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Joint Committee on Public Service Oversight and Petitions debate -
Wednesday, 21 Jan 2015

Equality and Fairness of State Pension: Discussion

We are discussing petition 33 of 2013 on equality and fairness regarding the raising of the State pension age to 66 and beyond. The petitioner, Mr. Henry Gaynor, is with us today. I remind everybody to be careful with mobile phones as they interfere with the live broadcast. We are pleased to welcome Mr. Gaynor, who submitted a petition to the committee entitled "Equality and fairness regarding the raising of the State pension age to 66 and beyond." Since the raising of the pension age, a number of lobby groups have highlighted what they believe to be the unfairness of this position for individuals who had an expectation relating to pension or retirement. I thank Mr. Gaynor for forwarding his presentation. Members are keen to hear his views on the raising of the State pension age and following his presentation, there will be a questions and answer session with members.

This Dáil is the first to have a committee dealing with petitions, although one has been in the European Parliament for many years. It is powerful that an individual Irish citizen can raise a matter of public concern, come into the heart of the Houses and discuss the issue. We will act on today's discussions. I thank Mr. Gaynor as we really appreciate his petition and his presence today.

Mr. Henry Gaynor

Thank you.

Before commencing I must read a note on parliamentary privilege. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Mr. Henry Gaynor

I thank the Chairman and members of the committee, as well as members of the public who may be listening. I presume members have already read the detail of my submission so I will give a brief overview of it. The Government is concerned about increased life expectancy and an increased length of time spent in retirement, along with a difficulty we may have funding State pensions. The Government has begun a series of reforms, including the raising of the State pension age to 66 and beyond from the beginning of last year. Not everyone is being treated equally.

I am comparing what is happening in the private sector with the public sector but I am not against the public sector. I am merely comparing how the two sectors are being treated differently. Before proceeding I will tell a story about a friend of mine who is retiring from his work next month. He has worked for 51 years since he was 14 but he will not get a State pension for the first year of his retirement. He must sign on and we hope he will get his stamps. He was born in 1950 and began working in 1964. We can compare this to a public servant who began before 1995. When that person has completed 40 years of work, he or she is entitled to a full pension. A public representative like the committee members elected before 2004 is entitled to a full pension after 20 years when the person turns 50. My colleague has worked for 51 years. The dates of 1995 and 2004 are cut-off points in the public sector but one could call his cut-off date 1963. That is a massive gap. The Government is using dates of birth to decide when a private sector worker is cut off from a pension but it is using a date of work termination for a public sector worker. I do not see why the public sector cannot have this as the relevant date.

In her submission to a committee on 2 October 2013, the Minister for Social Protection, Deputy Joan Burton, revealed that because of our increasing life expectancy, men are now living to an average age of 82, with women living to an average age of 85. From this we can work out that if an elected representative retired at 50 on a full pension, he or she would draw a pension for 32 years. A public servant retiring at 60 would draw a pension for 22 years but a private sector worker would only draw a pension for 14 to 16 years, depending on age. The private sector worker would be expected to work longer and have a lower life expectancy, meaning his or her time drawing a pension would be smaller again. The Minister referred to an OECD report on the pension system and in its view, the State is moving very fast against the private sector compared with the public sector. It has noticed the private sector is being treated differently.

In Kerry we have been campaigning for the past three years against these proposed changes. We have even been lobbying Deputies. The Minister, Deputy Burton, seems to believe the problem is we will be in retirement for too long and she wants to shorten that period. Data from the Central Statistics Office indicate that a person's job has an effect on life expectancy. If the Minister wishes to reduce the amount of time people spend in retirement, she should consider a person's job and work out the life expectancy, with retirement age being extrapolated from that. The Minister has used the financial crisis as an excuse for changes to the pension.

I am speaking for most of my colleagues when I say that none of us got involved in the madness of the Celtic tiger. We feel very hard done by to be blamed and punished for what happened to the banking system. We also note that those who were involved in the running and supervision of the banks managed to get away with their giant pensions. No one seems to have done anything about it.

