Public Service Superannuation (Age of Retirement) Bill 2018 [Seanad]: Second Stage

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

I welcome the opportunity to introduce the Public Service Superannuation (Age of Retirement) Bill 2018 on behalf of my colleague, the Minister for Public Expenditure and Reform, Deputy Donohoe. This Bill is a positive and timely measure which responds to the growing consensus that the traditional retirement age of 65 years no longer reflects contemporary life and society. The legislation provides that a large cohort of long-serving public servants, those recruited prior to 1 April 2004, will have the opportunity to continue in their public service employment up to the age of 70 years, should they wish to do so. At present, there is a statutory requirement for these public servants to retire at the age of 65 years. When this change was announced in December, it was welcomed by public servants, many of whom feel they are fit and healthy enough to continue working. For some, financial commitments such as mortgages and supporting children through third level education make retirement at 65 years an impractical prospect. Others simply enjoy their work and feel they have valuable skills and expertise to contribute to their organisations.

All the Deputies here are aware of individual public servants who want to continue in their employment past the age of 65 years. I am eager to ensure that this Bill is enacted as quickly as possible so that as many of those public servants as possible can avail of the new compulsory retirement age. While this will facilitate those who wish to remain at work for personal, professional and financial reasons, it will also address the income gap which is currently experienced by public servants who must retire at 65 years but do not receive the State pension until they are 66 years old. This creates considerable inconvenience for those affected and addressing this anomaly was one of the driving forces behind this legislation. The new compulsory retirement age of 70 years will also accommodate the scheduled increases to the State pension age to 67 years in 2021 and 68 years in 2028, ensuring that this income gap will not crop up again in future. When the Bill is enacted, no public servant, other than a member of the uniformed pension fast accrual group - gardaí, prison officers, firefighters and members of the Permanent Defence Forces - will be required to retire before the age of 70 years.

While this legislation is directed towards public servants, it also responds to the challenges and opportunities that changing demographics in Ireland present for society and the economy. The life expectancy of Irish men and women has increased significantly since the first official statistics in 1926. In the period to 2011, male life expectancy had increased by 21 years and female life expectancy had increased by 24.9 years. This upward trend is set to continue. Ireland, like most European countries, is facing an ageing population as life expectancy increases and birth rates fall. The number of pensioners is projected to more than double over the next 40 years. The result of this is a significant increase in the number of people of pension age relative to the number of people of working age, which has serious implications for the sustainability of the Social Insurance Fund and the State pension system. One of the ways to absorb the impact of this demographic shift is to encourage and facilitate longer working.

Supporting fuller working lives is one of the key policy strands in the Roadmap to Pensions Reform 2018 - 2023, which was published by my colleague, the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, in February. The roadmap commits to ambitious reform across the pensions system - State, public sector, occupational and private pensions - with the aim of modernising pension provision so we can all enjoy a life of security and opportunity as we get older. This Bill is one of the key actions committed to by the roadmap in respect of public service pensions.

It is widely recognised that supporting fuller working lives is key to promoting positive ageing and the continued integration of older people in society. This approach is supported by advocacy groups such as Age Action and was reflected in the recommendations made by the Citizens' Assembly in 2017 with regard to responding to Ireland's ageing population.

This demographic shift is not just an economic challenge but is also an opportunity. The Department of Health's national positive ageing strategy recognises that increasing numbers of older people, better educated and in better health than previous generations, are an enormous opportunity for economic, social and cultural development. I could not agree more with this sentiment. People are living longer, healthier lives and in many cases have the energy and desire to work into what are traditionally considered the retirement years.

The new compulsory retirement age of 70 recognises the significant contribution that older public servants, many of whom have built up years of valuable experience in the public service, are able and willing to make.

In line with the Government decision of 5 December last, the purpose of the Bill is twofold: to increase to age 70 the compulsory retirement age for public servants recruited before 1 April 2004, other than the uniformed pension fast accrual group; and to ensure that the additional service by a public servant up to the age of 70 can benefit from pension accrual subject to the maximum of 40 years’ service. The provisions for the compulsory retirement age in the public service have been addressed in previous legislation on a piecemeal basis. Compulsory retirement age for public servants is generally determined by their date of recruitment to the public service. Public servants recruited between 1 April 2004 and 31 December 2012 have no requirement to retire on age grounds, while those recruited since 1 January 2013 are members of the single public service pension scheme and have a compulsory retirement age of 70. Public servants recruited before 1 April 2004 are, therefore, the only group currently required to retire before the age of 70. They generally have a compulsory retirement age of 65 and it is this group that I cater for in this Bill.

