is little they can do to fully compensate those children. Downgrading those schemes or limiting their capacity is wrong. I hope on Committee Stage we will receive detailed information about this.

It is amusing that the Minister for Education and Science, who gave us electronic voting as one of his bright ideas told the teachers unions this week that it was time for him to stop going to their conferences. He seems unable to talk to the teachers' unions about these extremely sensitive changes and with regard to whether schools function well.

I received very detailed submissions from the Irish Medical Organisation about the impact of this on doctors who train abroad and therefore enter service in Irish hospitals later than they might otherwise do. The same applies to foreign doctors working in Ireland who, if they return to their home countries, reclaim their superannuation and use it as a form of saving. The Bill seems to have disastrous consequences for those people. I would like the Minister to comment in detail on those implications.

I wish to share time with Deputies Connolly, Boyle and Ó Caoláin.

Is that agreed? Agreed.

There are good and bad points in this legislation, the main thrust of which addresses the future financial burden on the State. Many years ago 65 was chosen as the retirement age as that was the average age at which people died. Now people live longer. On average a woman lives for 17 years beyond the retirement age and a man lives for 13 years beyond the retirement age. This longevity arises from better health care and nutrition. One of the good points about the Bill is that it addresses ageism in Irish society and eliminates compulsory retirement in the vast majority of cases. It has been statistically proven that those who work longer live longer. Those who retire early die sooner. There are benefits to staying longer in the workforce, if possible.

The Minister spoke about non-spousal partners being able to draw the pension of the civil or public servant involved, which is a progressive move. We have maintained the restrictions on members of the Defence Forces and the fire brigade because of the very physical nature of their jobs. It is good that retirement age is open ended for members of the Garda Síochána. Much operational and investigative expertise is lost from the Garda Síochána when members retire too early.

This legislation looks way into the future —some 30 years down the road. In 30 years I too will be 65. I see no reason I should not be able to work as much as I do today. This legislation covers that eventuality to a degree. What could go wrong? If the issue of teacher training were applied to doctors, it would take six years in medical school and ten years postgraduate training. On average, 16 years of a doctor's life would be taken up before he or she could become a fully pensionable member of the health care system. This is a significant length of time and explains why the IMO is concerned about the removal of the ten-year rule.

Some doctors in the GMS have contracts which oblige them to work up to the age of 70. This is not new and it applied 30 years ago. Why should this not be the case? I know of a doctor in County Wexford in his 80s who still does night calls. While he is the exception to the rule, he should be allowed to continue as long as he is able. However, what of those who are not able to work? This is very important for teachers, gardaí and anybody in the Civil Service. Some people burn out, get sick or are unable to cope physically or mentally with the rigours of their jobs. We must consider these people and not shut them out because we are looking at the bigger picture.

Most other issues have been addressed such as transfers within the Civil Service without loss of entitlements. Career breaks are very important. For families with both parents working, we already seem to be making it difficult for the second individual in the household to work. As my wife also works I see the burdens of trying to keep two jobs going with a young family.

While at one level membership of the Oireachtas is just a job, it is a privilege bestowed on us by the people. We should not have greater entitlements than those we represent. If everybody else is expected to work to 65, I do not see why we should be able to draw down pensions earlier than that. As Members of the Oireachtas we need to remember how important our role is. The Government must recognise the importance of Opposition Members of the House. All Members should refrain from making statements that negatively impact on our role. I remember one comment being made in this House to the effect that we somehow urinate on the public. I completely disagree with such remarks.

Time restrains me from commenting on the weaknesses in this Bill. We have only a brief opportunity to outline them. These should be considered by the Government and should be discussed in detail on Committee Stage.

Last September members of the Society of Actuaries in Ireland put on their thinking caps and recommended to a conference on ageing that the retirement age for new entrants to the public service should be raised to 75 by 2050. They suggested it should be phased in over 46 years with retirement age rising to 70 by 2025 and hitting 75 by 2050. The object of this exercise was to cut the cost of State pensions, which the society projected would double by 2050. So what? No reference was made to inflation, which would easily treble or quadruple in that time leaving public service pensioners as the poor relations. There was no reference to the Bible's projected lifespan of three score years and ten. The bulk of public service workers will have passed on to their rewards before their pensions become due. In reality, actuaries are bookies or the tic tac people of the insurance industry. They work out the pension plans and calculate the risk odds in reaching their projections and conclusions about our lifespan. They could give Paddy Power or Barney Curley a good run for their money.

One of the more colourful premises is in devising pension plans for teachers. A teacher who enters the profession at 20 and who reaches retirement at 65 will on average live for a further two years and eight months. This is the finest argument possible for early retirement for teachers. In September, just two months before the budget, the Minister for Social and Family Affairs vigorously and vehemently denied the Government had any intention of raising the retirement age. I also recall the Tánaiste acknowledging the right of people to have time after their working lives to enjoy themselves.

I also agree with her in saying that people should only work after retirement age on the basis of free choice. What about those who reach burnout around that stage? While employers have said they would live with it for a few years, this problem will become exacerbated in years to come. However, Lord McCreevy of Punchestown started with characteristic alacrity on his cost saving measure to shore up his 2004 budget and has embarked on the first stage of the actuaries' 75-year pension timescale by raising the retirement age to 65. This amounts to euthanasia by stealth with the Minister forcing public servants to surrender pensions back to the State.

Public service pensions used to be earned within a 40-year period. This has now been extended to 45 years. Will any benefits go with the additional years one must work in the public service? Pension contributions are made up of money that workers have earned. These additional years will mean workers having to pay an extra 5.5% superannuation, between 2% and 6% PRSI, 1.5% widow's and orphans' contribution and 1% employment, which is about 10% extra. Workers get no benefit for working these additional years. A worker should be able to get, for example, fifty eightieths of a pension after this period of time or these years should be regarded as a doubling of years of service after that point.

Will pension entitlement now be based on 45 years service? Deputy Burton mentioned the psychiatric nursing profession. Those nurses earned their pension after 30 years of service. They will now have to work an extra 50% or 45 years in the service. This is unbelievable and grossly unfair as it targets one section of the service which will take a particularly savage blow under this scheme. The Government will save on the double. It will save on the pensions it will not have to pay and it will take in additional revenue. This additional benefit should be considered.

Public service staff who have contributed to superannuation schemes and PRSI should be entitled to a legitimate expectation of an adequate pension in time to enjoy it. They also deserve to have the expectation of a reasonable number of retirement years in which to enjoy the fruits of their labour. A psychiatric nurse, for example, working in the service has at 65 years of age gone through a stressful life of one-to-one counselling. As Deputy Burton stated earlier, that is stressful and burnout does occur. There is no evidence in the Bill of any awareness of that. Deputy Paul McGrath said, and I agree, that the idea of a 65 year old teacher doing cartwheels or vaulting over a horse in a school gymnasium defies common sense. This legislation is designed in a way that means many people can expect to work into their latter years, paying into a pension fund from which they will never collect.

I note that the Minister for Finance has retired early from the debate. I assume he still has the opportunity and it is his prerogative. However, it is a neat ironic touch to what we are discussing here.

The announcement by the Minister during his budget speech on the change in the pensionable age struck me on the day as something that might cause political difficulties in the future. The Minister covered himself by making the change applicable only to new entrants after 1 April 2004. I would argue that it is always unwise to suggest that any legislation come into operation on All Fools Day. The Minister seems to be putting in place a first, second and third division for the public service, which is obviously causing discontent among particular professions, and we have a responsibility to address that issue within this debate.

