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Dáil Éireann debate -
Wednesday, 11 Jul 2012

Vol. 772 No. 2

Public Service Pensions (Single Scheme and Other Provisions) Bill 2011: Report Stage

I move amendment No. 1:

In page 8, line 25, to delete "Act 1965." and substitute the following:

"Act 1965;

(d) section 6 of the Superannuation and Pensions Act 1963;

(e) section 7 of the Superannuation and Pensions Act 1963;

(f) section 78 of the Local Government (Superannuation)(Consolidation) Scheme 1998.”.

This amendment seeks, in section 3, to include the repeal of sections 6 and 7 of the Superannuation and Pensions Act 1963, along with section 78 of the Local Government (Superannuation)(Consolidation) Scheme 1998.

I have had an ongoing debate with the Minister for Public Expenditure and Reform but, sadly, to no avail in respect of addressing not just future pension entitlements, but also current ones, and in particular those enjoyed by persons at the upper end of the service, such as current Secretaries General and county managers. The Minister, who has now joined us, has promised to deal with these matters but he has not done so as yet. I am therefore proposing this amendment as the manner in which those very large pension pots would be finally dealt with. The wording suggests including the repeal of sections 6 and 7 of the Superannuation and Pensions Act 1963 and section 78 of the Local Government (Superannuation)(Consolidation) Scheme 1998.

The Minister has said for quite some time that he will deal with the issue pertaining to county managers but he has not yet done so. We have had a long debate about this matter. I have asked the Minister to deal with the pension pots of current Secretaries General and the really indefensible pension arrangements they currently enjoy. I am asking him to accept this amendment as a concrete way of finally resolving this issue.

Deputy Minister for Public Expenditure and Reform ( Brendan Howlin)

I apologise in advance for the fact that I will be absent for the first hour or so of this debate. There is a scheduled meeting of the implementation body of the Croke Park agreement with the Taoiseach. I have been preparing for that and will be going there immediately. The Minister of State, Deputy Kathleen Lynch, will follow the debate and I hope Members will accept that.

We dealt with this amendment at some length on Committee Stage. The provisions are intended to deal with exceptional situations and their application requires ministerial sanction. As was said on Committee Stage, the repeal of sections 6 and 7 of the 1963 Act, which is implicit in the proposal, could only have prospective effect. I explained this in some detail to Deputy McDonald at the time and I think she understands that we cannot have a retrospective impact on the people we are talking about.

This legislation is creating a new framework for the future. These provisions not only apply to Secretaries General and the like, but they were also the basis for the terms offered in the general voluntary early retirement scheme in the Civil Service, which in certain circumstances allowed up to seven years' severance payments.

The House will be aware that, on my recommendation, the Government has already introduced a brand new regime to apply to Secretaries General. The Top Level Appointments Committee, TLAC, terms, which had been in place since 1987, were fundamentally altered within a matter of months of this Government taking office and my Department being established. Those very generous terms that applied in good times and bad - because we went through some difficult times post-1987 - have been altered. There is a new, much fairer system in place for all appointments.

At Question Time last week, I indicated the list of new appointments made to Secretary General rank since those new terms have been applied. A Secretary General's term of office is only seven years, so over a relatively short period they will work themselves out of the system. However, we cannot reach back legally to others. I know the Deputy has already debated this with me, but that is the advice I have received and I have laid it out fairly. We are changing the regime so that in future it will be a much fairer one.

The whole import of this Bill is to have one comprehensive piece of legislation that deals with everybody in a fair way. Fast accruals are implicit in this legislation because there are certain categories of work - for instance, the Garda Síochána or the Army - that will require that. I am also applying a relatively fast accrual to Members of the Oireachtas because of the nature of the job here. I am afraid that people have to reapply frequently and the employers sometimes do not see fit to accept one's application.

The new system is much fairer, however. Where there is fast accrual, in each circumstance under this new regime, there will be a concomitant significant increase in the contribution paid. The single scheme, therefore, will be a better and much more transparent system. The component parts of it are fair.

As regards the specific points the Deputy has made, we will come back to that in a different context, but it cannot be dealt with in the way that she is suggesting here.

I will make a short response because we have debated this at length. The Minister says he has received legal advice, which he has articulated. I assume it is from the Attorney General. I know it is not common practice, but it would be useful if the Minister would simply publish that advice to illuminate my position further.

It is not the practice to publish such advice and it is not my intention to do so. I have given the advice verbally. There are any number of eminent legal advisers available to the Deputy if she feels that countervailing advice is required.

It is the Minister's advice that counts because he makes the decisions based upon it.

The House will make the decision.

Question, "That the word and figure proposed to be deleted stand", put and declared carried.
Amendment declared lost.

Amendment No. 2 is out of order.

Amendment No. 2 not moved.

Amendments Nos. 3 and 12 are related and will be discussed together by agreement. As none of the Members, in whose name amendment No. 3 is tabled are present we will move on.

Amendment No. 3 not moved.

Amendment No. 12 seeks to remove the subsection which provides, with some exceptions, for an obligatory retirement age of 70 years for public servants.

Sinn Féin has consistently opposed any ratcheting up of the age at which a person would have the right to claim a State pension. We do not want people forced to work into their sixties and beyond if they chose not to do so for whatever reason. We believe people are entitled to their pension at the age of 65 years. We equally oppose the rigid provision whereby the vast majority of public servants would be forced to retire at the age of 70. A person should have a right to his or her pension age but not an obligation to down tools at the age of 70 years. Curiously, the legislation allows for some exceptions in this regard. For example, a Member of this House can work beyond 70 years. This provision is arbitrary and discriminatory.

In an age when people are living longer and some are fit and well and wish to continue to work at 70 years and beyond there should be no legal impediment to their doing so. However, I do not wish this to be confused with the issue of entitlement to pension at the age of 65 years. I ask that the Minister of State accept this amendment.

I am speaking from the notes provided to the Minister for Public Expenditure and Reform, Deputy Howlin, who apologises for not being here.

The difficulty that arises is that currently there is no upper age limit set. This legislation seeks to put in place a limit. As already stated by the Minister, this provision will not apply to people already in the system. Deputy McDonald has discussed at length the differential between Members of the Oireachtas and other workers. However, this provision seeks to address the lack of security and tenure of employment for Members of the Oireachtas. The age of 70 years is the upper limit. No one will be prevented from retiring at a lower age. It is important that there are clear guidelines in place in this regard. For instance, for staff recruited before 2004 a maximum retirement age of 65 years generally applies.

The Bill proposes a maximum retirement age of 70 years for single scheme members, except for certain elected officeholders and positions such as the President and Oireachtas Members. I understand the argument which the Deputy makes. However, I do not accept the notion that any of us would be so successful as to continue to be re-elected well into our seventies. It is accepted that there should be no age limit, other than the lower one, in respect of the President.

This is a new scheme. We all know people who would wish to continue in employment beyond the age of 65 years. There is nothing in the Bill which prevents people retiring at an earlier age. I am unable to accept the Deputy's amendment.

We will deal with the question on this amendment later.

Before we move on, I would like to deal with a drafting error in the Bill in respect of which the Minister had not been briefed earlier.

In accordance with Standing Order 140, I ask that the Ceann Comhairle direct the Clerk of the Dáil to make the following change to the Bill. In page 32, the last three lines should be indented so that it is clear that they only refer to paragraph (b) which starts on line 13. It is a technical amendment.

Is that agreed? Agreed. Amendments Nos. 4 and 5 have been ruled out of order.

Amendments Nos. 4 and 5 not moved.

I move amendment No. 6:

In page 19, to delete lines 1 to 8.

