JOINT COMMITTEE ON SOCIAL AND FAMILY AFFAIRS debate -
Tuesday, 11 May 2004

RTE Pensioners’ Association: Presentation.

Chairman

On behalf of the members of the committee, I am pleased to welcome Mr. Eddie Bolger and Mr. Peter Doyle, chairman and vice-chairman of the RTE Pensioners' Association respectively.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses, or an official by name, in such a way as to make him or her identifiable. Members who wish to make a declaration on any matter being discussed may do so now or at the beginning of their contributions. They are also reminded that if there is a possibility of there being a conflict of interest, they should make a declaration of interest either now or at the start of their contributions. Witnesses are reminded that members of this committee have absolute privilege but the same privilege does not apply to witnesses appearing before it. While it is generally accepted that witnesses would have qualified privilege, the committee is not in a position to guarantee any level of privilege to witnesses appearing before it. They need not think they are out of step because we are required to warn everybody, as they probably appreciate.

The delegates are very welcome and we are glad they are able to attend. Who is making the presentation?

Mr. Eddie Bolger

My colleague Peter Doyle will make a submission.

Chairman

Mr. Peter Doyle has provided us with a broad outline of his submission. When he presents it, my colleagues will ask questions on certain aspects of it and other issues, after which the delegates may reply.

Mr. Peter Doyle

I will make four or five points elucidating what is in my submission. When I started in RTE, there was a limit of approximately £800 per year. In other words, one reached a certain point at which one stopped being eligible and hopped over the social welfare. In theory, the system was such that when one reached that stage, and when contributions to social welfare were not obligatory, one could then become a voluntary member. One was supposed to have been told that one exceeded the limit and asked whether one would have liked to carry on as a voluntary member making a different kind of contribution. Around 1970, the system was changed and the widows and orphans provisions applied. I have detailed a couple of consequences of this. On the loss to members of medical and health services, in contrast with what occurred in at least one major concern in Dublin, no alternative services were offered. For a while there was a dental benefit but that seemed to fade away. There was no optical benefit, for example. In fact, there were no health or medical services in RTE. It was entirely the responsibility of the individual to provide for himself in this regard.

At the time of the changeover, such information as was available did not highlight what we were losing. That is important. The problem to which I refer did not impinge very much until one reached the age of retirement, at which stage one discovered all the different benefits to which one was not entitled, including optical and dental benefits, various medicines and other such services. There is a cut-off point for those on pensions at 70 years of age because of the medical card provisions. At the time in question, there was no such thing so the disadvantages were not pointed out. I cannot even remember any statement on the advantages of the new scheme.

The last section of my submission refers to paragraph 6, which refers to the active membership of the scheme, namely, those who are still working. I include it to point out that if a member, depending on his age, were to opt for a full class A contribution, which I believe has applied in recent years in UCD, for example, he or she would be doing himself a service in the long run. That is the reason I included that. We do not represent that membership. There is no representative body of members of the superannuation scheme, whether active or benefit members. The trustees are the sole rulers of it and members have no comeback. I included that as an illustration for the recommendation I made in paragraph 6.

This scheme is not simply something thought up and representative only of the RTE pensions association - we also represent pensioners who come under the RTE superannuation scheme. There is a portable pension scheme, which pays full members, which the chairman might go into more detail on. However, at present we do not cater for those people. Rather, we represent members of what is a closed pension scheme.

Our proposal on the issue was adopted by a motion as official policy at the Irish Senior Citizens' Parliament and the National Federation of Pensioners Associations. Our figures could be taken to represent a much larger number of people than just the 800 or 900 members - a figure which it is difficult to determine because of people joining due to early retirement. We represent the opinions of a much larger body of people.

Mr. Bolger

I will explain the position in greater detail. In the late 1960s, a provision was introduced under one on the Finance Acts which allowed semi-State bodies to remove blue collar workers in particular who reached a certain level of salary from paying the full A stamp contribution and to contribute to the widows and orphans stamp instead. RTE took this option and introduced it on a compulsory basis, as did other semi-State bodies such as the ESB and CIE. This was done without notification, as Mr. Doyle explained, and the consequences quickly became apparent to us in the early 1970s, when we realised that, having been paying an A stamp and reduced to a D stamp, we would not qualify for any State entitlements, including the optical and dental benefits which applied to people on an A stamp.

