Seanad Éireann debate -
Thursday, 26 Mar 2009

Vol. 194 No. 13

Pension Provisions.

Senator David Norris

I welcome the Minister of State, Deputy Mansergh. This is a rather appropriate matter for the Minister of State to take because I know he has a distinguished academic career and is sympathetic to the work undertaken by universities.

On 2 February this year, the Government announced a pension levy that would affect all public servants. I am not sure if this was to celebrate the 127th birthday of the great writer James Joyce but its impact on certain aspects of post-doctoral research is very negative. I have been made aware of this by a number of individuals in this area.

This is not entirely unlike a case in respect of which I was successful some years ago. A blind student was awarded a fellowship and grant in order to pursue a PhD in history. A very mean mechanism was engaged in whereby the value of that scholarship was subtracted from the blind person's pension, thereby making it impossible for the person to continue with his research. I was successful in this case and hope to be so again today.

I understand the levy will be applied to the personal remuneration of all college employees, regardless of contract or grade, from 1 March. The Government's argument was that this would compensate them for the alleged advantage of public sector workers in terms of security of employment and pension benefits.

A number of points need to be made regarding the anomalies affecting researchers. Researchers do not enjoy any of the benefits enjoyed by public sector workers, nor do they receive any overtime pay, despite the fact that a great deal of their work is done at night, after normal hours and at weekends. Most researchers are on fixed-term contracts with no guarantee of renewal. There are no defined pay scales and salaries are at the discretion of their supervisor rather than the college or Government. In other words, the instability of employment typically prevents them from enjoying the benefits of pension contributions over the longer term.

I remember very well when the Financial Emergency Measures in the Public Interest Bill 2009 went through the House — it was very recently. There is a clause in section 8 of that legislation that permits the Minister to exempt a group or class of employees on the basis of specific conditions of employment that distinguish them from other classes or groups of public servants. I have and will continue to establish the fact that the individuals to whom I refer comprise a distinct group upon whom a clear injustice will be perpetrated.

Until recently contract researchers were not allowed access to their own pension records associated with their employers' pension schemes despite the provisions of the Protection of Employees (Fixed-Term Work) Act 2003. As a result of their not having such access or making certain payments, many are now being required to back-pay employee payments for the period during which they were denied access. They did not have information on what they were supposed to pay, yet, when they eventually received it, they were required to back-pay. In other words, they are paying pension contributions on the double and now have further difficulties because of the new pension levy.

Researchers whose programmes are funded by industry or the European Union make full economic contributions for their pensions. The employer contributes at the rate of 20% while the employee contributes at the rate of 6.5%. The Government is not contributing to the pensions but is taking money from them.

In addition to this, most research projects are of limited duration. As a result the researchers will never be in a position to accumulate the years of service necessary to take proper advantage of the pension scheme. I will give an example of someone who was in touch with me who is the recipient of a Health Research Board, HRB, post-doctoral research fellowship. The main point of the fellowship is to provide support for outstanding post-doctoral researchers who wish to consolidate their research skills and make the transition from post-doctoral research training to independent researcher. To receive this type of prestigious award the proposed research project must clearly demonstrate the potential to have an impact on the health service, the needs of patients, health practitioners and the public.

The particular proposal I am discussing was peer reviewed at two different stages by highly qualified and respected peers of international and domestic origin. Each year the Health Research Board awards six to eight fellowships to proposals of merit to individuals in various research institutions throughout Ireland. This is exactly the type of work we want done in universities and the type of intellectual investment we want to attract from outside the State. We are acting to inhibit it by the imposition of financial strictures upon these people.

On top of this is a serious anomaly. People who do this research work in Trinity or other national universities such as the constituent colleges of the NUI are subject to the levy. However, this does not affect people in the Royal College of Surgeons of Ireland who receive exactly the same post-doctoral fellowships, have gone through the same peer review process and have demonstrated the potential to have an impact on the needs of patients and all of the other qualifications. They are not subject to it. Here is a classic contradiction. One group of workers is included in this penal scheme and another receives exactly the same remuneration, grants, awards and fellowships but is exempt simply by virtue of the fact that they are involved in another institution. This is clearly absurd.

I ask the Minister of State to use the facilities he has under section 8 of the quoted Act to review the situation positively. The vast majority of researchers are paid by various funding authorities and they administer the grant money based on peer review recommendations. Who gets funded for scientific research is not and never will be voted upon by the Oireachtas. Essentially, this Bill imposes a special tax on researchers who work in certain institutions but not in others. This appears to be unjustified and unsustainable.

In the interests of the development of intellectual resources and research which is not pure academic research, although there are aspects of this involved, but which will be of benefit to the country, patients and the health services, as is clearly demonstrated, and which involve small amounts of money, I ask the Minister of State to take action to protect this valuable intellectual resource and not to subject people engaged in this to a penny-pinching exercise.