In her submission, the Tánaiste suggested that by 2050, we will not have enough people of working age to fund people in retirement. To me, it is not correct to use the statistics for people of working age. There are approximately 3 million people of working age in Ireland. The CSO defines "working age" as between the ages of 15 and 64. Many people in that age bracket are not paying tax because they are going to school or college or are home-makers or carers. The Tánaiste should be comparing the number of people who are working with the number of retired people. Such a comparison reveals that in the private sector there are approximately 3.2 people working for every retired person, whereas in the public sector there are approximately 1.9 people working for every retired person. The problem is more in the public sector than in the private sector. Having said that, I have nothing against the public sector.

The Government has let us down badly. Governments are elected to govern us in a fair and objective manner. In our view, its pension reforms can be regarded as anything but objective. We feel that if reforms are necessary, all the parties involved should be brought together and a deal should be hammered out. Why not have the same cut-off date for everyone? Something like that would make it fairer. I look forward to any questions that the members of the committee might have.

I welcome Mr. Gaynor. This is a new process. It is very important for this Parliament to have a mechanism that allows citizens to draw the attention of parliamentarians to certain matters and to make cases like that made by Mr. Gaynor. Perhaps he could clarify the nub of the petition he has brought to Parliament. What exactly would he like us to bring in? What type of legislation is he advocating? What specific changes would he like the Tánaiste to make?

Mr. Henry Gaynor

I have spoken to my colleagues at work about what we think should happen. First, everyone should be brought up to 65. Some people can retire at 50. More people can retire at 60. If further measures are needed when everyone is at 65, it would be more acceptable to raise the age together for everyone. We also feel that retrospective changes are a step too far. When changes are made in the public sector, they are generally applied to new people going forward. We feel that any changes should apply to new entrants to the workforce. In 2012, a significant change was made as part of the reform of public sector pensions. Why not use that date and say that the changes being implemented relate to those who started work after 2012? We feel that going back to the 1960s to get at private sector workers is going back too far. Many people who left school young in the 1960s have been working for 50 years. I remind the committee that work was a lot harder then than it is now. We are always told to plan our pensions and tick all the boxes, for example by making additional voluntary contributions. However, as we approach retirement, we do not know where we stand.

We believe the Government should legislate to ensure employers keep us on in our jobs. At the moment, we are depending on the goodwill of the employers who are deciding whether to keep us on. In my workplace, we have to let management know two months in advance whether we are planning to stay on. If management agrees to allow us stay on, we have to undertake a medical and seek the approval of the human resources division. Up to two months before retirement age, we might not know where we stand. We feel legislation should be passed to remove this uncertainty.

I am aware that a letter has been sent to this committee by officials in the Department of Jobs, Enterprise and Innovation who seem to be of the view that a person who is let go at the age of 65 can take an unfair dismissals case against his or her employer. To be honest, do people who are about to retire want to be starting litigation against their employers? A retiring person who has no pension does not want to start litigation. That is no way for anyone to start retirement.

A solicitor who wrote an article about this issue in The Sunday Business Post on 11 January last conceded that this is "very much a grey area". She suggested that a court might rule in favour of one person but against another person. An employer can use several reasons to justify letting people go. There is no security at all for anybody approaching retirement. We feel let down, to be honest.

Is Mr. Gaynor aware of any solutions that are being availed of by those who retired in 2014 and are now facing this anomaly because they do not have State pensions?

Mr. Henry Gaynor

At the moment, they sign on at the social welfare office. I have met people who find that an insult. I have nothing against people who are on social welfare. Some people take great pride in the fact that they have worked all their lives without looking for anything off the State. They believe it is an awful insult to be expected in the very last year of their working lives to go down to the social welfare office and start signing on. I must say that some people are very angry about it.

Would Mr. Gaynor like to see a change in the legislation so that those people can retire normally at the age of 65?

Mr. Henry Gaynor

Yes. If the changes have to be made, they should be made going forward.

Mr. Henry Gaynor

The OECD mentioned twice in its report that there is no rush in this regard because Ireland is on a sound footing now and into the future. It has suggested that Ireland is one of the best countries in Europe for funding its pensions. That is why we cannot understand what the big rush is.