The stated purpose of this scheme is to have a universal system for new entrants, in which there is merit. It makes administrative sense and there is a sense of equity, if one gets the scheme right, in a single scheme. However, the amendment seeks to delete the subsection under which special provision for Members of the Oireachtas and the European Parliament is made. I would like struck from the Bill the notion that somebody who has been elected to the Oireachtas or European Parliament at some stage would not, should he or she re-enter as an elected representative, be subject to the new scheme but rather would enjoy the old scheme. I believe this flies in the face of the logic of having a single unified pension scheme. It marks the differential between elected Members, be it to the Oireachtas or European Parliament, which I do not believe is fair.

I appreciate that we regularly interview for our jobs. Some of us have had the experience of not cutting the mustard in particular interviews and of all the challenges of political life. However, we opt for that. I do not believe that a fair argument has been made as to why we should be treated differently. It would be far better and in our interests as elected public officials to be treated equally and to be seen to be treated equally. Amendment No. 6 seeks to strike that particular subsection from the legislation.

The amendment seeks the deletion of the subsection which provides that former or current Oireachtas Members shall not be members of the single scheme. I reiterate what the Minister had to say at the opening of this debate, namely, that we cannot legislate retrospectively in these matters. The Government decided that the single pension scheme should extend to new or first time Members of the Oireachtas and officeholders, including Ministers and Ministers of State. However, unlike almost all public servants Oireachtas Members do not have security of tenure and are subject to the will of the electorate. There can be a considerable change in Oireachtas membership from one Dáil or Seanad to the next. The requirement to be re-elected from time to time means that Oireachtas Members are different to the general body. I accept that we do opt for this life. However, I have often made the point that most people opt for the job they do and as such I do not believe that we are that different. The nature of our work may be different but how we get here is not in my view entirely different. This special factor is taken into account in the Bill for serving or former Oireachtas Members and Ministers. Accordingly, in the case of a Member of the Oireachtas and officeholder who was first elected or appointed before this Bill becomes law, he or she will be a member of the single scheme in respect of any future service as an Oireachtas Member. This is considered a reasonable exception on the basis that a Deputy, Senator or Minister may not be re-elected and consequently does not have the same security of tenure as do other public servants. The argument in respect of this provision was made on Second and Committee Stages. We will not be accepting the amendment.

Question: "That the words proposed to be deleted stand" put and declared carried.
Amendment declared lost.

Amendment No. 7 is out of order.

Amendment No. 7 not moved.

I move amendment No. 8:

In page 19, to delete lines 42 to 45.

This matter was discussed in great detail on Committee Stage. We want to delete the provision allowing the Minister to end the pension, which we believe is wrong.

We will not be accepting the amendment. As Deputy McDonald has already said, this will come as no great surprise. This matter was well thrashed out on Committee Stage. We cannot allow a Minister - either the Minister for Finance or the Minister for Public Expenditure and Reform - not to have this power. While the power already exists, it is not used in any way to ensure people do not get their entitlements. In all my years here I have not seen it used in that way. It is a power the Minister should have and already has. From time to time there are changes in allowances. That is basically what this power is and it will continue to be that. We will not be accepting the amendment.

Question: "That the words proposed to be deleted stand" put and declared carried.
Amendment declared lost.

I move amendment No. 9:

In page 19, after line 45, to insert the following:

"(5) The Minister shall publish a full list of allowances which shall be classed as pensionable under the scheme.".

Section 11 deals with the issue of pensionability of allowances, emoluments and related payments. On Committee Stage I tabled a simple amendment asking the Minister to publish the full list of allowances which are classed as pensionable under the scheme. The Minister did not do that on Committee Stage. He has had the opportunity to do it since and I look forward to the Minister sending me the list so that I can withdraw the amendment. If I receive that I will be happy to do so, but if not I will be back in a moment.

It is very difficult to see the Opposition being happy - I have been there and I do not think that is its job. The Minister and his officials are working on the list as was explained on Committee Stage. That list is not fully formed yet. I do not believe there will be a difficulty as soon as the list is completed. It is not normal, but I do not think there will be a difficulty. The list simply is not completed yet. As the Deputy has probably gathered, in the past year and the previous year when the Deputy's party was in control, the number of allowances and the variances in them are substantial. Some of them would even surprise the Opposition. As the list is not completed, it is not possible to comply with what the Deputy requests.

I ask the Ceann Comhairle to indulge me for a few moments on this amendment.

There is a two-minute restriction on the Deputy.

Yes, on the second contribution on Report Stage.

How much time do I get on my first contribution?

As much as the Deputy likes.

So I have missed the opportunity of giving-----

I am afraid so.

In that case we might have to deal with it in a different way and take 20 minutes by way of a division if I am not allowed enough time to speak under Standing Orders. I had asked the Minister for a response and had expected to get a response but did not. We should not be asked to pass legislation on pensionable allowances when we do not know the allowances to which they relate. Last week I tabled parliamentary questions and have received replies listing hundreds of allowances on a Department-by-Department basis. It makes no sense for the Government to claim it does not have the list. While I know the list may not be definitive, it is available to the Government and has not been discussed with anyone. It might help the Minister of State if I provided her with the list I got from each Department that the Minister for Public Expenditure and Reform will not provide to the House. I cannot let the matter go given that there are hundreds of allowances which should be read into the record if the Minister will not provide it.

I wanted the opportunity to do so but apparently I cannot do that now. I would have done so at my first opportunity. Given that the information was given in responses to parliamentary questions last week, it was reasonable for me to assume the Minister of State had the list. I am shocked that she does not have the list or that the Minister does not even intend giving the list. It shows gross disrespect to the House on the part of the Minister to claim he does not have the list when I have it here. It was well covered in the newspapers last week. Shame on the Department that cannot publish the list that was published in the newspapers last week.

Shame on a Deputy who makes assumptions without listening to the reply. The Deputy may refer to the fact that Departments were able to publish lists of allowances payable. It is certainly true that they published lists of allowances payable in each Department. These are Civil Service allowances, many of which are personal to holders and therefore would not have been payable to new beneficiaries - for example the children's allowance which is only payable to those in the Civil Service. On 1 January 1978 the Civil Service comprised only 10% of the public service. The allowances review covers all public service allowances and is therefore a wider exercise. Shame on the Deputy for jumping to conclusions. It is an awful pity he did not know about his first contribution.

The Deputy is now entitled to a final reply on the amendment.

The parliamentary questions did specifically ask about the health sector, the defence sector and the local government sector. The replies to the parliamentary questions are more comprehensive than just covering Departments. The list I have is fairly complete and broader. I asked for the details of allowances paid through local authorities and I accept that some of that information has not yet been provided. I have asked the Minister to compile it and send it on to me, and it will come in due course. I was giving the Department the benefit of the doubt in my first contribution as I assumed the officials would have had it here. I have lost my opportunity to-----

No, the Deputy has not.

Is there a limit on this?

I will not indulge you too long, a Cheann Comhairle. I want to outline some of the allowances. Approximately 20 allowances are being paid in the Department of the Taoiseach. The list from the Department of Foreign Affairs and Trade includes the child allowance, to which the Minister of State referred, for people who were in the public service before a set period, which does not apply. However, it also contains a van-driver allowance, franking machine allowance, keyholder allowance, paper-keeper allowance, shoe allowance, switchboard allowance, unsocial hours allowance, diplomatic duty allowance and passport office allowance. The list continues for five pages. The Department of Finance list includes delegates allowance, higher duty allowance, machine allowance, special variable allowance, keyholder allowance, telephonist allowance, child allowance, retro higher duty allowance, retro special allowance, retro private secretary allowance, retro local post allowance tax-free.

The Department of Public Expenditure and Reform list contains allowance personal to holder, child allowance again, maternity allowance, private secretary allowance and special allowance. There are not too many in that Department, which is a relatively new Department. The Department of Jobs, Enterprise and Innovation list also refers to child allowance. I am not dealing with the ones for private secretaries. We understand the allowances for staff on duty on weekends. I said here last week that many allowances and increments are part of pay - I have no argument with that. I was only asking for a list of what we are discussing. I am one of the few people in the House who will stand up for the public service in pensionable payment allowances. There are also footwear allowance, delegate allowance, cost of living allowance, child foreign allowance, local post allowance and school fees allowance. I also submitted separate parliamentary questions on the school allowances paid in separate Departments.