The pensions time bomb referred to in the Minister's opening contribution is a matter for debate. We are experiencing an increase in the birth rate. We are now a country of net migration. The population of the country has increased by 20% over a 40 year period. What we are really talking about is the dependency ratio between those in employment and those in need of pension provision and other forms of social support. In this context, it is ironic that the Minister for Social and Family Affairs is suggesting measures to discourage people from coming into this country when we need people coming in to improve our dependency ratio. We need younger people who are likely to form families and increase the number of young people.

What strikes me is the contradictory nature of Government policy where, on the one hand, it speaks of the need to protect against risks in terms of future pension payments while, at the same time, closes doors that would give us the means of increasing, through economic growth and increased economic activity, the population that would help us with our dependency ratio in future. This is being done on the same day that the Minister for Foreign Affairs is in Washington, cap in hand, saying that Irish illegal immigrants should be treated compassionately and with pragmatism by the US Government. Three different sets of signals are being sent out by the same Government on the same day. I do not expect consistency from this Government and the futility of expecting such is something that rings loudly from the Government side of the House. These are the messages that come from three members of the Cabinet, and the public is meant to react to them in some way that satisfies their curiosity.

The national pensions reserve fund has not earned one penny in the three years since it was established. It has lost money since it was created. If that continues, we will have no more money than we would have had by investing in other sources. The public service component of pensions will rise from 1.4% to 2.5% of gross national produce, GNP, over the period to which the Minister refers. In terms of the overall pension provision, that is minuscule. All these pieces of information are at cross-purposes with each other. It suggests that the Government is not very good at acquiring information that can be properly distributed. We have no national actuarial service. There are two actuaries working within the Civil Service, one within the Department of Finance and one within the Department of Enterprise, Trade and Employment. No full-time actuary works with the Pensions Board or the Department of Social and Family Affairs which has a direct responsibility for pension provision for many citizens. This is the climate in which we put intelligence together on the need for future pension provision and try to put legislation together to meet those needs. It is not satisfactory and the Minister has not provided a satisfactory Bill.

I also share the concern of Deputy Burton that including a clause providing that aspects of this legislation can be amended by ministerial order in the future is foolish. It will turn out to be unconstitutional in light of the Carrickmines and Aliens Act decisions. We should not enact legislation that will be subsequently struck down as unconstitutional.

The most contentious aspect of the Bill is that it puts in place a first, second and third division of public service pension entitlement, despite the commission's recommendation on the need to have a standardised and raised pensionable age for those within the public service. It subsequently recognised that some public servants, for example, the Garda, the Permanent Defence Force and firefighters, should be treated differently. Their pensionable age will rise but it will still be below the new average. Teachers and psychiatric nurses are being treated differently. Their pensionable age is to be raised by the full amount.

Members of the Oireachtas are to have their pensionable age raised as well. Deputy Paul McGrath said that is probably most unfair. I have no difficulty with it. The Minister seems to be thinking of many of us on this side of the House in that those of us who are elected and subsequently attain ministerial office are somehow covered by this Bill. In future, the ministerial aspect of a pension in the case of someone who has been elected but has yet to be appointed a Minister is covered by this Bill. It is unwise for legislators to pass laws from which they benefit directly. There is also a clause providing that future Taoisigh who have yet to be elected to this House will be exempt in terms of their future pension provisions. Those of us who are elected by and serve the public should not confer a status upon ourselves that we have not gained through other forms of public dialogue and debate. It is a flaw in this legislation and one I hope can be corrected by way of amendment on Committee Stage.

A more serious aspect of this legislation is that some professions within the public service, such as teaching and psychiatric nursing, carry high levels of stress, both physical and psychological, and this is not recognised in this legislation. The Minister stated that public service unions were approached on the formulation of the Bill and on the findings of the commission. It is unsatisfactory that the degree of consultation extended only to what was going to happen. The public service unions have expressed disquiet about what is proposed in this Bill. It does not say much for the current state of the social partnership process that legislation of this nature can be introduced in this way. Much of the communication that I, as an Opposition spokesperson, receive from public service unions is an expression of disquiet not only regarding this legislation but regarding the effect legislation of this nature is having on the partnership process.

The Bill is obviously technical legislation providing for some of the changes to be put in place. However, the principles involved are quite simple. To go back to the report of the Society of Actuaries, I would not take it on the level that other Members have taken it. It was strictly a mathematical exercise. All other things being equal, and not taking account of the birth rate or migration patterns, our current dependency ratio and existing trends indicate that if people retire at 70 or 75, the State would save a great deal of money. I do not believe anyone in the House would agree with such an approach.

The reality is that we need to achieve a balance in terms of work and pension provisions. There are professions which have a short shelf life, which have a high burn-out factor and from which people need to retire earlier than the standard retirement age. On the other hand, however, there are professions to which people can continue to contribute on a voluntary basis beyond the ages of 60 or 65. There are many people with experience and ability who should be allowed to do so. They could possibly be facilitated through the tax system and other aspects of the welfare system.

The Bill represents a missed opportunity. It will ignite a debate on the wrong level about what needs to be taken into account in this area.

Providing for pensions in the long term is a hugely important matter and it has been set out as a key Government priority. That is only right. The State has a direct responsibility for public service pensions and the purpose of this Bill is to significantly alter pension arrangements for new entrants to the public service after 1 April 2004. What an ironic choice of date.

The Minister's attempts to justify these far-reaching changes on the basis of savings cannot alter the reality that workers will enter the public service after 1 April on much less favourable terms than would have been the case if they joined on 31 March. That is an inescapable fact. The pensionable age is being increased from 60 to 65. This was a benefit that was hard-won by public servants in the past through tough negotiation, pressing their case and improving their conditions of employment. It is now being taken away by virtue of this legislation. With it may also be taken many potential recruits to the public service. This is something which must give rise to real concern for everyone.

On previous occasions I raised the disgracefully poor levels of pay that currently obtain for the lower grades in the public service. As Members of the Oireachtas, we are all conscious of the disgracefully low levels of remuneration paid to our parliamentary assistants which are pari passu with those of all other public servants. Their salaries are outrageously low. New entrants must know that not only will they start off at this very low base but they will no longer be in a position to retire at 60. They will be required to work until they are 65 years of age to qualify for full pension.

This new disincentive is not confined to the lower grades. It will also impact on the public service in general. It will be a contributory factor to making the option of joining the Civil Service at any particular point in one's career a less attractive option. That is unfortunate, particularly at a time when the public service often loses out to the private sector in terms of recruiting the most talented staff.

The changes set out in the Bill were announced by the Minister for Finance in Budget 2004. He also made an announcement which did not belong in the budget but which concerned public servants. I refer here to the Minister's unveiling of his decentralisation proposals. The Minister of State will note that I did not use the phrase "decentralisation plan" because we have since learned how little research, consultation and planning were invested in this matter. The botched and highly politicised handling of decentralisation by the Minister and the Government have adversely affected morale within the public service and the Civil Service. The Bill adds to that and it does not augur well for the Civil Service of the future that we have been given a further indication of the lack of consideration and regard the Government has for those involved in the public service.

Many questions have been raised about the new methods of recruitment in the Public Service Management (Recruitment and Appointments) Bill. Such methods are a cause for concern, not only to those involved in the sector but to everyone who depends on them for many of the services they receive.