Minister of State at the Department of Finance (Deputy Martin Mansergh)

I fully subscribe to what Senator Norris stated on the importance of research. As it happens I am very familiar with the situation he describes as I have a daughter who is a research fellow at Trinity and is, of course, subject to the pension levy. However, I have not had representations on the pension levy from that source.

The Financial Emergency Measures in the Public Interest Act 2009 is one of a range of measures which have been implemented recently to address the current economic crisis, focusing in particular on the serious imbalance in the public finances. The grave Exchequer position, which we spent most of the day discussing, demands that exceptional and unpopular initiatives be brought forward in the national interest, and the Government has not been found wanting in acting accordingly. It is against this background that the new public service pension related deduction was included in the Act, which was recently debated and passed in this House.

Public servants enjoy significantly better pensions than most private sector workers. Public service pension benefits are higher and considered to be more secure than those of pensionable private sector workers, and their superiority has been highlighted by the severe losses in value sustained recently by pension funds generally.

I accept that the pension related deduction is a significant imposition and that in many cases it has not been a popular development for public servants and their families. The Government, however, is firmly of the view that it is a justifiable and proportionate measure at a time of great upheaval in the economy. Secure pensions are a very valuable asset in the current economic climate. The deduction asks that public servants, who enjoy pension security or who have an analogous arrangement, make a fair and reasonable contribution in recognition of this fact and help play their part in addressing both our immediate difficulties and the longer-term sustainability challenges facing the public service pensions.

Senator Norris expressed concern about the impact of the Act on the position of university research workers, in particular those in receipt, for example, of funds under the Health Research Board post-doctoral research fellowship scheme. In this connection the scope of the Act is clear in terms of the categories of person to whom the deduction applies. Section 2(1) of the Act provides that the deduction is to be made from public servants or persons who are members of a public service pension scheme, who are entitled to a benefit under such a scheme, or who have an entitlement to a payment in lieu of membership in such a scheme.

I am advised that in Trinity College Dublin, research workers, including research fellows are, as a condition of their appointment, enrolled as members of the college's defined benefit pension scheme and so are liable to the deduction under the Act. In accordance with the provisions of the Act and Department of Finance guidance notes, the view of the Trinity College authorities is that the pension related deduction is being correctly applied at source, that is to say it applies to any employee, temporary or permanent, who is a member of any college pension scheme or, where they are not a member of a college pension scheme for whatever reason, has confirmed on inquiry that they are otherwise in receipt of a benefit under another public service pension scheme or receive an additional payment in lieu of membership of such a scheme. On this basis I can confirm that the college is operating correctly within the terms of the Protection of Employees (Fixed-Term Work) Act 2003 and the Financial Emergency Measures in the Public Interest Act 2009.

More generally, a key point concerning funded research workers in our universities is that Ireland has moved to make them pensionable over recent times and has thus significantly improved the attractiveness of a research career in line with our national strategy. The value of this improvement in terms and conditions is a multiple of the cost of the employee pension contribution. It is also important to note that the nature or source of funding for university posts is not relevant in the application of the deduction. If the individual meets the criteria set out in section 2 of the Act, then the deduction applies.

The deduction is linked to the entitlement of an individual to a public service pension benefit or payment in lieu but I would point out that section 6 of the Act provides for a refund of the deduction in certain limited circumstances. Such a refund will arise in cases where, on leaving a public service job, an employee has no accrued benefit under any public service pension scheme, has not received a payment in lieu of pension scheme membership and has not transferred the service to another public service pension scheme.

Section 8 of the Act also provides for exemption from the deduction in exceptional circumstances when approved by the Minister for Finance. Specifically, where the Minister is satisfied that there is a particular class or group of public servants who, by reason of exceptional circumstances because of some particular aspect or condition of their employment which, in the Minister's opinion, materially distinguish them from other classes or groups of public servants to which section 2 applies, there is provision under section 8 of the Act for an exemption in whole or in part from deductions or to modify the obligation under section 2 of the Act in such a manner as the Minister for Finance sees fit, if the Minister considers it to be just and equitable in all the circumstances to do so.

It provides that this is for a class or group. The procedure to be followed is that the application be made by that class or group by stating the case in writing to the person who authorises the payment of remuneration to the class or group concerned. The application will be considered by the parent Department and the HEA in the case of bodies in the higher education area and following this consideration, the case will be submitted to the Minister for Finance for a final decision. It would be for a group of persons affected to make the application in writing.

