I welcome the Minister for Public Expenditure and Reform, Deputy Howlin, to the House.
Public Service Pensions (Single Scheme and Other Provisions) Bill 2011: Committee and Remaining Stages
Sections 1 and 2 agreed to.
SECTION 3
I move amendment No. 1:
In page 8, paragraph (c), line 25, to delete “Act 1965.” and substitute the following:
"Act 1965;
(d) section 6 of the Superannuation and Pensions Act 1963;
(e) section 7 of the Superannuation and Pensions Act 1963;
(f) section 78 of the Local Government (Superannuation) (Consolidation) Scheme 1998.”.
I welcome the Minister to the House. As I have studied the debate that took place in the Dáil, I am aware of the Minister's logic in not accepting some of the amendments tabled in the Lower House. However, as my party spokesperson, Deputy McDonald, stated clearly, Sinn Féin was not satisfied with some of the responses received in this regard. Consequently, the Sinn Féin Members have re-tabled some of the amendments for further debate in this Chamber today, as of course is their entitlement. This amendment pertains to the pension arrangements of new entrant appointees such as Secretaries General and city and county managers. Obviously, Sinn Féin accepts fully this new arrangement means such individuals will be treated on a par with everyone else in the public service. However, Sinn Féin believes there are existing anomalies and inequities in respect of pension pots that must be dealt with. The Minister will be aware of the background to this issue, which is that many people are upset by some of the sweetheart deals, if one wishes to use that term, which have been done in the past. Although they were done by the previous Government rather than the present Administration, nevertheless they exist.
Some former city and county managers, I will not name them, having retired on pension with a lump sum — in cases where they had not the requisite years of service, their package was enhanced — have been re-employed by the State on a contract basis. That upsets people.
It would be a mistake for the Government not to follow the logic of what it is trying to put in place for new entrants to not make it retrospective to existing staff. What is the logic of the Minister's approach? Would the Minister like to apply these new provisions but believes he cannot apply them retrospectively? Has the Attorney General advised him on this matter? I have listened to the Minister's contributions in the Dáil. I know the Government does not provide the advice of the Attorney General.
The Minister was in opposition for many years so I assume he respects that it is very difficult for those in opposition to form judgments in the absence of the additional information available to the Minister.
The Minister will accept this is an important issue. While we welcome the positive provisions in the Bill, especially those that deal with new entrants, the view of my party is that the anomalies I have cited must be dealt with.
I thank the Chair for its indulgence. I have been trying to perfect the art of bilocation. I was speaking in the Lower House until 3.05 p.m.
I thank the Senator for his contribution on the amendment he tabled. I dealt with a similar amendment in the Dáil. I explained that the proposal in this amendment to repeal sections 6 and 7 of the 1963 Act could only have a prospective effect. One could not make it retrospective. The reason, as I explained in the other House, is that pensions are property rights protected by the Constitution. It is a simple fact. I know the advice the Senator would get from any authoritative legal source would be the same. Even if one accepted these changes, it would only impact on people appointed into the future. Since this Bill captures everybody who is appointed into the future, there is no point in doing that.
The anomalies to which he referred have caused disquiet. On becoming Minister for Public Expenditure and Reform, I discovered the Top Level Appointment Committee, TLAC, terms that applied to Secretaries General. I abolished them within a few months of taking office. Those terms had been in place since 1987, which surprised many of us who have been around since that time. Clearly the terms were overly generous and in my view could not be sustained in the current economic environment. We have substantially altered them. Many of the unacceptable features that the TLAC terms represented do not now apply to a Secretary General appointed since shortly after this Government came into power. We have taken a range of other measures on top level pay. We put a ceiling of €200,000 on pay in the Civil Service, which is the rate set for the Taoiseach. Of course, his net pay is a great deal less than that because of the significant tax and universal social charges which apply across the board. We should also be aware that the marginal tax rate for anybody earning over €100,000 in the public service, if one counts everything including the pension levy, the universal social charge and tax, is 62%, which is a high marginal tax rate.
People have asked me to mention the fact that we should always talk in net terms. When we talk about social welfare payments, we refer to the gross figure because it is not subject to tax, but to express a person's earned income in gross terms is unfair because it is not the amount of take home pay. If one is to compare like with like, we should speak in terms of what people get into their hand.
I do not disagree with the reasoning behind the Senator's proposal today but for the reasons I have outlined it can only have a prospective and not a retrospective impact. This new legislation will apply to all, including Secretaries General and to everybody else appointed in the public service once it is enacted.
The Minister will accept that it would be difficult to have a discussion on this issue and not deal with what is a sore point for many people. The Minister has given his reason that the legislation can take prospective effect only because of the legal rights of people. I accept the Minister at his word, but we would like to have the matter tested. That is the reason we tabled the amendments.
