This scheme has only been laid on the Table of the House to-day.
National Teachers' Superannuation Scheme.
Cathaoirleach
I move:—
That the National Teachers' Superannuation Scheme, 1934, made by the Minister for Education, with the consent of the Minister for Finance, under the Teachers' Superannuation Act, 1928 (No. 32 of 1928) be confirmed.
I second the motion.
This is a very important proposal, involving the pensions of several thousand teachers. The Oireachtas is asked to take responsibility for the scheme although it has only just been circulated. I do not think that sufficient time has elapsed to enable any member of the Oireachtas to read the scheme or to examine it sufficiently even to pretend to know what it means and what its implications will be. Seeing that we are asked to take responsibilities for it, and that an immense amount of controversy is developing in connection with it, I ask that the decision of the question be postponed to the next meeting of the Seanad after this week. Meanwhile, the Minister might be asked to make a statement that would enable Senators more clearly to understand the scheme when they are studying it for themselves.
Cathaoirleach
I was just going to suggest what the Senator has just adumbrated. In all probability we shall have business for next week, and if the Minister would make a statement now with regard to the motion, we could adjourn consideration of it until next Wednesday.
I do not think that the scheme has been circulated. I have not received a copy of it.
Cathaoirleach
It has been circulated, but it was only laid on the Table of the House to-day.
I am quite agreeable to the proposal to postpone the discussion of this scheme until next week or the week after, provided the Seanad will let me have their concurrence in the resolution before the end of the month.
Cathaoirleach
I think that there will be no question about that.
The scheme has been circulated but it is in a particular form, and I think it is only right that I should give the fullest possible details regarding it to Senators. In the first place, I think that I should say a few words regarding the old pension scheme, which the present scheme is designed to supersede, and the reasons which had led the Government to decide that a change is necessary. The original pension scheme was set up under the National Teachers (Ireland) Act, 1879. It provided for the establishment of a Pension Fund out of which all pensions were to be paid. The basis of the fund was provided by a capital sum of £1,300,000, set aside from the Irish Church Fund, the interest on this sum at the rate of 3 per cent. per annum being paid into the fund. Under the Act, the British Treasury were empowered to make rules for the administration of the fund and to modify or add to these rules from time to time. Actuarial valuations of the fund were regularly made from time to time and, with the exception of one occasion during the very early period of this fund, it was found that a deficiency was disclosed when an actuarial valuation was made. A sum of £90,000 had to be voted by Parliament to make up the deficiency in 1891. Similarly, in 1895, Parliament voted a lump sum of £95,434, as well as an annual grant of £18,000. At the same time, the benefits accruing to the teachers were curtailed and their contribution increased. Further valuations were subsequently made, from time to time, and it was found that the provision in the fund was not sufficient. At the same time, an agitation was growing up in the country, which Senators will remember, for better pensions, as well as better salaries, for teachers. After a certain time, the teachers' pensions were improved and further increased grants were made to the Pension Fund. In 1914, an effort was made to put the fund on a more definitely satisfactory basis, and the rules which were then made provided for a considerable increase in the amount of the contribution from the teachers. Their new contribution, fixed in 1914, ranged from 3½ per cent. to 5 per cent. of the teachers' salary. In 1921, however, the rate of contribution was fixed at 4 per cent. for all teachers and this rate of contribution has continued to the present time.
The reorganisation of the scheme in 1914 was such as to secure the solvency of the fund on the conditions then prevailing, but an entirely new situation was created by the considerable increases in the teachers' salaries as a result of the agreement of November, 1920. The actuary stated in 1929 that the increased pension liability under this head amounted, on the average, to £330 for each teacher in the service. In 1914, the grade salary of national teachers ranged from £53 to £185 (men) and from £51 to £151 (women). The rates (scale salary) under the 1930 agreement were £170 to £460 (men) and £155 to £360 (women). The effect on pensions may be gathered from the fact that the average (ordinary) pension granted in 1914 was £31 10s., in 1920, £63 10s., and in 1932, £164. After a few years it became clear that the fund could not stand the drain of these increased pensions.
A valuation of the assets and liabilities of the Pension Fund as at the 31st December, 1926, was made and disclosed a net capital deficiency on the fund of £4,210,364. This deficiency has since then been increasing with compound interest and must be now considerably in excess of £5,000,000.
The expenditure of the fund has for some years past exceeded the income and it has been necessary to sell out stock in order to pay the pensions. The deficit for the year 1933 was £82,580.
The realisable assets of the fund in the form of Government securities amount at present to about £1,500,000 and it is estimated that, under the present system, if the Pension Fund were allowed to drift, as it has been for years past, the assets would disappear completely in about ten years' time.
The other assets of the fund consist of—
(a) Teachers' contributions (four per cent. of salary) £102,000 per annum.
(b) Income from Saorstát share of the £1,300,000 allocated in 1879 from the Church Temporalities Fund, £26,598 per annum.
(c) Fixed Government grant from voted moneys, £29,326 per annum.
(d) Government grant (voted annually) of 15 per cent. of previous years' expenditure, £47,726 in 1933-34.
(It is estimated that the 15 per cent. Government grant would increase ultimately to a maximum of £90,000 per annum.)
The question of the remedial measures to be adopted in face of the hopelessly insolvent state of the fund has engaged the attention of both the present Government and their predecessors for some years past, and it has now been decided that the position is such that it is desirable to wind up the existing fund and to place the liability for pensions on voted monies.
We have examined the question of an alternative solution—the last Government as well as the present— and the question of making the fund solvent, either by Government subsidy or increasing contribution from the teachers, or by a combination of both and they revealed to us that none of these courses is practicable.