The matters I have outlined show that we should be wary of the Government's approach to the public service. The Minister for Finance took the unusual step of writing to us in advance of taking Second Stage of the Bill before us and lobbying against the proposals put forward by those organisations which represent teachers, particularly the INTO. His reassurances in the text of the letter and the associated documentation have done nothing to address the real concerns raised not only by the INTO but by the public services committee of the Irish Congress of Trade Unions. As the Minister admits in his briefing, a working group was set up under the Sustaining Progress partnership process but it failed to reach agreement. In other words, the Minister does not have the trade union movement on board for these far-reaching changes.

I turn now to the specific concerns raised by the unions, many of which relate to people who have a break in service and who will return to the public service on or after 1 April when they will be treated as new entrants. These individuals will then lose the right or entitlement that they may perhaps have won in the earlier part of their career to retire at the age of 60. The unions are seeking a more flexible approach and I agree with them in that regard. Compromises can be made. Union members have indicated a willingness to make such compromises and it is up to the Minister to show such a willingness on Committee Stage.

A fairer approach would be to give people currently out of service a six-month window of opportunity to return to service. I agree with the public services committee of congress that public servants currently out of service who return to the public service after 1 April next should not be regarded as new entrants if they have previously given lengthy service to the State.

I share concerns about student teachers and I do not understand why they cannot be treated in the same way as Garda trainees. It would be extremely unfair if the 1,000 students who are currently in training and who will graduate in May of this year should be covered by the Bill. After all, these people entered into training on the understanding that after graduation they would benefit from the terms and conditions of primary teaching which applied when they made their career choice. They will now be faced with an increase of ten years, from 55 to 65, in the retirement age. That is an outrageous proposition, particularly in light of the strenuous demands of teaching. We must recognise that it is a special profession which requires particular address. Not only are teachers involved, so also are the recipients of their teaching methods, namely, the young people and children who are the future of society. There is a great and bounden need to ensure continual freshness, vigour and updating which the diktat handed down with regard to the retirement age will not in any way accommodate.

I urge the Minister to treat these concerns seriously and introduce amendments on Committee Stage to address them comprehensively. I note that we were given notice this afternoon that the Select Committee on Finance and the Public Service will consider Committee Stage of the Bill from 9:30 a.m. on Tuesday next week, which leaves little time to prepare amendments. I hope the Minister, with the resources available to him, will accommodate the Opposition in producing the required amendments to ensure justice and equity for the various sectors involved.

The Minister stated that there should be no compulsion to retire at 65 years, but the Bill, in effect, introduces a compulsion to work until at least 65 years for most civil servants or face a reduced pension, which is an important point. The legislation represents a crude approach to the complex problem of future pension provision and the demographic consequences of ageing. It is a step backwards for workers in the public service and should not be proceeded with in its current form. I urge that it should not be proceeded with in the absence of agreement from the workers concerned. I strongly commend the amendments already flagged as necessary by the INTO and the other interested groups which in recent times made submissions to the Minister and his Department.

Like other speakers, I welcome the opportunity to say a few words on the Public Service Superannuation (Miscellaneous Provisions) Bill 2004. This legislation is just one of several steps needed in our efforts to address an issue which has loomed on the horizon for a long time, but has been consistently put on the long finger. In recent years, a barrage of warnings has been issued by many sources, especially in the financial and related sectors, pointing out that we and our European partners face difficulties with state pensions.

The most common phrase used, and one which grabbed headlines, was "the pensions time bomb". Dire pictures have been painted of the possible outcome if we do not take corrective action, one of which was the prospect of State bankruptcy. Since I first heard the pensions issue being addressed seriously some 20 years ago, economists and others, including the odd politician, have repeatedly raised it, with some spelling out various actions they believe necessary to address it. Nothing was done, however, until the current Minister for Finance, Deputy McCreevy, took action on the issue.

Hear, hear.

I will touch later on some of the steps he took. We can all identify with some of the concerns raised by previous speakers and I hope to address several of them later. I am certain the Minister will also respond to them. On the other hand, I cannot understand the approach taken by several Deputies, specifically Deputy Boyle, who appeared to indicate that we do not have a pensions problem. They also appear to believe that the Commission on Public Service Pensions was wrong. Some of the Deputies in question consider themselves to be well briefed on European affairs, yet they seem to be blinkered on this issue.

At least four European Council meetings, including the Lisbon and Gothenburg Councils, specifically drew the attention of member states to the issue of pensions and requested that they take action as a matter of urgency. Reference was made to safeguarding the capacity of national systems to meet their social obligations. It is amazing that the Deputies in question appear to believe that Ireland is the only country concerned about this issue or that pensions do not present a problem. While we are probably in a much better position than most of our European counterparts in that only 5% of our gross domestic product, GDP, is spent on State pensions against a European Union average closer to 10%, our position will approach the EU average if we are not careful and fail to take action.

The various proposals made to address the pensions issue have ranged from the unthinkable, such as not paying pensions or raising the threshold to 75 years, to alternatives such as cutting pension rates, increasing the contributions levied on workers or reducing the number of public service personnel. Other options are available, some of which require political courage and some of which have been introduced already. One of these was the courageous political decision taken in April 2001 to put aside billions of euro to ensure that people will have pensions in 25 years. This was the initial and crucial step which required considerable political bottle to take. The Minister would have gained widespread political kudos if the money allocated to the national pension reserve fund had been allocated for current purposes, but he set it aside because we needed to look to the future.

An earlier speaker scoffed at the decision to look ahead to 2065. One of the traps these Houses have fallen into in the past is that we have decided to play for today and to hell with tomorrow. A major problem with pensions is that they are structured on a pay-as-you-go basis and successive Governments have accepted this and refused to do anything about it. This Government is changing that position and I am glad to be involved in some way in encouraging it to do so. The decision to put aside money was morally correct.

Deputy Boyle, with his limited knowledge of the issue, was incorrect to suggest that the pensions fund was losing money. While funds briefly went through a rough period on the international markets, if the Deputy bothered to look at the bottom line, he would see that his statement is incorrect.

In ensuring that we safeguard pensions, action can be taken in many areas, which is what the Minister is doing. Anybody with even a slight interest in the issue will be aware that the current level of contributions cannot be sustained when combined with the current system of providing pensions for life after a certain length of service, as is the case with Members of the Houses and in many other areas of the public service.

It is never easy to change a person's conditions of employment or expectations for the future. I have heard various professions and Members criticise the decision to set the minimum age for pensions at 65 years for Members and 55 years for gardaí, members of the fire service and so forth. I will address these criticisms in more detail later and the Minister will respond to them as well. It needs to be spelt out that the Bill does not impose changes on the conditions enjoyed by people who have already entered service. They will be paid and their conditions will stand. It is important to point out that things will only change from 1 April. It will not be a case of pulling up the ladder once we are up. This change had to be made.

The formula for the future is being changed. The alternative to making this change was to increase the current rate paid with further increases in the future. The 1% provision would not have been enough and would have had to be altered in the future. We must have positive thinkers and positive action in this area.

There must be a relationship between the amount contributed and the duration of time a pension is paid. Many factors will affect that formula, some of them quite complicated but there are people available to work them out. The facts indicate the current situation is not sustainable. Saying there are only two people within a Department working on the problem is the kind of rubbish we hear by way of excuse for taking no action on any issue. The reaction from commentators, including contributors to this debate, has been that something should and must be done yet such people, other than the Minister for Finance, Deputy McCreevy, are not prepared to take any responsibility in that regard. Deputy McCreevy is a Minister who is willing to bell the cat on this issue and to take decisions and action.