I made a somewhat related point to which I ask the Minister to respond. It is still current practice that some people who are in top jobs, such as senior civil servants and city and county managers, have been given more generous pension packages that includes a lump sum and pension to allow them to retire from the public service to enable the State to save money and yet some of them are being re-employed within the public service as consultants to Departments or semi State bodies. That must be seen as wrong. That is an issue that must be addressed by Government. While this is not strictly related to the amendment tabled, it must be addressed. I would like to hear the Minister's views on that issue.
I will address both issues. The fundamental principle underscoring this Bill is a shift from the calculation of final pension. Instead of the final salary dictating the pension, it will be based on a career average. We may have seen where people were appointed to a very senior position in the last year of their public service life and their pension is evermore determined by that last number of months in some instances. That will end with this process. That is important.
The Senator's second point relates to people who leave work on a decent pension with a lump sum and are rehired. Again I am making changes in this legislation to deal with that, but a system that is called abatement is already in place. If one is rehired, the new salary plus the pension aggregated cannot be more than the final salary.
May I ask a supplementary question on the system of abatement? If somebody is hired as a consultant does the system of abatement apply? I think that is one of the anomalies that has come up.
Let me deal with that. There are two elements to the full explanation. Abatement does apply, but the change I am bringing about in this Bill is that all pensions and salaries will be aggregated. People who retire on more than one pension as things stood were not subject to the top levy, but under the Bill the pensions will be aggregated to ensure everybody is treated in a like manner. That is a very important initiative in terms of fairness.
During the Second Stage debate in the House last week I indicated that where people are employed on a contract basis the abatement will be applied to the actual contract fee. Where they are re-employed on a longer-term basis it will be applied to the pension but the abatement will apply in each circumstance.
My remarks are not directly on the point but relates to the Top Level Appointment Committee, TLAC, terms to which the Minister referred. The TLAC made changes. TLAC was described to me before as being akin to the Freemasons — that is the way appointments are done. I think the Minister needs to go further. I would remove some of the civil servants who still remain on TLAC. Furthermore, I do not see why a Minister should not be on that committee. Even on a VEC interview board, one will have members of the VEC on it. We live in a democracy. We may criticise Ministers for appointing people to boards but at the end of the day they are elected by the people and are vested with those powers. While this is not directly on the amendment I think my point is worth further consideration.
I think we are straying well outside the terms of the debate, but important issues are being raised and I will respond to them.
One of the changes I brought about in the structure of the TLAC, and not without some resistance, is that the majority of TLAC members come from outside the public service. The majority of every interview board comes from outside the public service. The chair of the TLAC is a non-civil servant and the chair of the interview board is a non-civil servant. I do not think it would be appropriate for a Minister to serve on TLAC. That is my personal view. We need to ensure the separation in terms of not politicising Civil Service or public service appointments. That would lead to a great deal of difficulty.
We are all straying a little.
We can stray back.
I would like to make an important point that has not been made already. I will repeat one of the big criticisms I made when, as a member of a local authority, I was the chair of the local VEC. When we were conducting interviews, we came under pressure to consider people who were coming to the end of their careers. We were told it was important for such people to move up to the next position so their pensions would increase. We were reminded of the huge impact that would have on them for the rest of their days. The aggregation of the fee would negate that, which would be welcome. It is not easy to ignore the fact that one's decision could affect somebody for the rest of their days.
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Amendment No. 2 is out of order as it could give rise to a potential charge on the Exchequer.
Amendment No. 2 not moved.
Section 3 agreed to.
Sections 4 to 9, inclusive, agreed to.
SECTION 10
Amendment No. 3 is out of order as it could give rise to a potential charge on the Exchequer.
Amendment No. 3 not moved.
I move amendment No. 4:
In page 19, lines 1 to 8, to delete subsection (4).
This amendment seeks to delete the subsection that provides that former or current Members of the Oireachtas "shall not be regarded as" members of the single scheme. The Government decided that the single scheme should extend to new or first-time Members of the Oireachtas and office-holders, including Ministers and Ministers of State. Unlike almost all other public servants, Members of the Oireachtas do not have security of tenure but are subject to the will of the electorate from time to time. There can be a considerable change in Oireachtas membership from one Dáil or Seanad to the next. The requirement to be re-elected from time to time means that Members of the Oireachtas are different from other public servants in this regard. This special factor was taken into account in the drafting of the Bill for former Members of the Oireachtas and Ministers. Accordingly, a Member of the Oireachtas who was first elected or appointed before this Bill becomes law will not be a member of the single scheme in respect of any future service as a Member of the Oireachtas. We have given this matter a great deal of consideration. It seems reasonable that a Member of the Oireachtas with many years of service who loses his or her seat should not be on a different scheme if he or she is re-elected to this House. Such a person should be able to continue with that scheme. The system that will be in place if this amendment is accepted would not be applied to any other public servant who might be fired in mid-stream and subsequently rehired. I believe our approach is reasonable.