As time went by, RTE had a second change in policy when, in the mid 1980s, it closed the superannuation scheme to all incoming employees and introduced a portable pension scheme. In doing so the company re-opened the A stamp qualification. This meant two groups of employees existed in RTE, one of which was compulsorily removed from the A stamp qualification and its entitlements. RTE revised its position in the 1980s and reintroduced it with the portable pension scheme.

This meant that someone who joined RTE in the 1960s as a blue collar worker such as an apprentice electrician, who qualified outside the organisation and paid stamps at the full rate for a year or two because the external contractor did not do so for apprentices, would pay for an A stamp and for the next 30 years would pay a D stamp, thereby not being qualified for any entitlement whatsoever.

The consequences of this became clear to Governments at the time and in 1996 the then Government introduced a measure, which became official in 1998, whereby one could qualify for a minimum pension with a minimum amount of stamps. The minimum amount of stamps introduced as a qualifier was 260 A stamps paid prior to one's 58th birthday. This would qualify one for a quarter minimum pension. One could go as high as a full minimum pension, the difference being €8 in 2002, between qualifying for the full entitlement of a full minimum pension and the full old age pension at 66. We believe that to be inequitable to people who, without their acceptance or authorisation, were removed from paying the A stamp, thereby disqualifying them from a State pension. They could work in RTE for a number of years and not qualify in any way for a State pension.

If one takes the practical example of a D stamp being valued at £2, as it was when we first made the calculation, and an A stamp being valued at £8, we asked that a monetary equation be put on the value of the stamps. In other words, four D stamps would equate to one A stamp in order to allow people to qualify for the minimum entitlements.

That is our argument and, as Mr. Doyle has already stated, we have had this proposition endorsed by the Irish Senior Citizens' Parliament and by the federation. I accept that it is complicated and difficult. It came to light to me in my position as chairman of the Pensioners Association. However, I was also previously chairperson of RTE's trade union group during the transition period and am fully aware of the number of people who left RTE with very small pensions, having worked there for quite a number of years and who failed to qualify for a State pension and all that goes with it. We are here today to see if anything can be done for the people I represented then and consequently discovered existed within the ESB and the other semi-State bodies in which this occurred at the same time.

Deputy Crawford

I welcome Mr. Bolger and Mr. Doyle to the committee today to put their case. I apologised earlier for the absence of my colleague, Deputy Ring, who would normally be in this seat. It is typical of the situation in which different groups have found themselves that they were not fully advised of their rights and entitlements. From that perspective, the delegation must have some case in getting the situation rectified. We must wait to see how far the committee can advance matters. I have read through the case which I acknowledge is complicated because so many changes took place during that period. Mr. Bolger and Mr. Doyle mentioned that other anomalies had been rectified but how many groups or bodies are in a similar situation?

Mr. Bolger

A quick calculation was carried out at the time the motion was tabled at the Irish Senior Citizens' Parliament. Allowing for the fact that there were then 47 semi-State companies and that all the blue-collar workers who reached the salary ceiling were compulsorily switched over, we did a rough calculation which reduced the total to about 10% of the workforce that existed at that time and these, until the changes were introduced, could re-apply and were offered the A stamp. This means we are talking about the high thousands, possibly as many as 80,000 to 100,000 people, over the period of 20 years.

Deputy Crawford

This is an important issue because the Government got the pre-1953 scheme so badly wrong that it has cost a lot. People are entitled to money and they have claimed it. I stand up for their rights. This is an example of the same issue. The issue of medical cards was mentioned earlier. Those who are over 70 are entitled to a medical card. Again, the Government got it extraordinarily wrong when it said it would cost €19 million, as it cost €53 million in the first year. These are important matters and we should try to obtain some sort of figure for the numbers involved.

Mr. Bolger mentioned that an A stamp was worth £8, compared to £2 for a D stamp.

Mr. Bolger

That was the result of the calculation we did. In monetary terms, an A stamp is equivalent to four D stamps.