The Department of Social Protection list includes telephone rental allowance, keyholder allowance, Gaeltacht allowance, dual responsibility allowance, cleaning allowance, training allowance, travel allowance, personal to the holder allowance and special investigation unit allowance. Obviously being in the special investigation unit of the Department of Social Protection can be a very difficult job, operating out of hours. An officer could be - I will not say on surveillance work - working with other State authorities.

I accept some of these jobs could be difficult and could involve a certain risk for the individual. I fully support some of these allowances and would defend them to the last but some of them are outdated and should no longer be in place.

In every Department there is a franking machine allowance. In the Department of the Environment, Community and Local Government there is a shift allowance, a PCW allowance, a special duty allowance, a met station officer allowance, a children's allowance, a photocopying allowance, a driving allowance, an office accommodation allowance and an eating on site allowance - this is granted where there is no canteen available. A person gets €1.75 tax free for having their lunch while sitting at their desk. One can discuss the merits of that separately, I am simply putting the allowances on record. I asked for the list of allowances paid by the local authorities where there are 30,000 staff and was advised that the list will be provided separately.

The Minister for Justice and Equality advised that there is a higher duties allowance, a paperkeeper allowance, a supervisor allowance, a driving allowance, a footwear allowance, an out of call allowance and various other allowances payable to the Minster's staff with which I have no problem. They are entitled to it, they earn and put in long hours.

In regard to the Department of Defence, I do not want to overdo what I say about the allowances there. I got into a good deal of trouble talking about the Border duty allowance. I tabled a separate question to establish if that allowance is in place. I have been criticised by colleagues and have received telephone calls about that.

There is still a Border.

Yes, exactly. As soon as this reply appeared last week, I received telephone calls at my constituency office in Castletown from Donegal and everywhere else asking what was I talking about. I said that I merely published the Minister's reply to the question and I made no comment. In regard to the Department of Defence, I am sure the Air Traffic Control officer's allowance is well justified. There is an editors' connect and An Cosantoir allowance, an election gratuity allowance - I do not know what that is for - an emergency medical allowance and an explosive ordnance duty allowance. The people who do ordnance work are certainly entitled to an allowance. In respect of many of these allowances I would fight for the people who have them to retain them but I would like to able to specify which is which. There is a fire protection pay allowance, an instructor's allowance, a special instructor's allowance, an Irish language teaching allowance, an isolated outpost allowance, a military service allowance, a technician pay allowance, a security duty allowance, a daily course allowance, a messing allowance - I presume that is for working in the Army mess, perhaps they eat at a lower table than the others, I do not know what that allowance is for - and a uniform replenishment allowance. I will not go into the latter allowance. The journalists asked me to specify the difference between a male officer allowance and a female officer allowance but I will leave that to others to talk about. Then is a long list setting out a trainee pilot allowance and the list goes on. I advise the Minister of State that I getting through this information. The few minutes I spend putting these allowances on the record, once I get them on it, might save me calling a vote.

The allowances in the Department of Defence, as opposed to the Defence Forces - I got details of the allowances not only in respect of the Department but in respect of the Army - include a Sunday allowance, a holiday allowance, a Saturday allowance, a wardsmaid's allowance, a kitchen and mess helper wardsmaid's allowance for bank holidays, and on call allowance in Haulbowline, about which the Minister of State will be pleased to hear. The on-call allowance in Haulbowline is €211.85 per week and it is taxable while the call out call allowance in Baldonnel is only €21.98 and it is also taxable. There is also a tool allowance, an oil allowance, a pumps allowance, a storekeeper's allowance and an eating on site allowance. That allowance for staff in that Department eating at their desks is €1.90 a day whereas it is €1.67 a day in other Departments.

In the Department of Agriculture, Food and the Marine there is an allowance playable to veterinary officers who work in rendering plants. None of us would want to have to spend our time in such plants and we know the difficult conditions that exist in some of them. There is a shift allowance, a 1% PCW allowance, which I presume was in one of the national pay agreements, a housing allowance, an assisted head service officer allowance, a footwear allowance, an on-call allowance, and an eating on site allowance, which is only payable to general operatives and craft workers. It is €1.90 in line with that of the previous Department to which I referred. There is a meat inspection allowance, a pesticide allowance, an allowance to farm managers at Longtown Farm - I am not sure where that is - a livestock allowance and allowances for taking samples at knackeries, which is not a nice job. Those workers earn their allowance.

In regard to the Department of Children and Youth Affairs, there is a modest set of allowances for this new Department, with which I would have no issue. In regard to the Department of Health, there is a modified rate full allowance and I will not go into the allowances paid to consultants. I presume they are not included in the list in the reply I received but they are the ones we should be talking about. In the Department of Transport, Tourism and Sport there is a range of allowances that are quite small, including a radio officer allowance, a station allowance, an on-call allowance and a marine survey allowance, all of which I am sure are well earned.

A list of the allowances in the health sector will be forwarded to me later. The Department could have produced a list. I accept it was not provided and that there is work to be done on it. It would be helpful to have such a list when the Dáil is passing legislation that deals specifically with allowances. We are being asked to pass legislation on the blind. If the Minister of State or I were to go for an interview this afternoon and we were asked what allowances were included in the legislation we had passed on public service pensions and other related matters, which include allowances, neither she nor I would know the answer to that question. We should not be passing legislation when that is the bottom line of what we are doing here.

My point has been well made. We will return to the issue of allowances in several other forms in this House but the way we are dealing with the issue here is not the right way . The Minister should have held over this section until his review of allowances was completed, whether that be next week, next month or next November. When he has the review of allowances and work is being done on a budget for next year - this will relate to new recruits by and large - at that stage we would have the exact list of allowances that are permanent, payable and taxable and they should be included under the pension scheme. Those allowances that are temporary or past their sell-by date should no longer exist and they should be abolished if that is the business case that needs to be made. At that stage we should incorporate the allowances into legislation. It is wrong that we are passing legislation in respect of a list of allowances about which nobody knows the detail. That is not good legislation. My point is well made and I will return to it.

I acknowledge what the Deputy has said. In my opening remarks I said there are so many allowances that it is difficult to know what they are. The review is ongoing. The Minister knew that this issue would arise and he has said that when the review is completed and presented to the Government he will have no difficulty in publishing it at that stage. The Deputy read an exhaustive list of allowances but it is only a fraction of those available. I agree with him that there are allowances which are quite moderate and that people richly deserve. They probably deserve higher allowances but in the current circumstances that will not happen in the near future. On the other hand, there are allowances in place that are a hangover from practices that occurred a long time ago and the notion that power would be removed from the Minister to make decisions on those allowances, which was the subject of the previous amendment, seems ludicrous. I agree with the Deputy's main point. I hope he will not take any offence at what I said earlier - I would not mean that to be the case.

Amendment put and declared lost.

Amendment No. 10 has been ruled out of order.

Amendment No. 10 not moved.

Amendment No. 11 has been ruled out of order.

Amendment No. 11 not moved.

I move amendment No. 12:

In page 20, to delete lines 19 to 23.

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

Amendment No. 13 has been ruled out of order.

Amendment No. 13 not moved.

I move amendment No. 14:

In page 23, after line 45, to insert the following:

"(10) Scheme members shall be entitled to purchase years of notional service and the Minister shall publish purchase tables and the rate of contribution for notional service before the enactment of this Act.".