I welcome Mr. Gaynor. I thank him for all the work he has put into this issue. It is clear that he has put a great deal of thought into it. Any citizen who makes such an effort has to be commended. He has hit the nail on the head with regard to two aspects of this matter about which something needs to be done. First, if the State is saying it will not pay the State pension until people reach a certain age, they should certainly be entitled to work until they reach that age. Second, a person in these circumstances who is not getting a pension and is not working should receive a standard social welfare payment. It is wrong to expect people who are retiring for reasons beyond their control to sign on as if they were jobseekers when it is clear that they are not. They are two very important principles.

I wish to ask Mr. Gaynor a question about something that has struck me on the basis of my reading of this issue. The pension received by a civil servant is distinct from the State pension. The pension that a private employee gets from paying into his or her pension fund is distinct from the State pension. They are two separate things. There are people working for private employers in defined benefit schemes whose retirement age is 65 and whose pensions will pay out at that age. Their pensions are unaffected by the decision to raise the State pension age. They will still get their full pensions at the age of 65. In many ways, the public and private sectors are not that different in this regard. The pension entitlements of a public servant who has been paying into the system for 40 years are the subject of a contract between that public servant and the State. That happens in the private sector as well. It is not necessarily true to say that private sector workers are the only workers who are affected by the decision to raise the retirement age. There are people in the private sector who have pensions that are not affected by the decision to raise the pension age. It is something that has occurred to me. I wonder if Mr. Gaynor could comment on that. Does that point change Mr. Gaynor's analysis a little, given that much of it involved a comparison between the private and public sectors? I do not think that distinction has been drawn clearly in his analysis. A person who worked in the public sector for five years before leaving it to work in the private sector will get a small portion of a public sector pension.

Mr. Henry Gaynor

That is true, but that is from 1995 on. I understand that public sector workers who started before 1995 and who have 40 years of service are entitled to a full pension at the age of 60, 61, 62 or whatever age they decide to retire at. Once they have 40 years done, they can retire. My friend about whom I was talking started well before 1995. He is being treated completely differently from a person in the public sector who started in the same year. His public sector counterpart would be untouched.

However, he would be losing his pension at 65.

Is Mr. Gaynor talking about his eligibility for a State pension?

Mr. Henry Gaynor

Yes. The Deputy is correct in what he says. At work, our employer has a pension scheme. It is called an integrated pension scheme, in that the pension we get from our employer plus the State pension will make up two thirds of our basic salary. The experts in the pension industry reckon that to have a decent retirement, one needs about two thirds of one's paid salary to maintain one's standard of living. In my case, when I retire under the plans that are being put forward at present, I will get my work pension on the first year I retire and might be able to draw stamps, that is, a social welfare payment for the first year. For the second and third years, I will be means-tested and because I have a work pension, it will mean I either will get a greatly reduced social welfare payment or no payment at all.

This is for the two years when aged 67 and 68.

Mr. Henry Gaynor

Yes. All of my plans up to now have been built around the point that on retiring at 65, I would have two thirds of my basic salary from the age of 65 onwards. However, the changes proposed by the Minister mean I will be badly dented for the first three years.

I suppose the principle is that people would work longer. While I do not wish to personalise this issue too much, has Mr. Gaynor's employer changed its policy as to the age at which employees can retire or until they can work?

Mr. Henry Gaynor

No, not at present. My employer is IBEC and what we think is happening is IBEC is just watching and waiting to see what happens. I presume that if one starts to interfere with the terms of a pension fund or pension scheme, it probably would cause all kinds of problems. I do not know but what I do know is that our pension from work will be reduced slightly because of the pension levy that was imposed over the past few years.

This is my final question but it is only the personal cases that really provide one with the detail. Is it possible that Mr. Gaynor may continue to work with IBEC until he is 68 and that he might actually start to get some small pension payments at 65 or 66?

Mr. Henry Gaynor

At present, I only know of one guy who actually has stayed on. However, he is not taking the employer's pension. I do not know if he chose not to take it but I imagine that were he to do so, half of it probably would go in tax and so he probably left it as it was.

Left it in the pot.

Mr. Henry Gaynor

As the Deputy says, I could work on until 68 but I work shifts and work three weekends out of four and when I hit 65, I will have had 43 years of doing that and may not wish to do that any more. People get tired and it is known that people age differently. Ideally, if the Minister wants us to work on, it should be voluntary. Legislation should be put in place whereby if I wished to work on for three years, I would know when coming up to the age of 65 that I could work on until I was 66, 67 or 68. At present, however, no one knows exactly where they stand.