Approximately 5% of GNP is used to pay public service and social welfare pensions. Maintaining the status quo, that figure will increase to 8% by 2026 and 12.5% by 2056. That may seem a long time away. It is the duty of this Government to ensure we have sufficient money to meet demand. Many people will scoff at the Government's concern for the population at that time. Deputy Paul McGrath is of that mind. I do not want to misquote him but he said the Minister should look at other sources of information and advice available to him rather than take action. He went on to argue against taking positive action based on a report by Dr. Fahy. Deputy McGrath advised the Minister not to listen too closely to the commission on public service pensions, not to take note of the EU or anything in the Stability Pact. He said the Minister should ignore everyone but Dr. Fahy who published his paper three or four years ago, long before people began returning to Ireland.

Deputy McGrath is correct in saying changes can and do take place. He said the year which stuck out in his mind was 1987 when 47,000 people emigrated. Having checked that figure, the Deputy was very accurate. Among the changes that took place in 1987 was the return of Fianna Fáil to Government. The changes brought about by that Government started the wheels turning. The wheels have turned full circle in recent years with the return of the same number of people to Ireland. Positive action provides people with opportunities, alternatives and, most importantly, safety and security.

Deputy McGrath is correct when he says things change but they do not change by accident, decisions taken bring about change. The current Minister is making things happen in the area of pensions.

Hear, hear.

This provision does not stand alone, it is coupled with tax incentives, pension funds, options for people to invest as they wish and the money put aside by the Minister to deal with this issue. The Minister for Finance has removed the restrictions which were binding up pensions.

Deputy McGrath expressed concern for Members of the Oireachtas. He made points similar to those I heard last week and the week before during the debate on the introduction of the smoking regulations. The point was that we should find a way around the regulations and should be subject to a different regime than everyone else. That is not on. Those days are gone. That is how we operated years ago in terms of income tax and other issues. We cannot go back to operating that way.

Deputy McGrath also said the Pensions Board reaction was over the top, but I disagree with him on that. It took a balanced view and campaigned for a five-year review. Let us not offend anybody, let us go along with all good things. Deputy McGrath said everyone to whom he spoke had been turned off by this proposal. While it may be all right to say that in terms of people outside this House, he went on to say that backbenchers, frontbenchers and Ministers were against it. That is not true. I eat, converse and work with these people and what the Deputy says is a blatant misrepresentation. One or two individuals may have expressed concern about the proposal but there is not widespread condemnation of it. Every Member of the Dáil and Seanad will say the Minister for Finance has done well by them.

Deputy McGrath is quite right in saying the Minister for Finance brought the standard of pay and conditions in this House to a high standard. He has been fair and has been willing to walk the walk. He has not been afraid to sanction and pay what he saw as the correct amounts in terms of remuneration or expenses. He has been honest and forthright in that regard. The Minister for Finance stands over his decisions. He would not hide behind legislation which would afford Deputies special privileges. It would be unreasonable to ask him to do as Deputy McGrath asked and to legislate to provide Deputies with preferential treatment in regard to this or any other universal benefit.

There is a perception among the public that we enjoy special privileges. I will argue the point regarding travel and overnight expenses. The public believes we get special treatment in terms of tax and so on. It is that type of thinking that puts us in a rut. With this Bill the Minister has directly affected the 430,000 pensioners in Ireland by way of providing discretion to pension fund managers and individuals in terms of investing their own money and in making benefits available. More importantly, he has looked to the future when the population will be approximately 1.2 million in 2056. People can talk all they wish about what might happen and say we might be hit by a plague and so on but the Minister has to deal with facts. Regardless of how many people return to Ireland, that is a good estimate. The Minister for Finance has to work to provide for that number of people. The Government is aware that the ratio of people working to the number of dependants will drop and will legislate for that.

The Government can only do so by removing the objections and difficulties and by taking positive action to encourage people to take care of themselves and look to the future rather than living for the day. It is becoming harder to get young people to look to the future but once they settle down and, perhaps, get married reality kicks in and they become more responsible. We must encourage our youth to think of the future. We could use old advertisements such as those which showed people like me moving from the hair colouring of Deputy Callely to grey.

We get a little greyer and we start to worry a little more about the pension.

Speak for yourself.

We need to encourage young people like the Deputy to become concerned at a much younger age but to do that we need an incentive.

Very much so.

On the European context, we have projections on where we and Europe are going in this area. These people went to the bother of going into conclave and producing various reports. For instance, in December 2001 the European Council in Laeken called for the use of the open method of co-ordination in the area of pensions to help member states progressively develop their own policies to safeguard the adequacy of pensions while maintaining their financial sustainability and facing the challenge of changing social needs. In 2002 the Barcelona Council called for the reform of pension systems to be accelerated to ensure they are both financially sustainable and meet their social objectives. They have been doing that since 2000 or even before that. The European Council has worked at the challenge of an ageing population and in particular its implication for maintaining adequate and sustainable pensions.

The Lisbon Council in 2000 stressed the need to study the future evolution of social protection from a long-term point of view, giving particular attention to the sustainability of pension systems in different time frameworks up to 2020 and beyond, where necessary. That was followed by the endorsement at the Gothenburg Council of 2001 of three broad principles for modernising pension systems, namely, safeguarding the capacity of systems to meet their social objectives, maintaining their financial sustainability and meeting the changing social needs.

There was also the joint report, and we might refer this to the Green Party and others, by the social protection committee and the economic policy committee, both of which look after workers' rights. They addressed the European Council and expressed major concern about this area.

On the Green Party's approach to this area, last week I read into the Official Report a letter from the Communications Workers' Union which was circulated to every Oireachtas Member which more or less stated that if the Green Party wished to get involved in areas such as this which affects workers, it should make itself aware of the issues that will affect their members and their workers. The same is true in regard to pensions. The party needs to make itself much more aware of the real issues in terms of what is needed for the future.

We need clear economic thinking. We know we need a certain amount of funding. I do not know what the Minister, Deputy McCreevy has put aside, but if my memory serves me correctly his courageous decision will meet approximately one third of the requirement. He is making alterations that will meet another aspect of it and there are also the incentives for people to put the extra benefits aside. Through all of his actions the Minister will have done a great job for all pensioners for the future. I commend the Bill to the House and I wish the Minister, Deputy McCreevy, and his colleagues in Government every success with it.

Hear, hear.

In approaching any issue like this which looks at the long term we have to take a visionary approach as to what we are trying to achieve in the public service. What we need is a pension system that is affordable but we also need one that encourages high performance and mobility and which forces decision makers to examine the true cost of employment when making decisions to recruit. Against those criteria this Minister has disappointed in terms of identifying the changes needed in the pensions area.

The pensions commission did very useful work. It provided, for the first time, a firm estimate of the cost of funding the public service pension bill. It came up with a figure, based on 1997, of just over £25 billion, which represented 54% of GNP at the time. That is only the start of it in terms of the provision for pensions that the taxpayer must make. We also must fund social welfare provisions and I estimate, given that nearly four times as many people are eligible for social welfare pensions, although they get much lower pay, that when that is added in we are probably talking about 140% of GNP. That is the total pension liability facing the taxpayer, which is about four and a half times the national debt. The taxpayer is right to be concerned about the sustainability of this burden because it will be a significant drain on resources in years to come. We all know that people are living longer and they also have shorter working lives because they spend more time in education or in other activities, and the standard working life is shortening.