The selection of the age of 70 as the new compulsory retirement age follows extensive discussions with public service employers and consideration of the other options available, such as synchronising compulsory retirement age with the age of eligibility for the State pension. Selecting the age of 70 not only aligns the potential working horizon for a public servant with the increasing age of eligibility for the State pension, it also allows people to work beyond that age should they wish to do so. It is only six years ago that the age of 70 was agreed as an appropriate compulsory retirement age for members of the new single public service pension scheme. Selecting 70 helps to bring about a consistency in retirement ages in the public service by matching the compulsory retirement age of the pre-2004 public servants with that of single scheme members. In taking the decision, consideration was given to the benefits of having a specific age limit which reflected increases in longevity and at the same time respected the existence of a retirement horizon. A defined retirement age is important for planning of recruitment and promotion throughout an organisation. For this reason, it was agreed with public service employers that a specific age limit should be set. While there can be no right answer as to what the perfect compulsory retirement age might be, the age of 70 strikes the right balance.

When the Government made its decision last December, it agreed that the new legislation would not apply to the uniformed pension fast accrual group - for example, gardaí, prison officers, members of the Permanent Defence Force and firefighters - who are required to retire early for operational reasons. It was agreed that issues relating to the retirement ages for these groups could only be dealt with at sectoral level where the detailed policy, operational and manpower issues relevant to those groups could be appropriately considered. On that basis, retirement ages for these groups remain a matter for the respective Ministers.

There is a small number of other groups to which the new retirement age of 70 will not apply. These are groups which, by convention, have no compulsory retirement age. I refer, for example, the President and Members of the Houses of the Oireachtas. Certain groups, such as members of the Judiciary, whose retirement age is provided for in courts legislation, are being excluded from the Bill. Their retirement ages will continue to be covered by the courts legislation. The new compulsory retirement age will not apply to public servants who have retired and been rehired on contract. Their fixed-term contract terms will continue to apply.

I will now briefly outline the main provisions of the Bill, which has been drafted as an amendment to the Public Service Superannuation (Miscellaneous Provisions) Act 2004. Section 2 identifies the public servants to whom the Bill will apply and refers to them as "relevant public servants". These are effectively all pre-2004 public servants other than those I mentioned earlier. Section 3 provides for a new compulsory retirement age of 70 for relevant public servants as defined in the Bill. It also provides that the new compulsory retirement age may be increased further in the future by Ministerial order in certain circumstances.

Section 4 gives effect to the Government’s decision to provide that the service between the age of 65 and the new compulsory retirement age of 70 would benefit from pension accrual, subject to the maximum accrual of 40 years’ pensionable service. Section 5 provides that any statutory instrument which sets a compulsory retirement age, which has been set under any enactment, should reflect the new compulsory retirement age provided for in this Bill.

Schedule 1 of the 2004 Act details the public service bodies to which that Act does not apply. These are mostly commercial State bodies. Section 6 of the Bill updates this Schedule by adding Shannon Group plc and Teilifís na Gaeilge to the list. Both of these bodies have a commercial mandate and were established since 2004. For the avoidance of doubt, a global reference is being added to the Schedule to exempt any pre-1922 public service body of a commercial nature established by an Act of Parliament.

Section 7 and the Schedule contain consequential amendments to various sectoral Acts which provide for a compulsory retirement age for an individual public servant or class of public servant, so that those provisions reflect the increase in the compulsory retirement age provided for in this Bill.

The Government recently approved two amendments to the Bill. These amendments concern the exclusion of Central Bank staff and the accommodation for teaching staff in the education sector to remain at work until the end of the academic year in which they reach the compulsory retirement age. These amendments will be dealt with in detail on Committee Stage.

The purpose of the Bill is to enhance the options available to pre-2004 public servants as they approach retirement. Once it is enacted, 70 will be the new 65 for this group. There will be no change to their minimum pension age but they will be able to remain at work on current terms and conditions up to the age of 70, if they wish to do so. This is a positive change for this large cohort of public servants and it represents a tangible step towards supporting fuller working lives. I commend the Bill to the House.

I invite Deputy Cowen to make his contribution. The floor is his but I ask that he move the adjournment of the debate at 5 p.m.