I thank Mr. Gaynor.

As a vote has been called in the Dáil, we will just allow Deputy Harrington's question and will get a response. We will keep it sharp.

I thank Mr. Gaynor for taking the time and effort to appear before the committee, which is appreciated. He brings up quite an interesting point. First, I note that as part of his opening statement, he stated the Government was concerned about increasing life expectancy. I imagine the Government is concerned about the cost of increasing life expectancy. It is a good thing that we are trying to live a bit longer.

Mr. Henry Gaynor

Yes.

It is not that bad yet. Would it be true to state that to correct what I will call an anomaly, legislation should be introduced to make it mandatory for companies to provide for work for their workers up until the age of retirement as provided for, whether it is 67 or 68 as the time goes on?

Mr. Henry Gaynor

Yes.

To take that one step further, Mr. Gaynor touched on the suggestion that if somebody reaches the age of 66, for example, there might be a voluntary aspect and such people then would enter the social protection system of jobseeker's benefit and then ultimately, jobseeker's allowance.

Mr. Henry Gaynor

Yes.

There also may be an issue here in that if one leaves one's work voluntarily, one might not qualify for either jobseeker's benefit or jobseeker's allowance because one must be actively seeking work.

Mr. Henry Gaynor

Yes, but what I have put forward is that whenever one leaves after 65, one automatically would get the State pension. As for wishing to work on until 66, 67 or 68, it should be made voluntary. While the Government would like us to work on for longer, one should get the State pension at whatever age one decides to work until.

I take Mr. Gaynor's point but life expectancy is getting that bit longer and I imagine most people would be quite happy to work until 66, 67 or even 68 and would be quite capable of doing that. Does Mr. Gaynor see the point that were there a voluntary aspect, they would leave before they get the State pension? Is there a danger that the Department of Social Protection then would take a view that a person had left work voluntarily and therefore did not actually qualify because one must be actively seeking work for either jobseeker's benefit or jobseeker's allowance?

Mr. Henry Gaynor

Yes, but the Deputy is working on the assumption that the State pension would not kick in until 68. However, my suggestion is that it should kick in at 65.

Mr. Gaynor is talking about totally-----

Mr. Henry Gaynor

It should be maintained at 65 and then, if a person wishes to work on until 66, 67, 68 or perhaps 70, that person automatically would get the State pension whenever he or she decides to leave. Everyone differs, in that some people feel burned out by the time they hit 60 and it all depends on the job one is doing. I can imagine that a guy putting up scaffolding will not be swinging off the scaffolding at 70 years of age. In any event, probably no one would wish to take him on for that kind of work.

That then brings us to another point, which is that if-----

I apologise but are members happy to pair for this vote? There are two Government and two Opposition Deputies present. Is that all right as it would enable us to continue? Alternatively, if Deputies wish to vote in the Dáil they probably need to go now.

Is there a Dáil vote?

I have two questions anyway, unless someone else has more questions. Can members pair to get finished, unless they absolutely wish to go and vote?

We have a choice to make. If we are going to vote we should suspend the meeting and go now.

I could head off and the Chairman and Deputy Harrington could stay.

No, can the Deputy pair with Deputy Boyd Barrett?

While I think another ten minutes could take this home, if the Deputies are happy to miss this vote we can pair off. Alternatively, if people wish to vote, we must go now and then return.

Are we equally paired?

Yes. It is a Dáil vote and there are two Deputies each from the Government and the Opposition. We can pair off here now and our Whips can whip us later on. Is that agreed? Agreed.

Has Deputy Harrington concluded?

I am concerned about the possibility of someone leaving and then running into trouble with the Department of Social Protection. Equally, I am concerned by the cost implication of returning the pre-retirement or transition year pension back to 65 and the State pension back to 66. To be honest, in an environment in which a huge pensions train wreck is coming down the track as to how the country will fund pensions over the next ten, 15 or 20 years, it will be a huge issue. It might not be a part of-----

Mr. Henry Gaynor

Yes but the OECD appears to be of the view that Ireland is on a very sound footing regarding the funding of our pensions. In some countries, their birthrate is not keeping pace with the ageing of the population but is declining. However, Ireland is the opposite and I believe it has one of the highest birth rates in Europe. Ireland is producing the young people to keep the system going. I believe our birth rate over the past few years has confounded some experts in that it is jumped up and now stands at approximately 72,000 or 73,000 per year.