Deputy Crawford

Has the organisation obtained a figure or suggested that members should be allowed to upgrade their own stamps? If they did upgrade their stamps, what would be the cost to the State?

Mr. Bolger

The Deputy correctly stated that this is a complicated matter. Many individuals in RTE, on advice from the trade unions, retired from RTE and opted to go into employment in order to qualify for A stamps after a period of time. The minimum number of stamps required to qualify is quite low, at 260. With the qualification, the State ends up paying people a quarter of the minimum amount of the old age pension. I have the details in the Department's information booklet. The pension is paid in two amounts, as referred to in social welfare docket No. 19 in 2002.

Deputy Crawford

I must comment on the issue raised by Mr. Bolger of the limit of £800 per year. That is a long way from the figures I have seen recently for the salaries of some RTE staff, although the ordinary staff are a long way short of that. Some of those people are the ones who criticise us the most as politicians.

Mr. Bolger

On the other hand, there is quite a number of people who served RTE, as a public service broadcaster, well over a 40-year period and have left the organisation with very small sums of money, which would pay for one meal in a high-class restaurant for some of the people whose salaries we have seen in the newspapers.

Deputy Crawford

I appreciate that.

Mr. Bolger

In 2002, a total of 48 stamps or more qualified one for a pension of €147.30. If one qualified for the minimum pension one received €144, so the difference was €7. If one qualified with between 15 and 19 stamps on average per year, one received €110, while if one qualified with the minimum number of stamps - ten to 14 - one received half of that, €73.70. We are suggesting that the minimum should be awarded to people who have paid equal amounts of money to the State and receive absolutely nothing in return.

People will say the D stamp is for widows and orphans and that the A stamp covers all other awards. It is all money, however. Accountants do not discriminate between the entitlement of a D stamp and that of an A stamp. It will quite simply be a matter of the amount of money paid in. Over a 30 or 40-year period paying a D stamp, one qualifies for absolutely nothing in terms of a pension, while someone who joins the workforce at 20, works for eight to ten years and then decides to go into private business or set up on his own will qualify, under the current terms, for a State pension of €73.70 at the minimum. I do not think that is fair.

Deputy Crawford

Mr. Bolger has put his case fairly. I see no reason for not supporting it. We only need to consider the actual cost.

Deputy S. Ryan

I thank Mr. Bolger and Mr. Doyle for their contributions. The social welfare system is full of anomalies. The more one trawls through it, the more one sees it. When I was working in CIE there was a major problem as people who were working prior to 1953 did not receive anything and were told that nothing could be done about it. They were obliged to campaign and eventually there was a breakthrough.

This is a situation that affects RTE staff. We are talking about workers who are part of superannuation schemes and who, through no fault of their own, are obliged to pay the D contribution. Whether we are dealing with RTE or any other company, that is what must be considered, including its merits and benefits as well as the injustice of it. The injustice is particularly acute for those who did not get the opportunity to become A contributors. In RTE, but also in other organisations, some people are paying the A stamp and receiving the benefit of it, while others did not have the opportunity to do this and lost out.

Our consideration should go beyond the superannuation scheme and extend to people who are making D contributions generally, for example the self-employed. This opens up a hornet's nest. In the proposal to deal with the anomaly, the organisation is suggesting that every four D contributions equate to one A contribution.

Mr. Bolger

Yes, in the context of qualifying for the minimum pension.

Deputy S. Ryan

As a member of the Labour Party, I have no difficulty supporting the development of this proposal and pursuing it. Obviously, the officials in the Department will refuse to consider the proposal at the outset. However, if the Oireachtas supports the campaign, not only for this organisation but across the board, I have no difficulty supporting it. Perhaps the witnesses might need the opportunity to develop it a little. However, in the context of what they propose, I have no difficulty supporting them. I thank them for raising the current anomaly.

Deputy D. Wallace

I welcome Mr. Bolger and Mr. Doyle. As has been said, this is a committee of anomalies, since that is all we ever seem to be dealing with. Great progress has been made in the Department of Social and Family Affairs over the years through the changes made. The pre-1953 situation has been mentioned. Much of that has come from the grassroots because of people such as the witnesses coming, meeting public representatives and making their case. I am surprised that RTE's pension scheme was not more attractive to its employees. Looking at it from the outside, one would think it was a great job and that everything would be nice and cosy. Having listened to the witnesses I see that, for many people, that is not the situation, and our knowing it does no harm.

