Seanad Éireann debate -
Wednesday, 16 Nov 1960

Vol. 53 No. 2

Pensions (Increase) Bill, 1960 —Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time".

Minister for Finance (Dr. Ryan)

The purpose of this Bill is to give statutory authority for the increases in civil pensions payable from the Exchequer or other public funds including the funds of local and harbour authorities which were announced in the Budget last April. Civil pensions only are covered by this Bill; separate legislation is being enacted to cover similar increases in Army retired pay, disability pensions and special allowances, and military service pensions. Most of the increases are already being paid under the authority of an additional estimate for £127,000 which was passed on 19th July, last.

Under the Bill pensions which were calculated on the salaries payable prior to the general civil service pay increase of 1st November, 1948, are to be increased by 7½ per cent. and pensions calculated on the salaries payable after the pay increase of 1st November, 1948, and before the pay increase of 1st November, 1955, are to be increased by 5 per cent. These increases, like those granted last year, are accordingly weighted in favour of those pensioners who are longest retired and whose pensions are lowest in relation to current levels. Provision is made under Section 7 of the Bill for a proportionate increase in the case of pensions calculated on average salary over a period which fell partly before and partly after either of the determining dates 1st November, 1948, or 1st November, 1955. A pension calculated on average salary can, accordingly, be increased even though retirement took place as late as July, 1958. The increases will take effect from 1st August, 1960, or from the date on which the pension first becomes payable if that is later.

In some cases pay increases which correspond to the civil service pay increases of 1st November, 1948, and 1st November, 1955, were granted on other dates. Where this is so eligibility for the 7½ per cent. or 5 per cent. increase will be determined by the actual date of the pay increase.

The provisions of the Bill have been explained in detail in the White Paper already circulated. It follows generally the pattern of the Pensions (Increase) Act, 1959, with, however, one change which may be of interest to Senators; the provision restricting pensions increases within the limits of an overriding maximum which was a feature of previous Bills does not appear in the present Bill.

The Exchequer pensions which are increasable by 7½ per cent. under Sections 3, 4 and 7 of the Bill were listed in Part I of the Schedule to the Pensions (Increase) Act, 1959, which is referred to here for convenience. The Exchequer pensions increasable by 5 per cent. are listed in Parts I and II of the Schedule to this Bill. The fixed pensions payable to widows and children which are specified in Part II of the Schedule are increased by 7½ per cent. or 5 per cent. according as the basic rates are fixed before or after 1st November, 1948. Increases in those fixed rates will apply to future grants as well as to the pensions currently in course of payment.

Sections 5 and 6 empower local authorities and harbour authorities to grant increases in the pensions payable by them which are specified in Parts III and IV of the Schedule. The increases will be subject to the approval of the Minister for Local Government or the Minister for Health in the case of local authority pensions, and to the approval of the Minister for Transport and Power in the case of harbour authority pensions. The increases allowed will be on the same basis and will be generally subject to the same conditions and limitations as applied to increases in Exchequer pensions.

Section 10 contains various consequential provisions, in particular, for the application to the pension as increased of any statutory provision as to payment, etc., where applicable to the original pension. It also provides that any increase in the Bill shall not be assessed as means for the purpose of an Old Age Pension or of a widow's non-contributory pension.

The cost of the Bill to the Exchequer is estimated at £118,000 in a full year. Senators may be interested in the number of pensioners who will benefit under the Bill. The number of Exchequer pensioners is 7,620 divided into the following categories:—

	Estimated cost in a full year
2,089 Civil Service pensioners	£40,300
2,705 national teachers	£37,000
2,440 Gárda pensioners and widows	£24,100
386 R.I.C. pensioners and miscellaneous	£4,500
The total estimated cost is	£105,000

Of the 7,620 pensioners benefiting about half will get a 7½ per cent. increase, 3,880 as against 3,740. Re-coupments to local authorities are estimated to cost a further £12,100, to bring the total to £118,000, and it is also estimated that the cost to local authorities of pensions increases payable out of their own funds will be about £15,000 in a full year.

The cost of the Bill in the current year will be about £72,000 and the balance of £127,000 voted by the Dáil in July last will be needed for increases in Army pensions, retired pay, military service pensions and special allowances, which are being covered by separate legislation. Including the increases in these pensions and allowances, the total cost to the Exchequer of the 1960 pensions increases is estimated at approximately £212,000 in a full year.

I commend the Bill to the House for its approval.