While I accept that, it is fairly evident that we still have a huge pensions funding issue and more work should be done in this regard.

I say this in the context of the cost implications of Mr. Gaynor's proposal on reverting the transition year and the State pension to 65 years and 66 years, respectively.

Mr. Henry Gaynor

The other side of the argument is that a person who has worked for 40 or 50 years has funded a pension through PRSI payments, etc.

In some cases, but not all.

Mr. Henry Gaynor

Yes. Of the 11,000 people who pass the age of 65 years per annum, we are discussing 1,400 or 1,500 who leave work, so it is not a large number.

Is Mr. Gaynor saying that only 1,400 people-----

Mr. Henry Gaynor

They reach the age of 65 years while working. Many who reach 65 years of age might be on disability or unemployment payments and others might have taken redundancy a few years prior.

I apologise to Deputy Harrington, but this is interesting. Effectively, 1% of the workforce goes into retirement.

Mr. Henry Gaynor

These figures have been put forward by ICTU. Actually, no, they come from the Department of Jobs, Enterprise and Innovation. It reckoned there were 1,390 such people in 2012. Presumably, the person who makes it all the way has fully contributed to PRSI or, before that was introduced in 1979, stamps for 40 or 50 years. Such people feel that they have fully contributed what was asked of them. They worked through the recession in the 1980s and paid penal tax rates but, when coming to retirement, are told from out of the blue that, sorry, they will not get a pension.

With all due respect to Mr. Gaynor, perhaps we could receive confirmation of these surprising figures and information on the cost implications as part of our further work on this petition. The latter would have to be considered.

When Mr. Gaynor finishes today, we will send the transcript of this sitting to the Department of Social Protection for a response on the issues he has raised, which will form part of our further deliberations.

I thank Mr. Gaynor for his petition and submission and for raising what is an important debate, certainly one that has educated me - I apologise for being a little bit late, but I had to attend something prior to this meeting - on many aspects of what is quite a complicated situation, given the many different types of pensioner. We need to have a serious discussion on this matter. For those of us who are at an age when, having not done so to date, we must start thinking about such issues, the debate Mr. Gaynor has raised will be helpful.

I am sympathetic to what Mr. Gaynor is saying. His main point seems to be that a private sector employee who has worked for all of his or her life and made contributions will be substantially disadvantaged compared with a public sector employee who started working before certain dates. Incredibly, the issue to do with Ministers is sickening. I do not know how Mr. Gaynor is not in a rage about how anyone elected before a certain year was ring-fenced. Was it 2004?

Mr. Henry Gaynor

Yes.

That is unbelievable. Apparently, what is good for the goose is not good for the gander. We should be outraged and insist that people receive equal treatment. Whatever about the situation in future, which is something that we need to discuss, it is outrageous that politicians would insulate themselves from the changes they were making. I accept that the new kids on the block got hit as well, but rightly so.

For the people who are still sitting in the Dáil, some of whom are Ministers, there can be no reason for specifically insulating themselves other than the fact that they had expectations before the changes were made, but tough luck to Mr. Gaynor and other private sector workers who will just have to suck it up. It is extraordinary. I thank Mr. Gaynor for highlighting this issue. Despite the circumstances, he has been calm in putting it across. He should be outraged. He is seeking equality for private sector workers caught in this unfair and discriminatory position. Essentially, they should also be ring-fenced against these changes, after which we could discuss the issue.

I agree with Mr. Gaynor, who probably knows much more than me, but I always revert to a point. It relates to one of my strongest memories from sixth class or first or second year in school in the early 1980s. The geography books of the time claimed that, due to advances in technology and how it would be labour saving, more wealth would be produced and productivity would increase, but that the amount of labour people would have to do to produce that wealth would be considerably less. According to the books, there would be shorter working lives and a shorter working week, meaning that society's main problem would be what to do with all of that leisure time. This was completely logical, yet we have got ourselves into a situation-----

Is Deputy Boyd Barrett blaming the teachers?