The Minister of State will appreciate what I am proposing in this amendment. We raised this matter on Committee Stage, had a discussion on it and that is the reason I have tabled the amendment. The amendment proposes that scheme members or public servants who are part of a pension scheme shall be entitled to purchase years of notional service and the Minister shall publish purchase tables and the rate of contribution for notional service before the enactment of this Act. The Minister of State will appreciate that many people who have taken a career break may not have their full 40 years' service on reaching retirement, which was the requirement in the past prior to the new legislation being introduced. Teachers may have worked abroad or may have been late in entering the profession.

They may now only make up 30 years but they want to contribute in order to buy extra years to give them the equivalent of a full pension on retirement. They are forced to take out additional voluntary contributions purchased from private sector pension schemes and we all know how these have performed in recent times. Many of these pension schemes have invested abroad there has been a reduction in the returns.

Teachers have been concerned about this issue over a number of years. Like everyone who takes out an AVC, they note the commission charged by these companies means the full first year of contributions is to pay the commission charges. The companies take the 5% commission on the 20 years of the contribution in the first year. The value of the AVC fund after the first year or two might be in the negative because of the level of commission charged. Current public servants are outraged that if they decide to increase the value of their pension on retirement they must go to the private sector. Some companies provide special arrangements for different categories of public servants such as gardaí, teachers or nursing staff. Also, there is no security as to what they will receive and this is also the case for private sector employees. However, these workers are public servants. They are paid by the State and they ask why their contributions cannot be invested by the State over the period rather than the State handing that money over to the private sector on behalf of its employees who have paid for AVCs.

My amendment contains a reasonable request for the Minister to consider publishing the table so that people would know what they would have on retirement. I ask the Minister to outline the rate of contributions and the notional benefit to be received. It may not be incorporated in this legislation but in this day and age of the State's cash flow difficulties the cost of AVCs is being deducted from public servants' salary payments and is being handed over to private companies. I suggest it would be more sensible for the State to hold that money, put it to use during this difficult economic period and pay the person the contribution on retirement. I suggest that the State should be the beneficiary of the contributions in the short term. The process of augmenting pensions has been privatised.

This Bill does not deal with AVCs which are private sector products that are already heavily regulated. The information contained in a table and which applies to teachers was distributed on Committee Stage and I hope it was of some assistance to Deputies. The Deputy has taken a sensible decision to make the argument rather than to table an amendment specifically dealing with this issue which could be moved out of order as being a potential charge on the Exchequer. The Deputy has chosen a novel but very clever way of debating amendments.

The Deputy will understand that the amendment No. 14 as he has tabled it, is not acceptable to the Minister. On the proposal that a notional service purchase option be included, the Minister points out that the single scheme is based on accrual of money amounts towards pension and lump sum and so it effectively represents a discontinuance of service as a measure of superannuation entitlement. In short, the scheme is counting reckonable amounts, that is, money, not years of service or notional service - this is a very clear difference - and would therefore be incompatible with the fundamental designs of the new scheme to insert a service-based element in respect of purchase of benefits and accordingly, the Minister, is not in a position to accept the amendment. However, I appreciate the Deputy's arguments.

I formulated the amendment in such a way as to raise the issue for debate and clarify the points. It is a way of asking the Minister to publish the purchase tables. I agree that information on the notional service purchase scheme for teachers, dated September 2011, was provided on Committee Stage. I note there is a limit to the number of notional years a person may purchase. For example, a person with 15 years' service on retirement will be permitted to buy a maximum of nine years. A person with ten years' service, therefore, cannot purchase 30 years. It is a case of supplementing rather than a full provision of a pension. The current arrangements for teachers are good. There is nothing to prevent other Departments from adopting such arrangements for current staff who are paying for AVCs. I ask if a similar arrangement could be implemented in due course for such staff when the new scheme is up and running. I will not press the amendment. I am happy to have raised the point and some progress has been made on this issue.

My officials inform me that the scheme is generally available across the public service. Progress is being made.

Amendment, by leave, withdrawn.

Amendment No. 15 is out of order.

Amendment No. 15 not moved.

Amendment No. 16 arises out of Committee proceedings. Amendments Nos. 16, and 20 to 27, inclusive, are related. Amendment No. 26 is an alternative to amendment No. 27 and must debated with it.

I move amendment No. 16:

In page 25, line 9, to delete "year for the pension, and" and substitute the following:

"year for the pension, that amounts to no more than €60,000, and".

This boils down to a straightforward proposition, that the pension payable to a public servant would be capped at €60,000. The amendments I have tabled propose to alter the legislation at various junctures to reiterate that point.

Some might argue that to introduce such a cap is a crude instrument. It is a blunt instrument, but it is also one that has the merit of equity and transparency. The Minister will be aware of the public disquiet and debate that arose in the not too distant past about the pension pots senior civil servants, former politicians and former Ministers were receiving. Those sums of money would be indefensible at any time but at a time when the State is insolvent and is a programme country, where cuts and austerity policies are damaging citizens and communities, it is utterly farcical for that situation to continue. The Minister, Deputy Howlin, told me his advice is that he cannot tamper with the pension entitlements of a range of senior personnel because the new provisions cannot have retrospective effect. I debated that with him and asked him to publish the legal advice. He failed to do so and, no doubt, my debate with him on that matter will continue.

What we are seeking with these amendments is a capped figure for the future. It is a reasonable figure of €60,000 as a maximum pension pay out for public and civil servants. That is the fair way to lead in a time of economic crisis, and I commend it to the Minister. I will not go through each of the amendments which apply to various provisions in the legislation, but the essential thrust is to clearly state that the pension take of senior public and civil servants can extend thus far and no further. It is also important to put it on the record that vast numbers of people who work very hard in the civil and public service will never have a hope of securing a pension of that order. It would be far beyond what they would be entitled to, so the cap I am suggesting in this provision is unapologetically aimed at those in the upper echelons who have, to this point, received excessive pay-outs and pension pots.

It is something that must be dealt with. The Minister says he cannot I do it retrospectively and I hope the Minister of State will not say that not only can it not be done retrospectively but it cannot be done into the future either. I hope that is not the Government's position.

I second the amendment. I will simply reiterate the point made by Deputy McDonald. People are scandalised by top civil servants and politicians walking away with obscene pension pots when the rest of the country is being crucified by austerity and cuts. It is particularly galling, as the Minister will be aware, that some of the people whom many would hold responsible for the current economic crisis are walking away with obscene pension pots while ordinary people are left to pick up the tab for the reckless behaviour that took place. Sinn Féin's proposal to cap pension entitlements at €60,000 per year is very reasonable.

The Minister has indicated that the problem with this is technical in nature, that is, in terms of what €60,000 will mean a few years hence. I do not accept that as a reason to oppose the amendment. The Minister can always adjust the figure upwards as time goes on. It would be a relatively easy thing to do. The Minister has given himself discretion in other matters relating to the new scheme so I do not see why the figure could not be updated as time passes. It would go some way to showing a serious commitment on the part of the Government to do something about these enormous pension pots of top public servants. In addition, although it is not directly related to the amendment, I do not accept that we cannot do this to some of the people who have walked away because there are other ways of doing it if there is a will. The tax system could be used to go after some of the enormous pension pots that some people have walked away with if there was a will to do so.

To take the Deputy's last point, where there is a will, hopefully there will be an amendment. In this case there was none from the Deputies to do this retrospectively. The retrospective issue is the difficulty, as Deputy McDonald knows. There is huge difficulty with retrospection. People come into an employment with a particular contract. They have an expectation of what the benefits will be as a result of that employment, so one cannot retrospectively damage that contract.

It is important that the Minister has introduced a cap of 50% of the final payment. It is probably the type of index linking the Deputies are seeking. The amendment introduces a specific payment of €60,000. People entering the service now at the levels people entered in the past means we are talking about 30 to 40 years hence. There will be many legislative measures passed between now and then. It is reasonable to assume that the sum of €60,000 in 20, 30 or 40 years will not be a great deal of money. That is also important.