Professor O'Brien

I wish to say a very few words about this Bill. I accept to the full that it is implementing a Budget decision and therefore cannot be altered at this stage. I should like to make a general point in relation to pensioners, who, after all, are a small class in the community, a class whose expectation of life is not as great as that of younger people and therefore should not be asked to wait too long for anything they are to get in the way of increased pensions. A pension is generally accepted as deferred pay, and if people in active service get rises on account of increases in the cost of living, the people who receive deferred pay should, in justice and equity, receive the same increases without delay. At present, there is a considerable lag between the time when the cost of living goes up and when the pension is adjusted.

As I have said, people of that age cannot afford to wait very long, many of them, and therefore I would ask the Minister to consider the possibility in future of relating increases in pensions automatically to increases in salaries for the same classes of servants, or providing some sort of rapid machinery of arbitration or conciliation of the same type as that in the case of serving officers, to consider the position of pensioners when the cost of living rises so as to give them a case in equity for an increase.

Dr. Sheehy Skeffington

I should like to support strongly what has been said by Senator O'Brien. It seems to me, and I think to all of us, in equity, that the Government ought to set about introducing some kind of comprehensive scheme which will allow such pensioners automatically to benefit every time serving civil servants set a rise in salary, owing to an increase in the cost of living. That is but common justice, and the complication of such a scheme, if it were to be introduced, could not be anything like the complication of the succession of Bills, such as this, that come before us, because there is a great deal of unnecessary complication about giving 7½ per cent. here, 5 per cent. there and so on. If you had an automatic scheme which would take into account in relation to pensioners as well as serving officers the circumstances which warrant a rise for them, we need never have Bills like this before us.

The Minister has said that the total amount involved is about £105,000 in any year and that it will benefit some 7,600 retired civil servants, which means in fact that those people will be getting an average of just over a pound a month increase. I do not think we can make a song and dance about that. It seems to me to be a very niggardly measure. We always seem to give just a bit less than what is required, and we always give it late; and it would be a pleasant change if the Minister came in and said: "We are going to give what we consider necessary in relation to active civil servants to these retired servants also." The big difference is that the pressure that can be put by the retired civil servants on the Parliament or the Minister is indirect, whereas serving officers have got, at least potentially, the strike weapon, which they do not resort to but which they could resort to. Pensioners cannot go on strike and therefore we here have a double duty towards them.

The Minister has said that this Bill is weighted in favour of those longest retired, which means, as we can see in the Bill and in the memorandum at paragraph 1, that the Bill provides increases of 7½ per cent. on pensions that were calculated on the salaries payable prior to the general Civil Service pay increase of 1st November, 1948, and 5 per cent. on pensions calculated on the salaries payable during the period after the general pay increase of 1st November, 1948, and before the pay increase of 1st November, 1955. As Senator O'Brien has well said, a pension and pension rights ought really to be considered as part of the salary, as deferred payment for services already done, and if outside circumstances combine to lessen the value of the pension as it had been calculated on retirement, a readjustment should in justice be made at once. These pensions are not ex gratia grants. If they were, they would be tax free, but they are not tax free. The Revenue Commissioners are just as interested in pensions as in salaries. Therefore, no case can be made for this kind of patchwork and the slow dilatory increases on what are already by no means large pensions.

The very well informed and moderately spoken retired Civil Servants Association has sent the members of the Seanad an excellent statement in which their claim to compensation could not be more fairly, moderately and cogently set forth. They make the point that they require some kind of percentage addition to compensate for what they rightly call the erosion in the value of the £. They give an excellent table showing, in relation to seven different groups retiring at different times, what percentage increase would really be required for each group to bring their pensions to the level they would have reached had they retired more recently.

You find this kind of thing in the third column, that for officers who retired between 1st April, 1958, and 14th December, 1959, an increase now of 6 per cent. would be required; for those retiring between 1st November, 1955 and 31st March, 1958, a present increase of 9 per cent. would be required; for those who retired between 1st November, 1952 and 31st October, 1955, 18 per cent. would be required; that the same percentage would be required for those who retired between 15th January, 1951, and 31st October, 1952; and that for those who retired between 1st November, 1948, and 14th January, 1951, 24 per cent. would be required; and in the earliest category, for those who retired between 1st November, 1946, and 31st October, 1948, an increase of 29 per cent. would now in equity be required.