The commission has given us a useful insight into this in that it shows that the proportion of the public service pay bill that will have to be devoted to pensions, which is now around 16%, will reach a peak of about 38% in about 20 years' time. In terms of GNP that does not sound so dramatic —I think it will go from 1.6% to 2.4% of GNP —but the pensions commission pointed out, and it is important to bear this in mind, that to fund the extra cost of public service pensions on the basis of the tax base as of now, on a pay as you go basis, would require two points on the standard tax rate and an additional three points on the top rate. We are talking about fairly substantial increases in the tax bases to fund these pension burdens. It is right that we have to look at reform in this area and in that regard many people will agree with the work of the commission and that the Government has to act on this issue.

The pension board put forward four major changes it would like to see made but what disappoints me is that only one of those areas is seriously reflected in the Bill before the House. The four areas it put forward are, first, to raise the pension age; second, introduce a more adaptable pension system which would encourage a better approach to working and to retirement; third, levy an additional 1% contribution on those of us who work in the public service and, fourth, require all Government bodies to carry the full cost of pensions in their budgets. Only the first of those has been addressed in the Minister's proposal before the House. That is seriously short-selling both the taxpayer and the public servant in addressing the long-term issues about pensions.

The most fundamental flaw is the failure to address the recommendation that individual bodies in the public service must bear the full cost of pensions. They must fund pensions on an accrual basis. This is one of the key recommendations of the pensions commission which has not been taken up by Government. Why do I say that is important? It is crucial that when Ministers of State like those on the opposite side of the House decide to recruit more people into the public service —and in the past two years they took on 40,000 extra recruits —the true long-term cost is evaluated at the time the decisions are made. If they ignore the pension cost they are understating the extent to which they are committing public funds.

The reality is that this Government expanded the public service radically, failed to deliver value for money and hid from the taxpayers the true cost in terms of pensions. The taxpayer was done on the double by the Government's approach to the last election. Money was wasted in a foolish spending spree but, crucially, the long-term costs will be there for the next 50 or 60 years.

The second reason it is important that we adopt this accruals based approach to funding pensions is that it forces Ministers for Finance to make savings on their budgets to provide for the long-term pension liability. That is crucial because if we want to create an economy that is capable of paying public service and other pensions in the long term, we have to save and invest wisely. We know the Government has difficulties in investing wisely. We also know, sadly, that it has difficulty saving. In the past three years it cut its rate of public saving from more than 7% of GNP, a substantial amount, to a small 2%.

The Minister would have us believe he should get plaudits for his idea of putting money into the national pensions reserve fund but the money going into that fund this year is borrowed money. We are doing what any stockbroker would tell us is madness. We are borrowing money. We are then buying foreign shares. We are creating a liability on future taxpayers and having a gamble on shares. That is not prudent. It is not a provision for future liabilities. What is crucial is that savings must be increased.

I heard Deputy Dennehy make heavy play of how prudent the Minister was in setting up the national pensions reserve fund. I wish to quote from the Commission on Public Service Pensions on the issue of funding public servants' pensions: "It would not, of itself, reduce the cost of pensions schemes, except to the extent that the returns on the money lodged with the fund would be greater than the returns which the Government would otherwise achieve".

Now we are in the situation where a Government, strapped for cash for funding infrastructural investment, is buying shares overseas. According to the pensions commission, that is wise only if we can be sure that the investment on these foreign stock markets will give a better long-term yield than dealing with some of the chronic infrastructural scarcities that face the county. There is no such confidence. I would assert the opposite viewpoint: if we want to have an economy capable of paying pensions into the long term, we must identify and resolve our infrastructural needs. The greatest criticism I would make of the Minister for Finance is that he has allowed the opportunity to slip by, namely, to put the funding of pensions on a basis that those who make the spending decisions must bear the full cost in their budgets. That was an important recommendation.

Also missing from this Bill is any of the interesting and innovative changes the pensions commission put forward. To build a modern approach to both working and retirement, the commission put forward interesting ideas that would help people to work more years. It had the idea that people in the "greying years" might take posts of lesser responsibility or perhaps reduce their working hours in later years and that the pension scheme would adapt to deal with that. It also wanted to have a pension scheme that would promote more movement in and out of the public service. It wanted flexibilities that would allow public bodies to restructure and remove people whose competence failed to reach the required standard and who needed to be moved on. None of these matters is reflected in the Bill. They have all fallen by the wayside.

It is significant that the Minister mentions the specific proposals for additional voluntary contributions, AVCs, in the category of "This may be done". There is no reference to new pro rata arrangements for work-sharing in the public service. The changes from the rigid link of pensions to pay at the point of retirement, which is crucial for allowing people to decide they will not hang on as their competence declines, has not been addressed. The Government insists that people still be locked in by these rules. The capacity to have pension entitlements comprised of a mixture of preserved benefits from disparate occupations as a worker moves through different phases of his or her working life has failed to appear in the Bill. Instead of vigorously pursuing these initiatives which should have been at the heart of creating a more adaptable and more flexible public service, the Government has introduced its own idea: to simply abolish the compulsory retirement age.

That is an important idea and is needed. What is crucial, however, is the context within which it is done. It must be accompanied by this new system that allows people to make changes throughout their working lives and to adapt the amount and type of work they do in line with their changing individual capacities. The danger is that the present proposal will encourage the people who should be leaving at age 65 to stay on instead of making way for younger and newer talent. The people with other options who would be especially dynamic and should stay on will go elsewhere. That will not create the sort of dynamism needed.

If that is to be avoided, alternative ways need to be examined. These are to be found in other elements of the approach to public service pay. There needs to be a much more rigorous system of assessment so that people, as they change through their working years, are properly assessed. People should not remain in posts where they no longer perform to the high standards required just because they can stay on. We do not need that approach to pensions. That is not the way to cope with the problem of people growing older, more people living longer and the burden of pensions. A dynamic public service needs to be created, but the Government has no interest in that agenda. This is evident from the way it approached the benchmarking debate.

Benchmarking was an extraordinary opportunity for Government to begin reforming the public service. There was €900 million available to pay for a package of serious public service reform, yet nothing happened. The Government did not put forward any reform package, no trade union was pushed beyond any negotiating position, there was no dispute and this all flowed through. It was all business as usual, it was all wrapped up, and this resulted in a failure to address reform. The people who lose out in that are those who are ambitious to see a high quality public service in this country. It is they who have been let down by the Government's failure on benchmarking.

Mobility within and outside the public service is a crucial element that should be encouraged. Far from encouraging that in this Bill, the Government is doing the opposite. People do not realise the weakness of mobility that pertains within the public service. We should be trying to get the best talent and dynamic leadership at the top. Of the 75 top level civil service positions filled in the past five years, one might expect that a third of the incumbents would have come from the private sector, a third from other Departments and a third from within the particular Department. That might indicate that the best available talent was being recruited. The reality is that only 20% of these posts were filled from outside individual Departments and no one was recruited from the private sector. Only one out of 75 was from the wider public service.

We have a closed system that does not promote mobility. People get into their grooves, there is a system that promotes them within the individual Department and the level of competition from outside is minimised. That is true of middle management as well, if one looks at higher executive, administrative and principal officer recruitment. Fewer than 20% come from outside the individual Department. A system of dynamic mobility is not being created throughout the public service. We have made no effort to do that and we should be accompanying reform in pensions with a serious effort to promote this type of mobility to get the best quality of employee within the public service. That is not what is happening and the result is an embedded scarcity of promotion opportunities for young talent. That is what deters people and why young talented people leave the public service to go elsewhere. We are not creating the opportunities for them to come up through the system to become the leaders of the future within the public service. That is what needs to happen if we are to reform the public service seriously to make it an efficient organisation to be able to afford to pay the pensions which are richly deserved.