I thank the Ceann Comhairle. I very much welcome the opportunity to contribute to the debate on the Bill. It is crucial that we adapt to a changing society. With advances in living standards, people living healthier lives and enjoying better healthcare. Noticeable improvements have occurred in a relatively short period. Thankfully, people in Ireland are living far longer than at any other period in history. The average life expectancy in the 1970s was around 68.8 for men and 73.5 for women. In 2012, the average life expectancy for both males and females had jumped more than ten years to 78.4 years for men and 82.8 years for women. This is altogether very positive but it creates issues that we have to deal with. There will be greater demands on our health service and a greater burden placed on the social insurance fund, which pays out pensions.

In a wider sense, we need to find ways where we can support people who wish to work on and remain independent and active in our economy past some arbitrary age that was set many years ago. The current mandatory retirement age for public servants of 65 years is just one such arbitrary age. It is clearly out of step with current life expectancy rates in Ireland but it is also out of step for the many workers older than 65 who wish to continue to contribute to society through their work. The State should be supporting these individuals, not hindering them. The benefits to society are obvious and clear for everybody to see. People are better able to support themselves and their loved ones for longer and better able to live longer and enjoy more independent lives. People of all ages value the work they do through their employment; be it in the public or the private sector. People over 65 are no exception.

We must not make the mistake of undervaluing people over the age of 65. People in that cohort can still contribute significantly to society through their work. They can provide badly needed experience and knowledge. Think of a college or university lecturer who has built a career teaching young students and engaging in research. Think of the value he or she can offer and which we are currently losing because we have set some arbitrary age which is far lower than what is should be.

The mandatory retirement age is also unfair vis-à-vis the current pension age for public servants, who are forced to retire at 65 and who can only start claiming their pensions at 66. This leaves them with a full year in which they are left with little or no income. This income cliff has already led to many former public servants having to sign on for jobseeker's allowance for that year, which is clearly contrary to the purpose of that scheme.

For these reasons Fianna Fáil very much welcomes the Bill. I encourage the Government and everyone in the Chamber to pass it as soon as possible. It is, however, disappointing that it has taken this long to rectify a matter which should have been easily dealt with. Deputy Calleary and I have been raising this issue consistently for well over a year. As long ago as last December, the Minister announced his intention to resolve the problem. We were told that the heads of a Bill to address the issue had been approved and that said legislation would be passed by the Oireachtas in a quick and efficient manner. The Minister also announced what was supposed to be a short-term interim measure. While we welcomed this measure at the time, we were under the impression that it was, as it stated on the tin, only an interim measure and not a long-term solution.

Unfortunately, for many workers, this has turned out not to be the case. Despite the assurances given to affected public sector workers and to Deputies, nothing happened until just before the summer recess when the legislation was finally introduced in the Seanad. The Minister informed us in March and April that this is a complex issue. He said that time was needed to get it right. While I agree with the latter, I do not necessarily agree with the former. The Bill contains only eight sections and is just over ten pages long. There is absolutely no reason whatsoever why the Bill could not have been passed and in place before the summer recess. The problem would have been solved and we could all have moved on. The continued delay only serves to show once again that, unfortunately, the Government responds to issues only as they arise. It makes an announcement, pretends that an issue has been solved and hopes nobody notices otherwise. By dragging this matter out until now, the Government has created a new problem. The workers who were expecting it to be resolved before the summer recess have been left in limbo and are, indeed, facing mandatory retirement at the age of 65. This is grossly unfair and I encourage the Minister to consider making the legislation retrospective to the date on which it was first published. We will certainly be making this an issue for further debate and deliberation on Committee Stage.

The purpose of the Bill is to increase the mandatory retirement age for public servants to 70 for people recruited before 1 April 2004. Section 2 provides a definition of "relevant public servant". That definition explicitly excludes the President and Members of the Houses of the Oireachtas, to whom no compulsory retirement age applies. The definition also excludes the uniformed pension fast accrual group, namely, gardaí, prison officers, firefighters and members of the Permanent Defence Force. These are logical exclusions and we have no difficulty with them. However, we do have a problem with some of the other exclusions. First, as already stated, public servants who are forced to retire before this legislation is passed and enabled by the Minister will be excluded from its provisions. I agree that the changes should start at some point but I would argue that the decision not to include the cohort of workers who were forced to retire between December of last year, when the Minister announced the interim measures, and now is misplaced and unfair. An important point is that what is proposed in Bill will not cost the Exchequer any money. In the explanatory memorandum, it is clearly stated that the measures proposed are not expected to give rise to any additional cost to the Exchequer. Why then has Government chosen to exclude the people mentioned? I hope the Minister of State will reflect on this and carry that message back to Government. As already stated, I will certainly be raising the matter again on Committee Stage.