Yet, under the 1960 Budget proposal, an increase of only 7½ per cent. is being given to the worst off of these, and 5 per cent. to the others, about half the pensioners involved. In view of that fact, I should like to close, as I began, by supporting Senator O'Brien in his plea that the Minister ought—I feel he would personally be sympathetic to this—to have prepared a comprehensive scheme for Civil Service pensions so that they can be adjusted pari passu with the salaries of serving officers. If increases are regularly justified and granted for serving officers by reason of outside circumstances such as the cost of living, obviously all these circumstances apply with equal, if not greater, force to pensioned officers. Therefore, a case for a comprehensive scheme of this kind is immensely strong and, I think, unanswerable, in addition to the fact that it would save a great deal of unnecessary complicated legislation such as the present Bill.

Professor Stanford

I want to add a few words of support to what Senator O'Brien and Senator Sheehy Skeffington have said. We have very good reason in this House and in this country to be grateful to our retired civil servants. It is sometimes forgotten that when many of the leaders in the struggle for independence were campaigning in the open forum of politics and sometimes even on the field of battle these backroom boys, as we may call them, were keeping the State running, were keeping the machinery of the State going smoothly and steadily. This State could not have made the progress it made in the first 10 years of its existence without the loyal and devoted services of the civil servants.

Also, as members of the Oireachtas, we are well aware of how much we owe to civil servants who help us— often more than they need—with our particular political work. It would be sad if the more senior members of the Civil Service who retired should be specially penalised, as Senator Sheehy Skeffington has shown. We owe a special debt to them. I appeal to the Minister, when he is framing his next measure of this kind or in his next Budget, to signalise our sense of gratitude to the older civil servants by making a generous adjustment in their pensions.

There are two points in this very reasonable memorandum, which no doubt the Minister has studied, from the Retired Civil Servants' Association, which I should like to quote. The first is against the regular argument that this leads to inflation and that we must keep down inflation. The answer very clearly here is that the revenues of the State have kept pace with inflation. Some of our salaries have not; some pensions have not; but the revenues of the State in fact have kept pace with inflation. Therefore, it is not a just argument to say that the State must counteract inflation by not giving the full pensions based on the equivalent of the value of the £.

The second argument is cogent, too. Some large firms in this country have adopted a regular automatic adjustment of pensions based on the value of the £. I believe it is true that some other countries, as distinct from our own, have done the same. I am not certain about that, but I believe it is so. Is there any reason, then, why we who owe so much to our retired civil servants should withhold this last gesture of justice and gratitude?

Dr. Ryan

Only one point was raised, that is, that Senators very naturally think we should treat our pensioners better. The plea is made that the pension should automatically move with the cost of living. As far as I can find out, that is not done in any country.

Dr. Sheehy Skeffington

On a point of explanation, the point I made, and that I think others made, was that pension rates should be advanced pari passu with any rise in the salaries of acting civil servants, not with the cost of living.

Dr. Ryan

That, I think, would be departing even further from realities in this country and other countries, too. As far as I can find out, this sort of automatic increase in pensioners' allowances has not come in in any other country for Civil Service pensioners. I think it is not defensible, taking into account the position of the general taxpayer.

There are many people in private circumstances and people who have retired who worked with an employer. They have had to make savings all their lives. They find when they retire and when the cost of living has gone up, and so on, that these savings are not as valuable as they expected they would be when making the savings during their lifetime of work. Still, they have to put up with that. Therefore, as economic conditions stand, we shall have to ask the Civil Service pensioners to bear some penalty, as it were, against an increase in the cost of living. Against that, a good deal has been done which perhaps Senators do not realise. A number of increases have been introduced. The earlier increases were weighted very much in favour of the lower-paid pensioner. In the past two years, it was an overall percentage. In the earlier years, it was weighted very much in favour of the lower-paid pensioners.

I am informed that the small pensioner who retired before 1949 has now about a 100 per cent. increase on what he had at that time, as a result of the various increases. I think that is fairly good, taking everything into account. In fact, I do not think the cost of living has increased since December, 1948, by 100 per cent. Therefore, the lower-paid pensioners are actually better off than they were before the war.

It might be said that that first compensation was given on account of the increase between 1938 and 1947 and a fair comparison therefore would be: what has the increased cost of living amounted to since 1938? Even taking that, we have not been altogether ungenerous to the lower-paid pensioner. The higher-paid pensioners have not done so well, in proportion, as the lower-paid pensioners. All I can promise is to take very serious note of the points made by Senators and to see if, whenever the opportunity arises, we can help these pensioners.

Question put and agreed to.

Agreed to take remaining Stages to-day.

Bill put through Committee, reported without amendment, received for final consideration and passed.