Have the witnesses made any other submissions to the Department of Finance or the Department of Social and Family Affairs regarding their situation and seeking this change?

Mr. Bolger

No, when we realised that the anomaly existed, we felt it would be better to pursue it through, and secure the support of, the Irish Senior Citizens' Parliament and the National Federation of Pensioners' Associations. At that stage, we thought of coming to this committee to highlight and explain the anomaly. We have no problem about writing to the Department and asking for a meeting to explain our concerns and highlight the problems and how they affect the group involved. If one qualifies for the minimum pension, one qualifies for all the add-ons, and the cost of living for older people is the same as for those in full-time employment. We have served a cause and want to be able to maintain a reasonable standard. We cannot do that if we are excluded from a means-tested medical card, as we are, and cannot afford to maintain our health.

We have not raised the matter directly with the Department. We are trying to illustrate our problem, which is a very difficult one. It is not an easy issue to get one's head around. There is a group of people involved over a period of years, and that window existed between the late 1960s and the mid-1980s. It changed again because all the companies involved moved into portable pensions. Very few, if any, of the semi-State companies have superannuation schemes; they all have portable pensions. Staff were affected in the period from the late 1960s to the mid-1980s.

Deputy D. Wallace

We can pursue this and see what progress we can make on it.

Deputy Connolly

The point made is very valid. People should take notice of what their pension will offer them in years to come. People today have a great tendency not to worry about their pension. They always have a great reason for buying a house. They have children attending school or college. Suddenly, three or four years before they are due to retire, they realise how badly off they will be. There should be ongoing information sessions. It should be obligatory for employers to tell their employees where they will stand regarding pensions. Many people will be shocked when they see how badly off they are. They may be in quite a good job, but their pension benefits and entitlements are extremely poor.

Listening to the presentation, I am also struck by the communications from the personnel department in RTE, and the unions cannot stand absolved either. There is a responsibility on personnel departments and unions to take the flak when this is not coming through. People must be fully informed of their rights. Like the witnesses here today, some people will find themselves in that situation. They will be entitled to pensions, but they will not be quite as good as they thought. People have the notion that if they are under 50, it does not relate to them. If it involves a little pain and drawing on their salaries to bump up their payments by perhaps 3%, they say they will wait until the next rise comes. Inevitably, they never act.

The witnesses mentioned the two rates of contributions, the D1 rate at £2 and the A rate at £8. That makes a major difference to someone on £800 per year, since that is only £16 per week. I take it that it would have been minimised as time passed, but it is still huge. If one tells someone to multiply their pension contribution by four because he or she will not have a good pension entitlement at retirement, the person asks to multiply it by one and a half or two. It should serve as a wake-up call. It is late in the day for the witnesses now. Our committee must now accept the flak and push their case on the basis that they were ill-informed and that companies changed without their being able to do much about it.

The solution to have four Ds equalling one A is logical and not asking for too much. The witnesses served a semi-State company, and that is reasonable. As a group, they will certainly not be getting bigger. We should examine the possibility of "red-circling" them and treating them as a one-off group. The current workforce, the Department and we must pick up the slack. It is the responsibility of this committee, though we can point at others, at least to push their cause. Where possible, we must ensure people do not find themselves in situations similar to that of the witnesses. I note that it may not even entitle them to an automatic medical card. I hope people will take note of the witnesses' plight.

Deputy Callanan

From what the witnesses have said, they seem to have an extremely strong case. We would all like to pursue this as far as possible. Are there many more workers in the same situation with other employers? The witnesses went from class A to class D. Was that a big change for the workers? Did they gain much at the time? Why did they do it?

Mr. Bolger

The Deputy's colleague answered the question. Some of us were having families at that point. We were married with mortgages. Whatever extra one got went on that. For the first few years, few of us, if any, queried the reduction from an A to a D stamp in our employment.

Deputy Callanan

At the time.