The Minister does not accept the amendment. The sentiment behind it is fully understood. Deputies on this side of the House are very conscious of how the public feels about things that are seen to be excessive. Hopefully, those days are gone and this legislation is part and parcel of the process of putting more equity back into the system. The amendments specify €60,000 for one group and €37,000 for another group. I am not defending myself in this instance but talking about equity, and if somebody has the same level of service, has made the contribution and in some instances paid a lot more with the faster accruing contributions, I do not understand the amendments from that point of view. What the Minister has done is very reasonable. When a legislative measure is before the House one must assume it will last the distance and in this case we are talking about people who might very well be collecting those pensions 30, 40 or 50 years hence. Putting a cap of 50% of the final salary in the legislation is probably as crude and blunt an instrument as the Deputy mentioned but it is a far more equitable one. We will not accept the amendment.

This is one of these old chestnuts that arise when one comes forward with a proposal to deal with the issues. I am focusing very specifically on the pension entitlements of very high earners because this is where the problem lies. Nobody in the world has an issue with public servants who have served their time and who have served their communities and the State being entitled to decent pensions; this is not a matter of controversy at all. As the Minister of State acknowledges, such staff are, for the most part, entitled to very modest pension coverage. The problem is with the upper echelons. The Minister of State said, "Where there is a will, there is an amendment". This is a very good phrase and it is quite correct. I introduced an amendment on the retrospection issue. We debated it and the Minister blew it out of the water on the basis of legal advice that he will not publish.

There is merit associated with caps. A cap was much trumpeted in respect of CEOs of semi-State companies. The figure in question was much greater than €60,000. A figure of €200,000 is referred to in respect of the Civil Service. While one might disagree with caps on the grounds that one must calculate what €200,000 will be worth in a given number of years, one must acknowledge that a cap, because it specifies a definite figure, represents the most effective and transparent approach. Of course, one must factor in what €60,000 will be worth in ten years. There are ways we can address that. The Bill envisages a system of linkage to the consumer price index, and this constitutes one method. There would be solutions if there were a will to accept an initiatives such as the one I propose. However, the Minister of State is not accepting my amendments so I can only draw the conclusion that there is no political will to have the kind of cap I propose. I intend to return to this matter and debate it vigorously with the Government.

Calculating 50% of one's final salary is a much cleaner approach. The figure of €60,000 would have to be returned to time and again because, no matter what condition the country is in 20 years from now, constant review will be required. If one applies a ceiling of 50% to the final salary, it comprises an absolute. It is very clear and straightforward as to how one would proceed.

As I said at the outset, when considering legislation, one must always regard it as the last ever Bill. We all know this is not true because legislation must be reviewed and updated constantly but that is how one must approach it. Calculating 50% of one's final salary represents the most reasonable and concrete approach. The Minister believes this absolutely.

If one considers the reductions to the pay scales of those who are earning more than the average and applies the 50% ceiling, one is coming close, albeit not close enough, to what is desired.

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

Amendments Nos. 17 and 30 are related and may be discussed together.

I move amendment No. 17:

In page 25, to delete lines 13 to 44 and substitute the following:

"(2) In this section "referable amounts in respect of each calendar year or part of a calendar year", in relation to a calendar year or part of a calendar year of service, means—

(a) in the case of a pension, an amount calculated at a rate of—

(i) 0.58 per cent of the Scheme member's pensionable remuneration for that year or part of a year of service that is less than or equal to 3.74 times the value of the contributory State Pension at that time and, in respect of such service, as adjusted when not working on a full-time basis by reference to the proportion that the number of hours worked bears to the number of hours that would have been worked if working on a full-time basis, and

(ii) 1.25 per cent of the Scheme member's pensionable remuneration for that year or part of a year of service that is greater than 3.74 times the value of the contributory State Pension at that time and, in respect of such service, as adjusted when not working on a full-time basis by reference to the proportion that the number of hours worked bears to the number of hours that would have been worked if working on a full-time basis,

and

(b) in the case of a lump sum payment, an amount calculated at a rate of 3.75 per cent of the Scheme member’s pensionable remuneration for that year or part of a year of service as adjusted, when not working on a full-time basis, by reference to the proportion that the number of hours worked bears to the number of hours that would have been worked if working on a full-time basis,

and as adjusted thereafter, until payment of the pension and lump sum arises in accordance with this Part, by reference to such adjustments as may arise as provided for in section 40.”.

These amendments, despite looking extraordinarily complicated, are technical and minor. The first is to the section that calculates the benefit for the majority of public servants. It simply involves the realignment of a subsection and, therefore, the drafter advised it necessitated the removal and reinstatement of the entire subsection. The amendment is to make the "as adjusted thereafter" clause cover both paragraph (a) and paragraph (b). The Bill, as cleared by the committee, only covered paragraph (b). It should include “pension and lump sum” whereas it included only “pension”. The amendment seems more complicated than it is but the adjustment is very minor and technical.

Amendment agreed to.

I move amendment No. 18:

In page 25, between lines 44 and 45, to insert the following:

"(3) Where a formula is being used for the calculation of retirement benefits, the Minister shall publish the basis for such formula, prior to the enactment of this Act.".

In the course of calculating what a pension would be based on, the matter proceeded to the Labour Court, which made an adjudication and set a compromise figure of €45,000. I hope the Minister of State will be able to explain the position.

Yesterday, 10 July, the Minister issued a letter to the committee on the Bill and we all received a copy. It dealt with certain aspects of the legislation, including the provision under discussion. I do not fully understand it.

I included my amendment on Committee Stage because I did not know whether we would receive clarification. The Minister has made some effort to provide the basis for the calculation in the letter but some further explanation is required today. A technical note was requested to explain the figures used in the single pension scheme for pension accrual for ordinary members. I refer to appendix 2. I find it hard to reconcile what the Minister says will be the pension entitlement for staff after the introduction of the new scheme with the potential savings listed. We are beginning to get to the bottom of this. The detail has not been given to us heretofore, despite the fact that this legislation has been before us for six months.

We asked for a technical note on how the figures pertaining to the new scheme are being calculated. The Minister's letter claims that, based on the estimates carried out by his Department, which, it must be stressed, are highly sensitive to changes that might happen in the middle of the century given that it will be 43 years before new entrants receive their full pensions, the annual expenditure on the pension scheme will be approximately €5 billion in today's terms. The Minister states the new scheme will reduce the annual expenditure by approximately 35%, or €1.8 billion. Importantly, he states the estimated saving will arise from indexation, in respect of which the figure will be €1 billion. The figure for career average change is €500 million and that for the later pension age is €300 million because people will have to work for three years more than they would have worked under the old scheme. We must take our time with this issue, as it sums up the Bill in one sentence.

The Minister of State will understand the confusion. Appendix 1 provides examples of the single scheme lump sum as a percentage of the lump sum under the current scheme. The public's confusion arises in this regard. I did not get my head around appendix 1 until I read the sentence I mentioned. We have been debating this issue for six months, but we are only now at the crunch. Perhaps the point was clarified, but 99.9% of the public does not know. Maybe the people behind the Bill know what this is about.

According to appendix 1, a clerical officer's pension will stay at 100% under the new scheme versus the current scheme. As the officer is on low pay, he or she will not lose. How was this figure calculated? Different assumptions are made for years of service. Under the new scheme, an executive officer's pension will be 85% of its current level, a higher executive officer's pension will be 78% and an assistant principal's pension will be 73%. This lessening is the essence of the Bill. According to the example used, a teacher's pension will be 83% of its current level, a senior staff nurse's pension will be 87% and a prison officer's pension will be 81%. Under the new scheme, most people will have pensions of approximately 80% of the current levels. Hence, the saving will be approximately 20-25%. However, the Minister stated-----

For new entrants.