-----where the exact opposite is happening. It is extraordinary and bizarre. The books were being rational in claiming that our working lives and week should be shorter. That was the expectation in the late 1960s right up to the early 1980s, but we have gone in the opposite direction. People living longer is now a problem and a cost, and we must make them work longer. Where did all of the wealth that was produced as a result of the increased productivity go? The amount of wealth that our society has produced has increased exponentially, so we should be able to afford people living longer. It should not be a problem. Mr. Gaynor is correct in that is it not a problem objectively. Rather, it is a problem because the system is structured incorrectly and the people who benefited from the exponential growth in wealth are not the ones who did the work and made the contributions. We must debate this issue. To be clear, Mr. Gaynor is proposing that we revert to the 65-year mark and that we should not entertain an increase in the working lifetime unless that is what individuals want to do on a voluntary basis.

Mr. Henry Gaynor

That is my opinion as regards those currently at work. If the retirement age is to be increased, that should only be done in respect of new workers. For those in the public sector and elected representatives, the Minister has set the day they started work as the criterion. For the private sector, it is the day someone was born. If a person was born after 1 January 1949, he or she will not receive a pension before turning 66 years of age. The year 1949 is a long way back. Many of those born in that year left school early. Fourteen years was the leaving age, so people would have started working in 1963. The year that has been set for elected representatives is 2004 and 1995 in respect of public sector workers, although there have been other changes regarding the latter, for example, 2004 and 2012. For a private sector worker, though, one must go back a very long time to 1963.

Before I allow the Deputy to contribute again, on 30 October we received a response from the office of the Minister for Jobs, Enterprise and Innovation regarding Mr. Gaynor's petition. To summarise, the response indicates a need for a change in legislation. The Minister and the Department made the point that, under equality legislation, including European, if a company was to say that it would not employ someone beyond the age of 65 years, defending that stance would be difficult legally.

If a company were to say it would not employ one beyond the age of 65 it would be very hard, legally, to defend that. Mr. Gaynor makes the point that when somebody is 65 the last thing that person wants to do is to go to the Equality Tribunal to defend his or her position. Maybe clarity and legislation are needed to state that the retirement age must be at the point at which the State pension is provided.

Is the committee agreed that we publish this letter on the website as part of the petition documentation? Agreed. This is an ongoing deliberation. We need to engage with the Department and so on.

What does Mr. Gaynor hope we will do now? I agree with what he says. He raises important issues that we - not just the committee but the political system and our society - must confront. What does he hope will come out of this?

Mr. Henry Gaynor

I hope the pension age will revert to 65 for people already in the system, and that the Government will sit down with the Irish Congress of Trade Unions, ICTU, and other interested parties to thrash out a deal. The deal must be the same for everyone, whether the cut-off date is 1995, 2004 or 2012. I am not in a position to say what the whole country wants. The Government must also legislate on the basis that if it raises the pension age the employer has no choice but to keep one on.

As the Chairman said, one can take a case to the Equality Tribunal but it takes approximately two years for it to hear a case. I have come across two pieces of information, one on a website on employment law set up by a barrister, which cites cases heard by the European Court of Justice. If an employer can show that he needs to let people go at 65 he can do so. The court will accept this if the employer has younger workers coming in whom he wants to promote. It is a grey area. One cannot be sure of winning a case. If it takes two years, the time will have passed.

Is Mr. Gaynor’s preference for the State pension to remain at 65 and apply to everybody equally or, if that is not possible, that legislation is introduced stipulating that an employer must employ the person until the State pension age? At the very least, there is a lacuna there.

I thank Mr. Gaynor. It is not easy to put together a volume of work and stick at it long enough to present a case. I applaud that. I share some of the views on the value of this petition, not least that it seems extraordinary that there is no statutory retirement age as part of the apparatus of the working environment. Employers use a one-year fixed contract to bridge the gap. Can Mr. Gaynor explain that in more detail and tell us what he thinks of it? Is it happening, and if so how widespread is it?

Mr. Henry Gaynor

The problem is that people would say they can get a contract to stay on for another year but in the months leading up to retirement age they do not know what will happen - will they be let go or can they stay on? In my workplace, a person approaches a manager two months before retirement to say whether he or she wants to stay on. The manager will tell the human resources department and it sends the person for a medical examination, depending on the results of which he or she can stay on. It is like going through a job application for the last year at work. I know of three people who are due to retire this year but want to stay on. None of them is sure of what will happen. They have to be almost at the door before they will find out whether they are staying or going.