It is also the case that college students or scholars on postgraduate studentship who receive a stipend are not entered into a college pension scheme. Scholarships consisting of a stipend of €16,000 and a fee grant of €8,000, by agreement with the Revenue Commissioners, are treated the same way and so are not subject to tax or PRSI. Scholarships are not considered to be remuneration under the 2009 Act, and those recipients are not members of the pension scheme so they are not subject to the deduction. The distinction must be made between research workers and people who are doing postgraduate research as the levy does not apply to the latter.

Senator David Norris

I thank the Minister of State for his reply. I am very grateful to him for amplifying beyond the direct typescript as his additional points were particularly helpful. The people who have been in touch with me accept that the country is facing very difficult economic circumstances, but they make the point that they are not public servants in the ordinary sense due to the vulnerability of their jobs, the method of funding and so on.

The Minister of State is right that the college in question is operating correctly. The question is not whether it is operating correctly, but whether it is operating fairly. There is a margin for appreciation. I am not sure how these people can legally constitute themselves as a group, but perhaps they can get in touch. They have a research fellows common room and so on, and they probably have a committee. Perhaps if this committee wrote to the Minister to seek a meeting with him, that could be undertaken.

Deputy Martin Mansergh

That is nearly accurate, but not completely accurate. There is nothing to say that people cannot constitute themselves into an ad hoc group. They must write in the first instance to the people who pay them. The people who administer their pay must then refer to the higher authority, such as the Department and the HEA. When they have made a recommendation on it, it can be submitted to the Minister. They do not go directly to the Minister as it is a multiple stage process.

Research workers in publicly funded third level institutions are part of the broadly defined public sector. Conditions for scientific research in our universities have vastly improved over the past ten years. We now have career research workers in these institutions, as opposed to lecturers, professors and so on. That is part of the broad context which we have considered. The Senator might have noticed from my reply that anybody who is there for a relatively short period and who will never be able to benefit from a pension can be reimbursed.

Senator David Norris

I thank the Minister of State for his further elucidation. There are degrees of research workers. Post-doctoral research fellows engaged in particular projects represent a slightly different category. I hope that there may be a positive outcome to this and perhaps the Minister of State's daughter may benefit.

Community Development.

Senator Paul Bradford

I am grateful that the Minister of State has come into the House to respond to my representation on behalf of the Castlelyons Community Council in Cork, which has made an application for grant aid under the voluntary housing scheme. To assist the elderly in the area, Castlelyons Community Council, which is a long established and very effective community council in east Cork, decided some time ago to establish a voluntary housing association that would lodge an application for funding under the departmental scheme. It decided to work in conjunction with Cork County Council to provide 12 units of accommodation for the elderly in the parish of Castlelyons.

I understand that the application was made in 2006. There was ongoing contact between the community council, which had to constitute a sub-committee that would be a recognised housing body. There was communication between the community council, the Department and Cork County Council on the project. Significant fundraising was required from the local community to purchase the grounds for the proposed housing development. Fundraising was required to carry out the drawings and the design for the housing scheme and to lodge a planning application. That was successfully done with the support of many people in the community. It is fair to say that in Castlelyons, as in many other communities across the country where voluntary housing projects are being considered, there was a level of satisfaction and anticipation within the local community at the progress which was thought to have been made.

Unfortunately, difficulties emerged during 2008. There was a necessity for much debate and correspondence between the housing body, the Department and Cork County Council. Consideration had to be given to changing house design, though it was eventually deemed that the original proposals put forward by the local community council were the best possible plans. However, that caused some delay. A serious problem then arose in December 2008, when the housing group in Castlelyons was informed that the rules of the scheme for tendering had changed in March 2008. The Castlelyons group was not informed of this rule change, and I am led to understand that in late December 2008 the group was advised that as the rules had been changed, its application was basically null and void and would have to be withdrawn. This was obviously very disappointing for the group in question as it had conceived the project, raised the money, purchased the land, designed the houses and was expecting the go-ahead. Instead, it got a very negative response.

The group members are obviously very disappointed that a rule which was changed in early 2008 was not brought to their attention earlier. They are also disappointed that the time, effort and money spent to date now seem to have come to nought. They made the point to me that there should be a much greater level of dialogue and co-operation between the local authorities and the Department on this matter. Groups such as Castlelyons Community Council are doing valuable work with these housing projects, work which would otherwise come under the remit of the Department and perhaps would not get done. These groups conceive projects which allow people to live out their autumn years in their own houses in their communities. That surely is very desirable.

I ask the Minister of State to look at the rules of the scheme to ensure there is greater progress between the housing bodies, the Department and the local authorities. In this case, will the Minister of State review the entire file and acknowledge that a difficulty arose because of a change in the tendering system? If the system changed in March 2008, but those changes were not brought to the attention of the association in question until almost nine months later, is it possible to have the application reinstated and decided upon? I look forward to the reply of the Minister of State, who would, I am sure, acknowledge, as I would, the tremendous work done by voluntary housing bodies.