Yes. Some 300,000 public servants are beginning to realise the importance of this debate. One section of the Bill affects them, but we will discuss it later. In general, the Bill only affects new entrants. By and large, new entrants who retire after 43 years, having paid for three years longer, will have pensions in the order of 80% of what they would have been under the current scheme. The Minister claims that there will be a saving of approximately 20%. This is what we all understood the figure to be, although we might not have liked it. However, the Minister also stated that the new scheme would reduce annual expenditure by approximately 35%. Any person who heard him would have expected the new pension rates listed in the appendix to be approximately 65% of the current arrangements. The figures have been dolled up to give them the appearance of being approximately 80%, but the small print on the previous page mentions savings of 35%. These two figures do not tally. How can we tell new recruits that, although their pensions will be 20% less, we will save 35%? The Bills Digest could not get its head around this issue either when it produced its updated documentation on the Bill on 27 October 2011. We raised this matter on Second Stage last autumn. Some of the public sector unions could not reconcile the Minister's claim about the reduction in pensions being small with the purported savings of 35%. We must tease out the question of why the figures do not tally.

The career average change is a fundamental element of the new pension scheme, as pensions will be based on career average salaries. For example, the No. 3 example of a higher executive officer on 78% of the current pension is based on ten years as a clerical officer, 15 years as an executive officer and 18 years as a higher executive officer. Every public sector union asked us how the Minister could claim that he would cut the pension bill by 35% when he continued producing charts to show reductions of 20%. Getting my head around this has been problematic. For this reason, we asked for the formula, but I have not received what I sought. We will discuss that issue on another day.

Everyone understands that the career average change will form a significant aspect of the reduced pensions of new recruits. Instead of one's pension being based on one's salary in the final few years at work, it will be based on one's career average earnings and lead to a saving of €500 million. A further change is that a person must work in the public service for 43 years. It is stated somewhere in the Bill that, due a career's extra three years, a person will be three years older when he or she retires. According to the notes on the Schedule, a longer working career means more tax revenue and pension contributions to support the scheme's pay-as-you-go nature. The later pension age means that the pension will be in payment for fewer years, notwithstanding increased longevity, and the national retirement age will have increased to 68 years. That saving will amount to €300 million and the career average change will save €500 million.

However, the major saving has not been dealt with yet, that is, the €1 billion relative to indexation. Some 60% of the overall saving owes to the fact that, when a person retires, his or her pension will increase based on inflation. Under the existing scheme, increases are based on current pay rates. If a person works for a lifetime and retires under the new scheme, his or her pension increases will be capped to the consumer price index, CPI, rather than to pay increases. As such, the scheme's main saving does not owe to the changes in terms of the career average earnings or becoming pensionable three years later. Instead, it owes to the fact that, when people retire, inflation will screw them. We will make our savings when they are in their old age, not when they are still making contributions.

For decades, the standard of living in every Western society has increased. If it had not, people would have the same standard of living now that they had in the 1930s. My main gripe with the legislation is that, having given 43 years' service, contributed to the State and paid tax and PRSI, the increase in one's pension will be limited to the rate of inflation. One will never receive a standard of living increase. One could leave the service at 68 years of age and live for 30 years on a pension. If society's wealth and standard of living increase and if the public sector payroll increases accordingly, pensioners will receive nothing. We will not allow their pensions to decrease below the rate of inflation, but we will cap them at that rate as well. If everyone else's quality of life and pay increase in the following 30 years, pensioners will still see no increases. We are locking people into their final standard of living on the date they retire, and this despite the fact that they will not be on large pensions. They will have contributed towards the overall annual pension fund by paying superannuation, various levies and taxes. We are saying thanks for the 43 years of work and although they are leaving the service, if standards of living increase in the next ten or 20 years, they will get no increases relative to it. They will be pegged to the consumer price index.

This is the biggest single change in the legislation. Everybody has been focused on the career average earnings aspect and the number of extra years that must be worked. We are indicating that once a person is out the door, he or she should not expect an improved standard of living up to the day of death. That is what the legislation is about.

Some 60% of the total saving is due to indexation. Pension increases after a person's retirement will be based on consumer price index increases and remain unconnected to increases in pay and earnings in society at large. The figures from the past 20 years were provided by the Department in recent days, and on average public sector pay rates increased by 1% more than the rate of inflation in that time. Over a period of 20 years, a person would have had a 20% improvement in the standard of living, which is only right.

I would not like to think that the standard of living we have in Ireland today will be the same in 30 years or that nobody could expect an increased standard of living. We are saying to these pensioners that the standard of living of everybody else can increase but when these people live off their pensions, they will never get an increase in their standard of living, although the income will be proofed against inflation. If everybody else is seeing standards of living increasing by 1% per year - sometimes it may be half or a quarter of that - these pensioners will not share in it. It is the meanest aspect of the legislation and where the savings come about.

I could never reconcile the charts we were handed that showed how people's pensions would be at 81%, 87% or 83% of the current arrangement. That may be true on the day the person retires but the Department will claw back the money. At the end of a person's life, having lived on the pension for 20 years, what percentage of current arrangements will it be? The figures I outlined are the high point on which a person starts but it will drop every year in a person's retirement. When salaries and standards of living go up, the person on these pensions will only see them rise in line with inflation. The pension as a percentage of current arrangements will decline year by year when a person is in retirement, and that is not reflected in today's information. The best figure is given at year 1, and as a result a fair picture is not given.

What has been described is accurate but the picture is incomplete. A pensioner cannot expect an increase in standards of living if the State wants to claw back most of the money by linking increases to indexation.

The Deputy knows there will be further opportunities to contribute.

There is a bit of time put aside for this and the essence of the Bill is in this sentence. The new scheme will save 35% and the charts that indicate pensioners will be on approximately 80% of current arrangements is not a fair reflection. Some €500 million will be saved from the change to career average earnings and there will be €300 million in savings from people having to work three years longer. The biggest change is that once people go out on a pension, they should not expect any increase in their standard of living. Some €1 billion will be saved on the back of pensions from this, and that is not fair to the people who will work for 43 years.

I am a little confused about what we are discussing. What amendment is it?

It is amendment No. 18 in the name of Deputy Fleming.

How does that amendment relate to the subjects we have debated?

That is a matter for the person moving the amendment. I call the Minister of State to respond.

If we are having a discussion about those matters, I would like to contribute.

The amendment dealt with the calculation formula.

I will make a brief contribution. Until now, pension entitlements were dependent on increases in public sector pay and the automatic link has been broken, meaning we are into a much more vague metric involving the consumer price index, with all the potential ups and downs in that. I heard Deputy Fleming state that public sector pay was ahead of the consumer price index but I do not accept that.

It is over ten or 20 years.

The figures mask how people at the top can benefit from percentage increases to a much greater level than people at the bottom. Percentage figures do not tell the complete story about how these issues affect everybody. It is also wrong to say that pay is ahead of inflation, as people seek pay increases in order to deal with rises in the cost of the standards of living. The consumer price index does not always reflect this fully, particularly how the rise in the cost of living affects people at different levels in society. It is a much more vague process that is subject to factors other than the automatic link that currently exists between pension entitlements and pay in the public sector.

In other sections it is made clear that all of this, in any event, is in the gift of the Minister. What is the connection between the consumer price index and increases in pension entitlements? There is no automatic link and it is up to the Minister to decide if and when any increases in pension entitlements are given. That is a serious deterioration in pension entitlements for future pensioners from the public service when compared to the current guaranteed system.

I disagree with some of the details in the way Deputy Fleming made his contribution but the substantial point is correct. The bottom line is that the Government will make a massive saving on the back of future public sector pensioners who will see a very serious degradation in pension entitlements. As has been stated by me and Deputy McDonald, among others, we would have no problem if this was the case for the very highly paid public servants who walk off with very handsome public sector pensions. These are politicians, Secretaries General, etc. The bulk of these savings will be made on the back of degrading pensions of people who are, for the most part, low and middle income earners and whose consequent pension entitlements are not that generous. It is another austerity attack to make life worse for future pensioners.