Would those three colleagues have expected to, or signed a contract to the effect that they would, retire at 65? Is this now in addition to that contract, in which case it might be reasonable to have to-----

Mr. Henry Gaynor

In our place of work there is no contract to the effect that we must go at 65, but it has been the custom and practice for the past 20 years. One of the documents provided on the employment law website states that if an employer can show that the normal retirement age in his place of work is 65, that can be acceptable as a retirement age. In the system we had for the past 40 years, everyone knew where they stood. In the private sector one worked up to 65, retired and got one’s pension. In the public sector, whatever one had applied. When the Minister for Social Protection started interfering with this, she grabbed the money but left the problems. We have been campaigning for the past three years and I do not think she is interested in tackling the problems. She sounds like a broken record, saying we are living longer and we must work longer.

Perhaps we should not make this personal about the Minister. In fairness, no Minister gets out of bed in the morning and says he or she is going to interfere with this or that. Mr. Gaynor has pointed out some of the problems. That is reasonable, and we ought to discuss those to see what we as a committee can clarify or pursue to effect change. Sometimes people put things in place and, until they are in place, do not realise the unintended consequence or the incomplete consequence.

Is the one-year contract separate from the person’s original contract of employment? In that circumstance, are the worker’s rights diminished, or is it a continuation of the existing terms?

Mr. Henry Gaynor

I do not know for sure. In my place of work we continue as we are if they agree to keep us on.

There is no change of circumstance or conditions.

Mr. Henry Gaynor

There are only a small number of cases. The change came in last year. As far as I am aware, only one person was due to retire last year, and he asked to stay. We succeeded with that because we were lobbying our Deputies. We had meetings between our company, Jack O’Connor of SIPTU and Deputies Deenihan and Spring, and eventually we thrashed out a deal to the effect that two months before retirement we approach our manager, and if he agrees to keep us on he contacts the HR department, which sends us for a medical, and if we pass that we continue as we are. That happened because we were agitating for something. I think there should be legislation that is clear for everyone if the pension age must be raised. There should be no ifs and buts about it.

There should be nothing ad hoc about it.

Mr. Henry Gaynor

No.

I draw Mr. Gaynor’s attention to a letter I referred to earlier from the office of the Minister for Jobs, Enterprise and Innovation. It asserts:

While Section 34(4) of the Employment Equality Acts provides that it is not unlawful for an employer to fix a compulsory retirement age for employees, the Equality Tribunal has, in recent decisions, interpreted those Acts in the light of rulings of the Court of Justice of the European Union (CJEU) cases concerning Framework Directive 2000/78/EC, which prohibits discrimination in employment and occupation on various grounds, including age. In those cases, the CJEU has found that terminating someone’s employment on the basis of their chronological age is considered as direct discrimination under EU law.

I would like to hear Mr. Gaynor's response to that. It raises two questions. If the grounds are so solid then why was legislation not introduced to prevent an employer from refusing to employ somebody? Why leave it to the employer?

Mr. Henry Gaynor

The European Court of Justice takes each case on its merits. It has found in favour of the employer and the employee. From what I can gather, an employer must be able to show that he or she has a valid reason for letting a person go. An employer cannot just say to an employee that he or she must go on reaching 65 years. If the employer says, "I have a young person here whom I want to promote," then that is considered a valid reason. Let me give the example of an engineering firm that has trained apprentices who have almost completed training, but also employs older fitters or electricians. In that case, an employer would have a valid reason to let the older guys go at 65, because he or she has new guys trained. That is acceptable, from what I can gather, but please remember that I am not a lawyer or barrister. Mr. Stephen O'Sullivan has created a website, employmentlawireland.wordpress.com, which lists a few examples of cases in which the court has found in favour of either the employer or the employee. This section of law is a grey area and is unclear.

The next sentence of the letter reads:

However, the CJEU has further found that this discrimination can be justified if it arises as a result of a legitimate aim in a State's social or employment policy.