There are equity issues as well which the Minister has quite happily swept aside and not faced. There is clearly the equity between this and future generations to be considered. A number of recommendations to address that have been ignored. That is allied to the issue of the equity between people who work in the public sector and those in the private sector. The commission is clear that the value of pensions in the public service is much better than in the private sector, especially because of indexation to employee grades and not, as in the private sector, to the consumer price index where growth is much slower. There was a proposal for an additional 1% contribution from all of us who work in the public service. That disappeared without trace.

The working groups all comprised public servants. To some extent both the management and worker representatives in those groups were on the same side in this issue and it was swept off the board. It was an important issue because these are valuable pensions to which people such as us are entitled. When a serious commission such as this comes up with a proposal of that nature, it deserves serious debate. There has been none. It was dismissed by the Minister by one line in his speech.

This is not a populist issue. To listen to Deputy Dennehy, however, Deputy McCreevy was the great courageous Minister for Finance who faced up to difficult issues. Here was a difficult issue and he swept it under the carpet before any debate on it occurred. That may be popular in the short term but, in the longer term, it could be a Trojan horse for those of us who work in the public service. One of the features of the public service pension is that it is a defined benefit scheme with this valuable indexation approach. The quid pro quo the pension commission offered for the increase in our contribution was that there would be a proper pension fund with trustees managing it on behalf of the public service. Those of us who work in the public service would then have more say about the direction of public service pension policy. That has been thrown out without proper debate.

Where is the proper comparison between public and private sector? That was swept under the carpet. It was to be addressed in the report on benchmarking and the commission set it aside as a result. As we all know, however, the benchmarking evidence was shredded, we never saw the report and the issue was never addressed. There are genuine issues of equity between our generation and the next and between those in the public sector and the private sector that were raised by the commission and that the Government has chosen to sweep under the carpet for short-term political considerations. So much for the courage that Deputy Dennehy said was a characteristic of the Minister for Finance.

There are also important issues of equity within the public service. The commission produced interesting evidence about the value of a fully funded pension to a new entrant to the public service and how much he could expect to pay. Those figures were not referred to in the Minister's speech or anywhere else. A person entering the public service as an unestablished or industrial officer in the low paid grades, who pays 6.5%, receives total pension contributions of 8% between employer and employee. At the other end of the scale, the value of a hospital consultant's pension on an actuarial basis is 21% or three times those at the bottom of the scale, and he also pays just 6.5%. We are telling the lowest paid people in the public service that they must pay the same contribution as everyone else but will get a pension worth a tiny fraction of the pensions that are available to those at the top end of the scale.

The further up the tree a person is, the better his pension entitlements. He gets it on the double. He gets higher pay and a much more valuable pension contribution paid with a huge bonus. That important issue is not being debated. The commission decided not to kick this sleeping dog but it is plain that we have built a pension system that is inequitable and those who are losing out are at the bottom of the pile.

There should have been a proper examination of the pension structure to address this. It is not surprising that many people are frustrated at the way in the which the general five year increases have been increased to ten years for teachers, 12 years for military personnel and 18 years for other areas. Even with the narrow canvas of this Bill, issues have been left hanging. The definition of new entrants is crucial and we should look at flexibility to deal with the difficult issues faced by groups that have not had their needs heard.

Pensions and their funding are critical to society. We must be aware that the pension policy we put in place today will have a major bearing on our long-term development. It is imperative that we have a comprehensive debate now to secure proper pension provision and the future growth of the economy. The Minister for Finance believes that pensions and long-term provision do not get the profile they merit. It is good to hear it being addressed in the media today and there should be more media coverage of the issue to ensure the public is involved in and aware of the provision of pensions.

We do not face the severe demographic problems that confront our European partners, and the experience of France and Italy should encourage us to act now. The absence of preparation in the good times, combined with an unwillingness to face unpalatable decisions, means that those countries must now implement drastic fundamental reforms to curtail the spiralling cost of pension provision. Unsurprisingly, these late and enforced changes have resulted in strident protests and street demonstrations.

It is easy to be complacent about pensions. The current levels of provision and the increases the Minister for Finance has granted in recent years contribute to such an attitude. As legislators we have a duty of care to people, especially those who cannot afford to be complacent or to take the short-term view. It is only by making correct policy decisions now that we will avoid the difficulties being experienced by some of our European partners.

Only 20 years ago, a well known fact about Ireland was that 50% of the population was under 25. While our European partners enjoyed a post-war population boom, it was different in Ireland in that it was not until the 1960s and 1970s that the population grew rapidly. In south County Meath, we could see this as it progressively hit primary schools, post-primary schools, the jobs market and housing. All the time we appeared to be lagging behind the necessary policy changes. The Bill prepares the ground in pension terms for those who were educated in prefabs because we did not prepare a school building programme and for those who had to wait for housing because there was no housing programme. We must look ahead.

We should recognise that, after 1987, the economic turnaround was ultimately assisted by the large numbers of young people. As they pass through the age patterns, we must also recognise that, before long, we will no longer be able to regard ourselves as a country with a predominantly young population. The structure of the population has already changed. Family sizes are smaller, more women work outside the home and couples are having children later in life. We must address the economy and the cost of pensions. All these social changes mean that the cost of pensions borne by the economy in the middle of the 21st century will increase dramatically.

This is not news to the Government. It has been preparing for this with the establishment of the national pensions reserve fund, which underlines the Government's seriousness about long-term planning. The fund was established to create a mechanism to ease these increased pension costs. It involved setting aside moneys, investing them and drawing them down in future when growth rates may be slower and the age dependency burden increased. The fund will ease over the long-term the Exchequer burden arising from our additional pension commitments and avoid a sudden rise in a short period.

The Government is committed under legislation to make statutory payments of 1% of gross national product, GNP, to the fund each year. In 2003, that was worth €1.1 billion. The Government kick-started by allocating €6.5 billion to it on its establishment in 2001. This is a departure regarding the management of public finances and, in particular, regarding introducing a new, strategic, long-term element into budgetary planning. Its establishment shows that the Government recognises the importance of the pensions issue and has put in place a very practical mechanism to deal with it. The provision of 1% of GNP was a reasonable start, yet many felt that it should have been abandoned or suspended. It is important that people recognise that we cannot have a short-term attitude to this important issue. We must be aware of the pensions position, and the figures brought to our attention make that clear, particularly the fact that today's public service and social welfare pensions cost the Exchequer approximately 5% of GNP, and maintaining that level of provision is expected to cost 8% of GNP in 2026 and a remarkable 12.5% of GNP in 2056.

According to the Department of Social and Family Affairs, in 2001 there were 430,000 people of pensionable age in Ireland, but it is amazing to consider the expected increases to 673,000 in 2021 and 1.2 million in 2056. All that means that the ratio of people at work versus people on pensions falls from more than 5:1 in 2001 to fewer than 2:1 in 2056. Once again, if we did not already know about it from talking and listening to the Government and others on this issue, the figures alone remove any grounds for complacency about pensions. We cannot simply presume that our economy will be able to bear the additional costs without difficulty.

The Government has also demonstrated its serious concern for pensions in other ways, such as the taxation incentive, the personal retirement savings accounts, and the Finance Act 2002, which made significant changes to tax relief for pension contributions. These also sought to encourage employees to take up and improve pension cover. Overall, the Government has two main roles regarding pensions. It must set pensions policy for society as a whole, and, as the largest employer in the State, it must provide pensions for its own employees. The increasing pensions burden faced by society is also reflected in the significant direct costs confronting the Government regarding public service pensions. The decisions that we make on public service pensions have the potential to determine the future of budgetary policy, as a general increase in pensions costs can affect the future shape of society.