It is a severe indictment of our society that not only will the young people in future be worse off than their parents but the pensioners of the future will be worse off than the pensioners from the last generation. It is a rotten indictment of what is happening in our economy and society and the way in which we are heading.

I thank Deputy Fleming for putting down the amendment. He is correct as the gap between the 20% level and the 38% level relates to indexation and the later pension age. It is no great secret. The table is based on assumptions.

As we are all very much aware, when we deal with pensions we can only work on assumptions because they are in the future. We must make assumptions of a certain nature; they do not always turn out to be correct but we have to make them.

I do not accept, and neither does the Minister, Deputy Fleming's assertion that the link between future pensions and the CPI will have a detrimental effect on pensions 30 or 40 years hence, because the contribution people will make during their career will also be indexed linked to the CPI. Therefore, it is not so much a negative measure but will inflation-proof contributions and the eventual pension received as one exits from one's career. This is the essential point. I know the Deputy did not mean to gloss over this, but as contributions are made year by year they will be linked to the CPI so the contribution and the final ongoing payment will be inflation-proofed and this is how it will be. I am sure this will not be the last piece of legislation on the issue. Given the state of the country and as we look to the future it is a sensible arrangement.

I wish to speak specifically on one point I did not make. We understand the formula referred to in the appendix states at present pension rates are based on the residual part of final pay after subtracting twice the rate of the contributory State pension. This ensures a minimum floor for low-paid public sector workers. A person who never worked in the public sector and who has a spouse would have twice the contributory State pension, and we want to avoid people working and coming out with little more than the pension they would have otherwise had. According to the arrangement they will get 20% of their final salary regardless up to a certain figure, and we will not get into the nitty-gritty of this.

It is to ensure people on very low incomes-----

Receive a pension.

We agree with this. Up to now under this formula there was not an exact link, but generally the rate of increase of the old age pension matched increases in standards of living in society which were generally not too far removed from increases in public sector pay. I do not know whether anyone has figures on this, but generally we have tried to look after people on the State pension as other pensioners and they would have benefited. The point I am making is a small technical one. Under this arrangement over a 20 year period if the contributory State pension increases more than inflation - which we would all hope it would and people have a real increase in their pension - but the pension of people under this scheme will be based on their contributions, we could find that ten years into payment the actual pension would reduce because it is linked to twice the amount of the State pension. It is very important that in the first year of their pension people will have a real pension with a certain amount of money, but if the State pension increases over the next ten or 20 years from then we want to ensure a commensurate increase under this arrangement, particularly for people who were on low pay so their pension is not reduced as a percentage.

It is difficult to know whether this will happen or in what circumstances it could happen. The point is noted. I am sure the Department will examine it. It is difficult to see in what circumstances this would happen. I am sure no matter how the Government of the day was made up, it would ensure such a scenario would not play out. It is a very technical issue and I am sure there will be a very straightforward answer when people examine it.

On the basis of the document we received yesterday I will withdraw the amendment.

The Minister does not have a difficulty with providing any further information which becomes available provided it is complete.

Amendment, by leave, withdrawn.

Amendment No. 19 is out of order as it would incur a charge on the Exchequer.

Amendment No. 19 not moved.

I move amendment No. 20:

In page 26, lines 2 to 8, to delete all words from and including "equal" in line 2, down to and including "has accrued" in line 8, and substitute "no more than €60,000.".

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 21:

In page 26, lines 30 to 41, to delete all words from and including "subject" in line 30, down to and including "office" in line 41 and substitute "subject to a cap of €60,000.".

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 22:

In page 27, line 10, to delete "as a public servant." and substitute the following:

"as a public servant, however the combined pension earned may not exceed an annual pension payment of €60,000.".

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 23:

In page 27, lines 33 to 36, to delete all words from and including "maximum" in line 33 down to and including "and" in line 36 and substitute "cap of €60,000, and".

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 24:

In page 28, lines 23 to 26, to delete all words from and including "maximum" in line 23 down to and including "and" in line 26 and substitute "cap of €60,000, and".

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 25:

In page 29, lines 47 and 48, to delete all words from and including "maximum" in line 47 down to and including "that" in line 48 and in page 30, to delete lines 1 and 2 and substitute "cap of €37,500, and".

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 26:

In page 30, to delete lines 24 to 48, to delete page 31 and in page 32, to delete lines 1 to 50.

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

Amendment No. 27 cannot be moved. Amendments Nos. 28 and 29 are relative and alternative to each other and will be discussed together.

Amendment No. 27 not moved.

I move amendment No. 28:

To delete pages 33 and 34 and in page 35, to delete lines 1 to 20.

Deputy Fleming has tabled an alternative amendment to this one. The crux of the issue is the difficulty with the fast accrual calculation. A lengthy exchange took place in respect of the fact that everybody under the new scheme will be less well-off in terms of their pension entitlement and it will be a matter of degree. The difficulty that arises for particular categories of workers in the Garda Síochána, the Defence Forces, prison officers and fire service employees is that they do not have as long a working life as others for operational reasons. Therefore, a fast accrual system applies to them.

I am aware that in the drafting of the legislation there was contact with the union representatives of these workers and that complicated equations and algebraic formulae were passed over the table in the effort to get things right. However, I am reliably informed by these workers that they will be disproportionately affected by the terms and provisions of the fast accrual system. They were are at pains to say that they are not looking for special treatment. They understand the legislation means a level of pain for all public sector workers and appreciate that, but they think they are being unfairly treated.

I do not believe that in the course of the lengthy discussions between the Department and the unions a satisfactory arrangement was reached for these categories of workers, whose virtue it should be borne in mind is regularly extolled by politicians and Members of the Dáíl. For that reason, my amendment proposes the deletion of the proposals for the fast accrual system because, as envisaged, it is not right. Deputy Fleming's amendment calls for the Minister to publish a report on the implications of the new scheme for the Garda, the Defence Forces, prison officers and so on and I imagine he is concerned about the same issue as myself. It must be emphasised that for these categories of workers, who take on very arduous tasks, it is not fair or right that they be in a less advantageous position in the new scheme, but that they will be disproportionately affected as against other public service workers. This does not tally with the kind of rhetoric we hear so often congratulating them on their efforts on our behalf. I support Deputy Fleming's effort to have this issue addressed also.

Amendments Nos. 28 and 29 deal with the issue of uniformed workers working on behalf of the State, specifically members of the Garda Síochána, the Permanent Defence Forces, prison officers and specified fire brigade employees. These are people in uniform who deal with emergency and other security services. Everybody knows they have a difficult task to do, which is getting more difficult as the years progress.

It is important we listen carefully to what these workers have said. Recently we have met with and had correspondence from the Prison Officers' Association and from the public administration and community division of SIPTU. We have received further correspondence from them in the past few days and they are still not happy with the current situation with regard to this issue. We raised this matter extensively on Committee Stage and I was quite surprised by how hostile the Minister, Deputy Howlin, was. The essence of what he said was that these people have a bloody great pension and they are looking for a better one again. I was surprised by his tone.

Is the Deputy sure that is exactly what he said?

That is very close to what he said.

There is a difference between being very close to what he said and exactly what he said.

I am not quoting him. I am paraphrasing and saying that was the gist of what he said. We have gone through large sections of this legislation and we spent eight hours on Committee Stage. In that time I was surprised by the Minister's attitude in just a couple of instances. This was one of them. In general, he was fair and reasonable and we could agree to disagree on issues, but when it came to this issue, I was surprised by his attitude. He shocked us. I advise all of the people working in the organisations to which I have referred to read the debate and judge this for themselves. I am not quoting him, but over the eight hours of debate I was surprised by his attitude in this regard. His view was that these people have a very good pension scheme, they can retire after 30 years and they are doing very well, but now they are coming in and looking for some enhancement of the new scheme.