The other exclusion I wish to raise is that relating to new entrants. I would like to hear further from the Minister of State as to why this cohort is also being specifically excluded. I understand that public servants recruited after 2004 have a minimum retirement age of 65 or 66 rather than a mandatory retirement age. Is it this cohort that is explicitly excluded from this Bill? Can the Minister of State confirm whether a mandatory retirement age for those recruited after April 2004 is set at 70 years? Does this mean, for example, that if somebody is recruited today, he or she will have a compulsory retirement age of 70? If that is the case, I struggle to understand the rationale behind specifically excluding this cohort. Perhaps the Minister of State can clarify the position when replying or on Committee Stage.

Section 3 sets the mandatory retirement age for relevant public servants at 70 years. This section also enables the Minister for Public Expenditure and Reform to increase the mandatory retirement age up to 75 years. The section outlines what steps the Minister must take before he or she decides formally to increase the mandatory age. One of the key steps in addressing the current issue, if it were to arise again, is the consideration of the pensionable age. Our population is ageing and the demands on the Social Insurance Fund will likely increase significantly in the coming years. We already know that the pension age will increase to 67 in 2021 and 68 in 2028. Thereafter, none of us knows what the pension age will end up being but it is fair to say it is likely to be higher than 68. In order to cater for that scenario, it is correct to give the Minister the authority to make the appropriate changes. We do not want a return to the current scenario, which I believe to be quite unnecessary, particularly given that this Bill will not place any charge on the Exchequer.

Section 4 will mean that service provided between the age of 65 and the new compulsory retirement age of 70 will benefit from a pension accrual, subject to the maximum accrual of 40 years’ pensionable service. Section 5 details issues with existing retirement provisions in statutory instruments. Section 6 adds a number of corporate bodies established before the foundation of the Irish Free State to the list of commercial State bodies that are exempt from the legislation and section 7 is relatively technical in nature.

I reiterate what I stated earlier, namely, it is regrettable that it has taken this long to bring this Bill to the floor of the House. It is relatively straightforward and there is no reason why it could not have been done and dusted before the summer recess, as was envisaged at this time last year. We will be supporting the legislation through Second Stage. I have highlighted the issues we would like to debate further on Committee Stage. By and large, however, we will support the speedy passage of this Bill through the Dáil because we believe it is crucial and vitally necessary at this point.

Is any other Fianna Fáil Deputy offering? No. I call Deputy Stanley. There are just two minutes remaining.

I welcome the fact that the Bill has come before the Dáil today. We support the principle of it. As Sinn Féin has made clear many times, we support the full abolition of the mandatory retirement age as we believe that the manner and duration of a person's labour should be decided by that person and that person alone, and not be based upon a decision of an employer. If a worker wishes to use his or her labour beyond the age of 65, that is his or her right. The Bill is consistent with this position but the implications of its provisions are inconsistent with the spirit of the Employment Equality (Abolition of Mandatory Retirement Age) Bill which Sinn Féin brought before the Dáil and which would lead to the abolition of the mandatory retirement age across all sectors, not just the public sector. Last year, the Citizens' Assembly voted on this matter and 86% of its members were in favour of abolishing the mandatory retirement age. The Bill demonstrates tentative progress toward that end by increasing the mandatory age of retirement.

The Bill also closes an unjustifiable gap in the current arrangement whereby public servants recruited before 2004 are forced to retire at the age of 65 but only gain access to the contributory State pension at the age of 66. What is proposed has obvious implications for that cohort. As we know, this gap is set to grow as the age at which the contributory State pension can be accessed is to increase from 67 in 2021 to 68 in 2028, with the possibility of it being extended further beyond those years. In light of this, we welcome the move to close this gap in the Bill, which also responds to the challenges of an ageing society by allowing workers to work longer.

The structure of our society is changing. We have an older population. People are healthier for longer as a result of medical advances and lifestyle. It is only logical that our public sector reflects this trend by allowing people to work irrespective of age.

I ask the Deputy to propose the adjournment of the debate.

I propose the adjournment.

The Deputy will have in excess of 17 minutes when the debate resumes.

Debate adjourned.