The emergence of such bodies was a very desirable concept some years ago. At that time,housing associations and bodies such as the Respond Housing Association, Threshold, the Society of St. Vincent de Paul and others, took over part of the role of the Department of the Environment, Heritage and Local Government. They built houses and brought a sense of local ownership, community involvement and participation to social housing. This was a new departure and we moved away from the previous one size fits all concept of local authority housing. We must retain hope and optimism within these groups. For such applications as that of the Castlelyons Community Council, where a technicality appears to have blown the project apart, I hope the Minister of State and the officials at the Department of the Environment, Heritage and Local Government will work to get the project back on track at the earliest opportunity.

Minister of State at the Department of the Environment, Heritage and Local Government (Deputy Michael P. Kitt)

I thank Senator Bradford for raising this issue. I reassure the Senator that meeting housing needs through the current range of housing programmes remains at the very top of the Government's agenda. In particular, the voluntary and co-operative housing sector has a proud record of achievement in the provision of accommodation for people with special needs and low income families under the capital assistance scheme, CAS, and capital loan and subsidy scheme, CLSS, respectively. Since their inception in the 1980s, more than 21,000 homes have been provided to households in need throughout the country under these two schemes. This represents a considerable success story by any measure of social housing delivery.

Even in these times of more constrained public finances, support for voluntary housing remains a priority for my Department and I am confident that we will be in a position to substantially meet our ambitious Towards 2016 target to start 6,000 new voluntary houses between 2007 and 2009. More than 4,000 of these have already been delivered, at a cost to the Exchequer of some €850 million. This is a clear demonstration of our commitment to supporting the valuable contribution by the sector in meeting housing needs of vulnerable groups and households.

The voluntary and co-operative housing programme is delivered through two schemes, namely, the CAS and CLSS. Resources under these schemes are substantially committed for this year, the third year of the initial Towards 2016 delivery period. It is, therefore, timely that we take the opportunity to look ahead and, taking account of the changed economic situation, begin the process of preparing a new multi-annual programme to underpin future progress. The very active voluntary and co-operative sector has already submitted an impressive number of new projects for consideration in future years.

This brings me to the project in question, an application for 12 sheltered housing units at Bridesbridge, Castlelyons. This project has not been refused. It remains under consideration, in the context of the overall pipeline of projects designed to provide new accommodation for households with special needs. My Department and the local authority are engaging closely with the voluntary group concerned to consider issues of the project's compliance with our "sustainable communities" policy requirements, in addition to the various capital appraisal and procurement requirements for publicly funded projects.

All construction projects, including those undertaken by approved housing bodies, must now be procured under the new forms of contract for publicly funded projects. This has been communicated to local authorities on several occasions in the past three years. Three circulars issued from my Department between October 2006 and August 2007 highlighted these new requirements. Following an examination of the procurement process undertaken for this project, my Department advised the local authority that it did not appear to comply with the requirements of the new forms of contract. I understand that this has since been communicated to the community council and the need for compliance with the new procurement requirements has been emphasised. It is a matter for the approved body concerned, in the first instance, to consider its next steps.

I re-emphasise my Department's commitment to supporting the voluntary and co-operative housing sector as part of our overall approach to meeting housing need. Obviously, our capacity to do so will be subject to the level of resources available. Individual projects will have to meet our "sustainable communities" objective as well as comply with various capital appraisal and procurement requirements. In this way, we will maintain a solid foundation for continued progress, and value for money, in meeting housing need through the voluntary and co-operative sector.

Senator Paul Bradford

I thank the Minister of State for his reply. I am somewhat consoled by his statement that the project has not been refused. Let us suppose the negotiations between the Department and the housing body involved, namely Castlelyons Community Council, result in the ability of the community council to respond favourably to the new procurement contract system. If the documentation is resupplied to the Department, will the file be considered on the basis of the earlier date of application? I fear it might be deemed a new application and that the whole process would have to be gone through again. On the basis that the Minister of State has stated the application has not been refused, is it simply being held in abeyance until such time as he has satisfactory correspondence and tendering documentation from the community council? Can the application be re-activated and returned to its former place in the queue, rather than placed at the end? That is my concern. I thank the Minister of State for his interest. I advise him that once the community council makes progress, it will probably correspond directly with the Minister of State on the matter. Will the Minister of State intervene personally and offer his support?

Deputy Michael P. Kitt

I thank the Senator for his comments. The matter is under consideration. The Department and the local authority are engaging closely with the voluntary group concerned. When the information is forwarded I will discuss the matter with the Minister of State with responsibility for housing, Deputy Michael Finneran.

The Seanad adjourned at 4.05 p.m. until 2.30 p.m. on Wednesday, 1 April 2009.