I ask Mr. Gaynor to provide examples. He said this section of law was a grey area for the European Court of Justice. I would appreciate if he sent us on some examples to strengthen his case and help us in our work.

Mr. Henry Gaynor

Yes.

My question is on the basic arithmetic, and goes back to the question on figures raised by Deputy Boyd Barrett. Mr. Gaynor said that around 1,400 people join the pension system in this way every year, and the day after their 65th birthday they become eligible for the State pension. There is a sense that the change was brought in to save a lot of money. However, if the number increases for two years cumulatively - let us say 1,400 leave work one year and another 1,400 leave work the next year - and that is multiplied by 288, then one gets around €800,000 in a full year. On the other hand, the State loses tax revenue amounting to, give or take, a couple of hundred thousand euro. Really, the saving involved, from the figures given to us by Mr. Gaynor, is possibly around €500,000 per year, so one would wonder-----

They are also receiving jobseeker's allowance at the same time.

Yes. There is some saving in terms of the pension that would have been payable. Jobseeker's allowance is paid, so there is possibly only a saving of a couple of hundred thousand euro for the State. Is there a financial benefit to the State? I am not sure whether Mr. Gaynor has any thoughts on the matter.

Mr. Henry Gaynor

The figure was stated in the letter sent by the Department of Jobs, Enterprise and Innovation, as far as I can recall. About 11,000 people per year reach the age of 65, with about 1,400 people leaving work.

The State also makes a saving in terms of social welfare payments. For example, a person on unemployment benefit receives €188 per week, so the State would save €42 per week. The people who are working argue that they have stayed the course. Perhaps some people receiving welfare were burned out by work or receive a disability allowance due to being injured. I do not see why such people should lose out either, but today I will just focus on people who are working.

As far as I can make out, the total cost of State pensions per year is €6.5 billion. As Senator Ó Clochartaigh has said, a couple of hundred thousand euro out of €6.5 billion is peanuts. It boggles the mind why people are being targeted.

It might be a useful to ask the Department to calculate the saving and to calculate how much of this is offset by lost tax revenue and the cost of putting somebody on jobseeker's allowance for nine months.

Mr. Henry Gaynor

One must also remember that if a person aged 65 works on for two or three years, there is probably a young person left unemployed. If he or she has a family, they will draw down social welfare to a much greater value than the saving on pensions.

I have been contacted by a couple of people who have been caught in having to sign on for the year between their 65th and 66th birthdays. Has Mr. Gaynor a view on that requirement? It seems preposterous that people are put on jobseeker's allowance for that year. They must go through all the hoops to get jobseeker's allowance, with labour activation, questions about whether they are looking for a job, and all the rest.

Mr. Henry Gaynor

As far as I can gather, the first year will not be so bad because one is entitled to one's stamps, as we call it. It is years 2 and 3 that will be the problem when the State raises the retirement age from 66 to 67 and 68, because one will be means tested. In our case we will have a small pension from work, and people may have put money aside in AVCs in order to boost income. We have ticked all the right boxes and followed the State's advice to prepare and provide for retirement. Unfortunately, when we reach retirement the State wants to chop its piece out of it.

I can see the following problem. The State has talked about getting everyone to have their own private pension. If the State is doing what we have outlined, it will be very difficult to convince a person that he or she will benefit down the line. A person will think that if one provides one's own pension the State will take a lump of it when one reaches 66 or 67 years. With regard to the pension levy, a lot of us have AVCs but the State has taken a lump sum out of it over four years. That situation will have a negative impact on us as well. In one sense the Government encourages people to provide for their retirement. Unfortunately, when people follow its advice they discover that having a pension works against them. As a result, one is left wondering, "Why bother?".

We will send the transcript of Mr. Gaynor's presentation and today's discussion to the Department of Social Protection and the Department of Jobs, Enterprise and Innovation so they can respond to the issues raised by him.

Following Senator Ó Clochartaigh's proposal, we will seek an estimate from the Department of the cost savings that will accrue from this pension initiative and its solutions for resolving the matter.

I thank Mr. Gaynor for his attendance. We appreciate his petition today. I wish to inform the committee that we will invite ICTU to attend the committee to discuss this submission.

The joint committee adjourned at 5.20 p.m. until 4 p.m on Wednesday, 28 January 2015.
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