The commission's report has been discussed at length during the debate. It very much set the agenda regarding what must be done on public service pensions and forms the basis of the Bill that we are debating today. It set out a realistic and progressive framework for public service pensions. It is to be welcomed that the Government is determined to avail of the opportunity created by the commission's report to put in place reasonable measures to secure proper evolution of public spending on pensions in the longer term. Our challenge now is to deliver a system which ensures budgetary sustainability in the long run while providing acceptable income in retirement.

To meet those challenges, the Bill introduces two fundamental changes, and it is important to state that they will have an impact on the majority of new entrants to the public service from 1 April 2004. The standard minimum pension age in the public service will rise from 60 to 65. The other significant change is the abolition of the maximum retirement age in most areas of the public service. It is important to recognise that the Equal Status Act 2000 prevented discrimination on age grounds, and it would have been helpful in the changes that we have seen in recent years. It is important to say in this debate that, if people wish to work to 70 or beyond, that is a personal choice that should be respected.

Savings anticipated from the Bill are estimated at €300 million annually in today's values. That may not seem a great deal, but it is approximately 20% of the current public sector pensions bill, and a reduction of 20% on the bill anticipated in 50 years will be no small saving. We can be glad that we have a Government that takes a long-term view on the issue and that we are learning from other countries' mistakes. It may turn out that the Minister for Finance has overestimated the extent of the demographic challenge; patterns of population growth can be difficult to predict. However, we must deal with the facts as we find them and not as we wish them to be. I am happy to support this far-sighted Bill.

I am delighted at this opportunity to speak on this very important legislation, the Public Service Superannuation (Miscellaneous Provisions) Bill 2004. The Bill is very timely and follows the report of the Commission on Public Service Pensions. The demographics of this country are changing, and it has been obvious for some time that people are living longer. Not only that: the general well-being of the population is improving. As a result, whereas some years ago "old age" was considered to be post-65, it is now obvious that many people are in very good physical and mental health after that age. Those changes in life expectancy have many causes, which I do not propose to discuss.

However, they have two direct consequences which are very important. The first is that the cost of funding the public service pensions bill is rising all the time, and it will reach an unacceptable level quite soon. I can think of nothing worse than people reaching pensionable age with the expectation of receiving their pension only to be told that the State does not have the necessary funds available. As more and more people live to reach that age, and as those people are now living longer while receiving a pension, the demands on the State to provide are growing all the time. It would be disastrous if money were not available to meet peoples' pension needs. With the fall in the birth rate that has occurred during the past 20 years or so, the number of people working and therefore paying tax will also decline. We might quite conceivably have a situation where ever fewer workers are paying ever more to fund the pensions bill.

The Minister for Finance, Deputy McCreevy, has recognised that emerging problem for some time, and he has taken steps to ensure that the pensions time bomb, as it has been termed, is defused and does not explode in ten to 20 years. This Bill is a further step in helping to deal with that growing crisis. All new entrants to the public service from 1 April 2004 shall start to receive their pensions only after they have reached the age of 65. In certain categories, such as the Garda Síochána, prison officers and members of the Permanent Defence Force, lower minimum pension ages are identified. Recognising that people are generally fitter and healthier than in past generations, it is right and proper that pensions should only be paid to people who have reached an age where they are incapable of working as well as they could when in their 30s and 40s. The Minister, in making these changes, is recognising the fact that people are healthier now than in the past.

However, this Bill goes a step further, and that is where the Minister has shown great foresight. There is a growing band of people who do not feel they need to retire at the age of 65. Before this Bill, if one worked in the public service, one was compelled to do so. That does not happen in the private sector, and there are many examples of situations where people have done some of their finest work after the age of 65. I know of many who did not want to retire at 65, as they felt they had many years of active working life ahead. To tell someone who is keen to continue working and who wants to continue working for the State that he or she must retire at 65 does not make sense. Moreover, it is an insult to those people to throw them out of work if they feel that they can continue.

This Bill gives them the choice, and choice in life confers dignity. From now on, there will be no compulsion for anyone in the public service to retire at 65 if fit and willing to remain in employment. That is the really exciting aspect of the Bill, and it will have the most profound influence on people's lives in future. I am sure there are many people who will have cause to praise the Minister, Deputy McCreevy, as they continue working past the age of 65, with all the benefits and dignity that work confers. The labour market participation of older people differs from country to country, and it is interesting to note that those countries with high participation rates generally have high employment rates. In that regard, I note that some of the most advanced industrial countries in the world, such as the USA and Japan, have retirement ages of over 65. For this to occur, there must be training of older workers. The policy of lifelong learning is a move in the right direction. Many of our third level institutions, especially the institutes of technology, provide courses where workers can engage in re-training or re-skilling. It is important that workers have a choice about whether they continue to work after 65 years of age. The provision of lifelong training will be an important determinant in whether one opts to continue working after that age.

The Minister should give greater consideration to one aspect of the Bill. It concerns the position of doctors who decide to pursue a career in hospital medicine. At present, the average age of qualification from medical school is 24 or 25 years of age. If a newly qualified doctor decides to pursue a career in hospital medicine, he or she has a minimum of five and in most cases seven to eight years' training to undertake as senior house officer, registrar and senior registrar. In addition, most pursue a period of research leading to a masters degree in surgery medicine or their choice of discipline. It is also recommended that a doctor should spend a period of training abroad, usually in a centre of excellence such as Oxford or Harvard.

The average age of starting work as a consultant in the Irish hospital service is between 36 and 38 years of age. In recognition of this, present regulations permit years spent abroad to be recognised for pension purposes as years which can be added on when the number of years spent working in Ireland are calculated for pension. As it is necessary to have 40 years' service to qualify for maximum pension, this facility exists so consultants employed in the service have exposure to the newest procedures while abroad. The abolition of this facility would discourage Irish doctors from going abroad during their training and act as a disincentive to the return of Irish medical personnel working abroad. The Medical Council estimates that more than 4,000 Irish trained doctors work abroad.

With the implementation of the Hanly report, there will be a need for a massive increase in consultant numbers. It will be necessary to encourage as many consultants as possible to return. I fear that the abolition of the add-on years will act as a disincentive to those doctors to return and work in the public health service.

A further anomaly exists with regard to nurses and doctors working in the psychiatric sector. In recognition of the difficult nature of this work and the resultant high levels of stress for some personnel, special arrangements exist for the calculation of the pension rights of this dedicated group of health professionals. I urge the Minister to ensure that these conditions remain so that this important service can continue to attract the best and most dedicated personnel, as exemplified by those currently working as psychiatric nurses and medics.

I congratulate the Minister on his innovative approach to this important issue and commend the Bill to the House.

I wish to share my time with Deputy Finian McGrath. A career in the public service as a nurse, teacher or worker in the health sector or in the non-commercial State bodies will be a different proposition from what it was previously. While there are good points in the Bill, it must be acknowledged that people in the categories to which I have referred will have to work until they are 65 years of age to get a pension.

I noted the pensions commission's report when it was published. It was the result of a major, in-depth investigation into the many and varied aspects of pensions. The Government backbenchers have complimented the Minister, which is what Government backbenchers usually do, on being courageous and taking vital and necessary decisions. There is no question that there are positive aspects to the Bill, but the Minister has taken the course of least resistance. We are discussing what will happen in the next 30 or 40 years. Imagine the reaction if the Minister announced that this change would apply to current workers in the public service. Imagine trying to convince teachers and psychiatric nurses, for example, that they would have to work until they were 65 years of age before they would claim their pension. We would certainly see demonstrations outside the gates of Leinster House.