Mr. Bolger

It was a little gain. Then, in about 1970, one of my colleagues went to personnel to inquire whether he might continue to pay the A stamp voluntarily. He was refused. The man is still alive, and he has a witness. He was refused the opportunity to start paying the A stamp again. They explained to him at the time that he was debarred from it because of the conditions set for blue-collar workers switching from A to D. Aer Lingus was fortunate, not penalising its staff but allowing them to continue paying the A stamp if they chose to do so. I assume the blue-collar workers employed in the ESB, CIE and most of the semi-State companies were in the same position as us. The company decided it was compulsory for them. They won it. It would affect few staff but at the time it would have been 10% or 15% of the numbers in all the semi-State organisations. Some had staff of 20,000, for example, Eircom and An Post. It would require research, for which I did not have the resources, to ask about the standing staff numbers in the organisations affected at a particular time because the second element was that one was required to reach a salary ceiling which some would have reached faster than others. This referred to gross salary or earnings in a particular year. If one worked a great deal of overtime one entered it before one's colleagues. The implementation was scattered but it affects all those involved.

Mr. Doyle

With the downsizing or reduction in staff in RTE in a few years time people will be eligible to become members of the superannuation scheme to collect their pensions and at 60 become members of our association, so people aged between 55 and 60 have a slightly different arrangement. When they come on stream there will be a certain increase, maybe 900 but others will die, members, widows, dependants so the number should plateau at a certain point and then start to decline. The same pari passu would apply to CIE and the ESB: the figures would reach a certain level and because a scheme is closed the number will drop over a period which is probably actuarially calculable. The overall effect is that it would return to the membership figures that pertained before the major staff reductions.

Mr. Bolger

Over very few years the last person will exit the RTE superannuation scheme, which we envisage to be about 2040 or 2045. There will be a significant sum of money in the pool which must return to the Minister for Finance and the last persons being victimised now will be dead and buried. The money that is in the scheme cannot compensate them for the current losses, even if the Minister thought that would be a route to take.

Chairman

We thank Mr. Bolger and Mr. Doyle for giving us a valuable insight into the anomaly which has arisen for the RTE pensioners. This is an all-party committee and the witnesses will note that contributions from all parties and the Independent members support the premise of their submission. I will seek the witnesses' permission to furnish it to the Minister for Social and Family Affairs with whom we have regular contact with open door access. The point that there will be a significant surplus in the funds at the end of the contribution period is salient. The Minister for Finance of the day will benefit from something that was unilaterally imposed with very little information about its ramifications and impact. The effects are obviously devastating. We will try to reflect this and the consequences for the witnesses and their colleagues to the Minister.

Ring-fencing is important because valuations often have a knock-on effect. The lower level of wages in RTE is significant. We have recently read about the significant earnings of those at the top of the company pyramid whereas further down the scale, particularly in the 1970s, wages seemed to be very low although it was easy to increase this with overtime which led to part of the problem. Nevertheless it is worth comparing the top earners today with the money those who worked to establish RTE in the 1960s and 1970s took home. They provided a valuable service to us all as a public service broadcaster. We hope those doing well now reflect on that too.

There are significant budget surpluses and we hope that everyone will share in that well-being and wealth and that people like the witnesses, and those they represent, will enjoy the security of living out their days with some degree of comfort, financial security and health. We will make our submission to the Minister but it is important, as Deputy Dan Wallace noted, that the witnesses make submissions to the Ministers for Social and Family Affairs and Finance.

Mr. Bolger

I picked up on that.

Chairman

Deputy Dan Wallace, as a former Minister of State, is giving good advice. We look forward to further contributions on this topic.

Arrangements are in train to have a joint meeting with the Joint Committee on Enterprise and Small Business next Tuesday, 18 May at which a delegation from the Fair Trade lobby group will present. However, this has not yet been confirmed. Arrangements are also in train for the select committee to meet to discuss the annual Estimates of the Department of Social and Family Affairs. Details will be circulated to the committee when they are finalised.

Deputy Crawford

Is this to pay out the other anomalies in the system?

Chairman

I will not allow that question.

The joint committee adjourned at 3.35 p.m. sine die.