The proposed new scheme will be on a non-contributory basis and the teachers, instead of contributing four per cent. of their salaries to the Pension Fund will be paid on the basis of revised net salary scales.
In introducing this new scheme, the Government have had to take into consideration the ultimate charge on the Exchequer in respect of both salaries and pensions. Under the present system the cost to the Exchequer in 1934-35 of teachers' salaries would be approximately, £3,470,000, and of pensions, £79,000, a total of £3,549,000. Under the proposed new scheme, the corresponding charges would be—salaries, £3,228,000 and pensions, £371,000, a total of £3,599,000. This represents an immediate additional cost to the Exchequer of £50,000. The Exchequer is also taking over liability for pensions for 1,755 junior assistant mistresses and 732 lay assistants, and for the rapidly increasing liability in respect of other pensions. This liability is increasing owing to the fact that teachers pensioned prior to 1920 are disappearing and teachers with much larger pensions are coming on charge. The total number of pensioners is also increasing. There are now 2,514 pensioners as against 1,946 in 1922. The actuary estimates that the number of pensioners excluding junior assistant mistresses and lay assistant teachers now coming under the scheme for the first time at the peak point will be 3,300. The total liability of the Exchequer for pensions will, it is estimated, rise to a maximum of from £550,000 to £600,000 per annum, in round figures, involving about the year 1960 an additional charge on the Exchequer for salaries and pensions, of from £229,000 to £279,000 per annum.
A continuing offset against this charge will, however, be the fund itself, when it has been turned over to the Exchequer. The market value of the securities held amounts at present to about £1,476,000 with an interest bearing value of £51,148. There will also be £26,598 representing the interest derivable from the Church Temporalities Fund, making a total of £77,746. It is not proposed to realise these securities, but a decision has not yet been reached as to the ultimate application of the interest accruing therefrom.
Coming now to the details of the proposed new pension scheme, there will be no change in the method of calculating the pensions, which will be, as at present, based on one-eightieth of the average annual salary for each completed year of service.
There is also no change in the conditions under which teachers may become eligible for pensions. These are:—
(a) Retirement on ordinary pension after having attained the age of 60, or after having attained the age of 55 and having served for not less than 35 years;
(b) disability pension after having served for not less than ten years; and
(c) non-efficiency pension in the case of a teacher who has attained the age of 50 and was removed from the service on the ground of his inability to discharge his duty efficiently.
The following benefits which are not available under the present scheme are provided in the new scheme:—
(a) A death gratuity equal to the average yearly salary for the three years ending 31st March next preceding the date of death where a teacher dies in the service after not less than five years' service.
(b) A disablement gratuity at the rate of one-tenth of his average annual salary for every completed year of pensionable service where a teacher retires owing to disability before having served for the ten years necessary to entitle him to a disablement pension.
(c) A marriage gratuity equal to one-twelfth of her average annual salary in respect of every completed year of service in excess of one subject to a maximum of one year's salary where a woman teacher with not less than seven years' service is required by the regulations shortly to come into force to retire on marriage.
Lay assistants in convent and monastery schools and junior assistant mistresses hitherto ineligible for pension benefits will be included in the scheme and will be credited with two-thirds of their back service provided that any such teacher who gave no service in the period of five years immediately preceding the appointed day and who enters the service on or after the appointed day will not receive any credit for back service.
About 50 teachers who elected to remain under the pension rules in force prior to the year 1914 and who paid smaller premiums and are entitled to smaller pensions than if they had agreed to come under the 1914 rules will be dealt with under the new scheme by giving them credit for a pension based on a half of their actual service previous to the appointed day, plus, of course, all service after the appointed day. This small group of teachers will get larger pensions than they would have got under the old scheme.
It was not absolutely essential to bring these teachers in, but, as a compassionate measure, we have done so and given them the benefit of this scheme, which they then refused to take. They did not come in under the new scheme; they refused to come in on two or three occasions. Nevertheless, where there is no big question of finance involved, and where there would be obviously hardship, we will extend the scheme to cover all these cases. But, no matter how perfect your scheme, or what trouble you take to cover individual cases, there will be always cases of hardship not covered, and I do not suppose that when the present scheme is in operation we will not have cases made to Senators and Deputies of individual hardship. But it is impossible to bring every individual case in under the rules. Wherever there were groups of teachers such as those who were not entitled to pensions hitherto, or even those whom I have just referred to, who failed to take advantage of their opportunities, we have tried to bring them in.
Under the present scheme, a teacher is entitled to a refund of all premiums paid by him into the fund, with compound interest, if he dies in the service, and without interest if he withdraws from the service before becoming eligible for pension. In future, such refund of premiums will apply only to premiums actually paid up to the date the new scheme comes into force and such premiums will not be refunded if the teacher is eligible for a gratuity, unless the gratuity is less than the amount he would receive by way of refund of premiums. That is only a small point.
Taking the new scheme as a whole, I think I can claim that the benefits provided are definitely more advantageous to the teachers than those which they at present enjoy. Further, under the revised scheme, pensions have the guarantee of the State Exchequer, instead of being dependent on an insolvent fund. I think the Seanad will recognise that it is a matter of great importance to the teachers that they should in future have the absolute security of the State behind them for their pensions. The Government claim confidently that their proposals effect a settlement of this troublesome question on lines which must be regarded as satisfactory and reasonable from every point of view.
This scheme—a very beneficial scheme, I think it is—is, as I understand it, based on the fact that the 9 per cent. cut is to be permanent.
Cathaoirleach
The House decided not to discuss this motion until the next day, when it will be the first item on the Order Paper.
The Seanad adjourned at 4.50 p.m. sine die.