There is an element of burnout in every walk of life. Let us take the case of psychiatric nurses with which I am a little familiar. There was a good reason for calculating their pension entitlements differently. They have an extremely difficult job. If one told a psychiatric nurse now that he or she would have to work until he or she was 65 years of age to get a pension, one would get a strong reaction.

No Member of the House knows exactly what will happen in 30 or 40 years. Down through the years, the system for predicting these matters was not always correct. However, I do not blame the Minister for trying to do it. He is the Minister for Finance and all Governments must do such things. Ultimately, however, there is something inequitable about what is happening. My colleague, Deputy Richard Bruton, showed in his contribution that pensions depend on the scale of the salary one earns in the public service. There will be more from the existing scheme, not to speak of the proposed scheme, for a hospital consultant than for a low paid worker in the public service. Both pay the same 6.5% contribution but the return from it over a lifetime is truly astonishing. The Minister said he could not get agreement on this from the various stakeholders. It is easy to see why. There are aspects to this legislation which they just could not swallow.

There are a number of other matters which are worth referring to on an occasion such as this. It was said that there were other ways of dealing with this issue. I share many of the views expressed by the contributors to this debate. There is no doubt that people who reach the age of 65 years and are blessed with good health and the mental ability to continue working have a great deal to offer. It is a wonderful situation in which to find oneself at that age. There is an important place in society for such people and, when the time comes, they will congratulate the Minister for Finance for providing them with the opportunity.

However, there is a series of checks and balances in this area. I remember the 1980s, a time when it was extraordinarily difficult for young people to find jobs. In a hospital, for example, I even saw the resentment of a granddaughter that her grandmother was a staff nurse at that age. She wondered why she had not retired to give her granddaughter a chance to get a job. Many people will remember that time and that attitude. I sincerely hope we do not return to such times, but we do not know what will happen.

It is important that a pension scheme does not result in massive displacement of people. People who have the ability to continue working, who do not want to retire and whose talents are needed should be looked after. At the same time we must ensure that the young bright sparks around whom the world ticks are given the opportunity to progress in the system. Irrespective of what we do we should not trip those bright young professionals on their way up. We must maintain the balance.

As many Deputies have pointed out, we are fortunate that people live longer, for reasons I do not have time to examine. It is good that the graph is going up but it creates a problem which we are lucky to have, rather than the problem besetting many emerging nations.

I see this whole Bill as a kind of fire brigade action which takes the path of least resistance. We had to do something. The pensions commission put people thinking and its report was a talking point around the country. It mentioned that in order to get it right, people would have to work until they were 75 years of age. I heard many people around the country say that the way they were going they would never make it to 75 years of age. This legislation had to be tailor made into what would be acceptable.

I cannot understand why Departments do not make provision for the pension needs of a particular civil servant when that person is first employed. Pension provisions are part and parcel of the employment of the person. It is a bit like the way the Government side-stepped the benefits that could accrue to benchmarking, when it would not pay benchmarking in the local authorities. The only way it could be paid was on the back of the people using the services in the various areas. Against that background I am disappointed this aspect of the pension was not included in the legislation.

One never knows how the pension provisions work or how successful they will be. For instance, many thousands of people in private business on private pensions have gone through a terrible time. I know people who had their pensions invested in blue chip investments and shares who expected to retire in recent years. Some of those who had to retire had paid more into their pension fund than they got out of it. This points out the difference between public and private pensions. Any Government should try to create a balance in the area.

The Minister referred to a voluntary pension contribution for public servants although he did not make clear what he meant by it. What is it and what does he intend to do in this area? Many bright-eyed and bushy-tailed young civil servants are not worried about pension entitlements when they join the service at 23 or 24 years of age. This is changing and people must now take all pension entitlements seriously. The pensions commission said that people in the private sector who passed 30 years of age without having a substantial pension in place were likely to have a huge shortfall by the time they reached 60 years of age. Many 30 year olds do not even think about making pension provisions. There is much hard thinking to be done on the matter.

On Committee Stage many Deputies will want to know how the Minister will handle the various sectors such as teachers and psychiatric nurses, given the problems over the years and the reasons specific regulations were introduced on their account. I hope the Minister will be receptive to what has been said and what will be said on Committee Stage.

I thank Deputy Connaughton for sharing his time. I also wish Caltra well in the all-Ireland club final on 17 March.

I thank the Chair for the opportunity to speak on the Public Service Superannuation (Miscellaneous Provisions) Bill 2004. I declare a special interest in the issue. I was a teacher and member of the INTO for more than 20 years.

I have major concerns with regard to some aspects of the proposed changes to public service pensions. I strongly support the amendments put forward by my colleague Senator Joe O'Toole, particularly those relating to the definition of re-entrant, people with significant years of public service, student teachers, retirement age of 60 years and the provisions for students in the colleges of education. I am open and honest in saying that I fully support the INTO position on these issues. I want to be a voice for teachers, future generations of teachers and public sector workers. We should pay tribute to the great work done by public service staff. I commend their efforts. We should not lose sight of their work, particularly that of teachers who work in disadvantaged schools.

With regard to the definition of re-entrant and the gap in service of 26 weeks, section 2 (4)(b)(ii) provides that where a person was serving in the public service prior to 31 March 2004 and returns on or after 1 April 2004, that person will not be categorised as a re-entrant provided he or she returns no later than 26 weeks following the last day of service prior to 31 March 2004. Though the thrust of this provision —discounting breaks of 26 weeks or less —is welcome, it does not go far enough. In effect, it means that a public servant currently out of service who returns to the public service on or after 1 April 2004 will not be categorised as a re-entrant provided he or she returns within six months of his or her last day of service. The provision as written brings no benefit to a public servant who is, or who will be by 1 April next, already out of service for a period longer than six months. In some respects it applies legislation retrospectively. People who have served in the public service are not aware that such a provision is about to be introduced.

A more equitable approach would be to give people currently out of service a six-month window of opportunity to return to service, starting on 1 April and running until 30 September next. The Bill should be amended to allow a person who was serving in the public service prior to 31 March 2004 an opportunity to return to service no later than 26 weeks following 31 March 2004.

With regard to people with significant years of public service, I support the position of the public services committee of congress that public servants currently out of service who return to the public service after 1 April next should not be regarded as new entrants if they have previously given lengthy service to the State. If the new terms are applied to experienced public servants, they will be dissuaded from returning.

Many teachers currently out of service are women teachers who have temporarily left the service due to family circumstances. There could be a potential problem regarding equality legislation if these women are to be treated less favourably in terms of the ultimate pension age than men or other people who are not de facto required to leave the public service for these reasons.

The Bill should be amended to exclude people who have been employed in the public service for a period of not less than 15 years from being categorised as re-entrants if they return to service on or after 1 April next.

On the issue of student teachers, the Bill specifically provides that persons admitted to the Garda training college before 1 April 2004 will not be regarded as new entrants although their period of training may extend beyond 1 April 2004. The INTO seeks a similar provision for the student teachers in the colleges of education. While I accept that there is not a direct contractual comparison between the position of trainee gardaí and trainee teachers, the relationship between student teachers and the State is special.

In summary, I urge caution on points such as age of retirement, the definition of re-entrant and provisions for students in colleges of education. I support the public services committee of congress. I urge the Minister and his colleagues to take on board the views of the Irish National Teachers Organisation and the other public sector unions.