The representatives of these organisations have always been clear in the understanding when the scheme was being explained to them, that they would be no worse off than any other similar grade in respect of the position with regard to final pensions. They all know they will be a bit worse off. One would want to be blind and deaf not to understand that. However, they do not want to be any more worse off than others of a similar grade.

One would want to be blind and deaf not to understand the reasons for that.

We understand all that. Perhaps the Minister is not happy with the level of public sector pensions, but we will come to that later. If the Minister wants to cut current public service pensions, he must bring forward proposals, but will not get much support on that. If it is the Department's view that previous arrangements have given the public sector grade of workers to whom we have been referring too big a pension, so be it.

The representatives of the unions say that according to the pension experts they consulted, Trident Consultants, it is not the case that these workers will be no worse off. They say the workers will be worse off and say this is very unfair, on account of the fast accruals group and the early retirement age for this sector for operational reasons. None of us wants to see 68 year old gardaí on duty at 2 a.m. on a Sunday morning or soldiers, prison officers or fire brigade officers of that age trying to perform onerous duties. There is a good reason for early retirement for these sectors, due to the nature of their work. These people are not looking for any enhanced terms, but want to be assured they will not be disadvantaged under the new arrangement. The formula for dealing with their arrangement is different because of their particular situation.

To return to the chart referred to in the Minister's letter, the comparison is made with only one person. The clerical officer who serves his full career as a clerical officer will have no reduction in pension under the new scheme. His pension will be 100% because of his career average. However, the uniformed prison officer, who retires after 33 years as a prison officer, will only receive a pension of 81%. Therefore, it is clear the clerical officer comes out with a full pension, but a prison officer who spends his entire career, including the extra three years, as a prison officer, will come out with only 81%. The Minister may say that the reduction for assistant principal officers is of the same order, but in the example given by the Minister, the assistant principal has only spent 18 years in that position. The majority of his career was at a lower level so his career average would be less than had he been constantly at the higher grade for his full career.

Therefore, the chart the Minister gave us yesterday further reinforces the point being made by the prison officers, the Garda, the soldiers, the fire brigade people and SIPTU. We had a presentation at our Oireachtas committee some months ago on this area and it was very useful. We also had representatives from the Irish Nurses and Midwives Association in who made a similar case. They gave an example of the case of a higher executive officer who will get a pension of somewhere between 85% and 91% of current pension when we move onto the new arrangements. They say the multiplier for fast accrual grades under the proposed new single scheme will only bring the pension of a prison officer to 80%. The Minister confirmed this would be 81% in the chart he presented last night. However, the pension of a clerical officer who remains at the same grade throughout his career will not be affected at all. He will retire on the same pension.

A person who gets no promotion during his career and who retires on the same grade after 43 years should not be affected by the new scheme, because the career average salary is close to final salary. The same comparison does not apply to people who get promotion, as illustrated by the examples for every other grade on the chart, executive officer, higher executive officer, assistant principal grades and others. They are not directly comparable, so they make the point that the addition of the fast accruals makes their situation relatively worse compared to others even though they know everybody is, to some extent, worse off. That is why I asked the Minister - maybe by way of avoiding the interminable debate we could have on this matter - to publish a report on the implications of this. We got the message loud and clear on Committee Stage that the Minister was pressing ahead. He rejected our views on that matter. Unfortunately, I am taking it as a fait accompli that the Bill will pass today without the amendment Deputy McDonald proposed which would delete the section dealing with this issue. On the basis the Minister is determined to push this through, we want to see a report within six months on the actual implications and more worked out examples.

We got something from the public sector employees, who are competent people, through their trade unions, and we must accept what they say at face value but we also want to test what they say. There is only one line in that whole report dealing with people on the fast accruals basis. If the legislation is passed - we suspect it will be - we would like to see a report in a few months time analysing this in further detail. That should not be an undue burden on the Department and it is something to which we ask the Minister to agree. He does not need to include it in the legislation but he can give a commitment to come back with a detailed report on this matter before the end of the year.

I would like to reinforce the point. Everybody accepts that firefighters, prison officers and Army personnel do extremely difficult, arduous and sometimes very dangerous jobs and that it is entirely fair and reasonable that they retire earlier. They should not be penalised more than others because of the nature of their jobs. Judging from the tone of the Minister's response when this issue was raised on Committee Stage, he somehow seemed to think that because they have a shorter working life, they are getting an easier ride than everybody else and, consequently, it is somewhat more justified to put an excessive penalty on them in terms of the impact the new legislation will have on pension entitlements in the future.

The unions were very clear when they appeared before the Joint Oireachtas Committee on Finance and the Public Service that these categories of public sector workers would be disproportionately hit in terms of their future pension entitlements after the passing of this Bill. They have not heard a convincing response to the contrary from the Government on that matter. The Minister should have taken this on board and engaged more with the unions.

Maybe the Minister of State can tell us definitively if the case they are making is wrong. This concerns their pensions so I would say they have a fair idea how they work and how this Bill is likely to impact on them. Is the Minister of State telling us that this is not the case and that they will not be disproportionately hit because they are pretty certain they will be, which would be unfair? It is bad enough that many low and middle income public sector workers will see the quality of their pensions degraded but it is even more unfair if particular categories of people, who do difficult and dangerous work, are excessively penalised by the measures contained in this Bill.

It is agreed that what Deputy Fleming is looking for in his amendment, namely, a report after six months is not long enough in terms of this type of scheme. One would have to give it a little more time. It has been explained to me that it would be okay if a new entrant died shortly after entering the service. One might be able to do an early micro assessment but I do not think that would be very reasonable in terms of how it would work into the future. The report will have to wait a little bit longer. It is a good idea but six months is a little bit unreasonable.

I refer to Deputy Fleming's argument in regard to clerical officers, for instance. Clerical officers will have to work longer and will not be allowed to retire until they are 60 years of age. Prison officers will also work until they are 60 years of age but they may retire at 55 years of age, which is a clear distinction. Clerical officers will work until they are 68 years of age under the new arrangements.

The Minister's commitment to the public service is not something for which he has been widely praised but I do not believe anyone would doubt his commitment to it and to protecting that particular group of people. That group of people includes not only those we see sitting at desks or meeting people at counters but people in uniforms who do very dangerous jobs. The reason the Minister is not here today is that he has a meeting with the Taoiseach in regard to the Croke Park agreement. His commitment cannot be doubted and it is probably stronger than any other person's in the State.

The Department recently sent a fairly comprehensive letter to the Prison Officers Association, SIPTU, the Association of Higher Civil and Public Servants, the Association of Garda Sergeants and Inspectors, the Garda Representative Association, Permanent Defence Force Other Ranks Representative Association and the Representative Association of Commissioned Officers confirming that the report drawn up in regard to the public sector clearly states that people in these categories will not be unduly affected by the changes to the scheme compared to current members. The Minister is not inclined to accept the amendment.

Deputy McDonald is opposing this section which provides the scheme members, who may be required to retire early, such as the gardaí, Permanent Defence Force members, firefighters and prison officers, with early paid pensions and fast accrual. I cannot accept the amendment which would strip these uniformed public servants of these valuable and important benefits in the single scheme.

Deputy Fleming wants a report to be published within six months of the enactment of this Act on the implications of the new scheme for the categories covered by this section. As the Minister said on Committee Stage, there are, as there should be, review powers in section 41 of the Bill which will allow the scheme to be reviewed for any class of scheme members.

The Department has not had a response to the letter sent to all of the main players, including the unions, on this issue. If a fast accruals system is to be put in place, which is right because we rely on these people for our safety in all sorts of ways every day of the week, there will be an additional cost but it is a cost which will be reflected in the exit. It is right that people in these areas are allowed to retire earlier because they do jobs which they cannot go on doing indefinitely.

Debate adjourned.
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