Section 10(4) enables "a member of the Oireachtas or the European Parliament or . . . holder of a qualifying office" who previously lost his or her seat but subsequently regained it to retain his or her membership of what we see as the more generous scheme. Why should one rule apply to someone in the public sector who happens to be a public representative when an entirely different rule applies to people who work in the public service generally? We do not believe that would be fair because the Government would be treating one set of public servants differently from another group of public servants. The Minister has explained the rationale for this provision. We accept the merit and logic of the move to a single scheme, but we believe it should apply to all elected representatives and all qualifying groups. We do not see why elected representatives should be exempt from what the Government deems appropriate for those in the rest of the public service. We will pursue this amendment, which we have tabled for the reasons I have outlined.
I understand the Deputy's position, but I do not agree with it. It is patently obvious that elected Members of the Oireachtas are not like ordinary public servants who have a career path and a contract of service. They cannot be fired in the middle of their careers only to be rehired after a few years. It would be an anomaly for a person who served for 15 years in the Oireachtas before losing his or her seat to be debarred from picking up where he or she left off if he or she is re-elected. With all due respect, many decent and hard-working Members who contributed to their pension schemes over many years have lost their seats when their parties have been caught in political tsunamis. The Senator's party often likes to be particularly hard on elected Members of these Houses because it bestows a certain public cachet. I think what I am saying is objectively reasonable.
It is not a case of us being hard on public representatives. The Minister is aware that we have called for all public sector pay to be capped at €100,000 per annum, or €2,000 a week, which would be very reasonable in the current climate.
That has nothing to do with this amendment.
I accept that, but I am mentioning it in the context of the Minister's suggestion that my party is hard on public representatives. It would not be difficult for a Deputy to live on €75,000 per annum, which is what we propose. Nor would it be difficult for a Senator to live on €60,000 per annum or for a Minister or the Taoiseach to live on €100,000 per annum. The point we are making in the context of this amendment is that at a time when we are tightening up on the pension entitlements of all public servants, the same rules have to apply to public representatives. We cannot have a two-tier approach to what we are trying to do.
I agree with the Minister. The position he has outlined is reasonable. Members of the Oireachtas are in a different position. Members of Sinn Féin often talk about the average industrial wage, but we have not seen much evidence of it. They have not set out their policy on the pensions——
What evidence does the Senator want?
During the presidential election campaign, we saw Martin McGuinness's bank accounts, which did not show any transactions other than in his local shop. From what I could see, he did not have ESB bills or anything like that. It is a matter of public concern that Sinn Féin has never set out its policy on the pensions of its own former members in this jurisdiction and the other jurisdiction. People ask questions about it.
Many questions have been asked over the years about the financing of the Senator's party.
We are broke.
The Minister's argument — that a person who came in under a particular scheme before having to exit it for a certain period should be allowed to revert back to that scheme if he or she is fortunate enough to get back into the Oireachtas — is a reasonable one. Senator Cullinane's party wants to set €100,000 as the maximum salary that can be paid to anyone in the public sector. If that comes to pass, some school principals and gardaí will have to take a pay cut. If it is intended to cut the Taoiseach's salary to €100,000, will that involve the Taoiseach receiving the same salary as a schoolteacher? If Sinn Féin wants to cut everybody's pay by a certain percentage, I am not sure it will score as highly in the popularity stakes as it thinks it will.
The Minister is right. It is good to hear that Sinn Féin, like other parties, agrees in principle with the idea of a single scheme applying to all public servants. Members of the Oireachtas are patently not public servants in the same way as a public servant who has a career in the Civil Service. As the Minister has said, the reality of elections every five years or more frequently means we cannot treat the two groups in the exact same way. The key point is that this position does not privilege Members of the Oireachtas — it simply recognises the difference between them and public servants.
I am always intrigued by Sinn Féin's enthusiasm for putting the squeeze on expenses and costs to the State. I answer many parliamentary questions on claims that are made. I answered a question last week on whether anyone has voluntarily given up their pay to bring it to a certain level. The reply stated that nobody in Senator Cullinane's party has done so. I can facilitate his party colleagues by forwarding abatement forms to them if they wish. I made the same offer to Deputy McDonald in the other House. That would allow them to yield back to the State an appropriate level of remuneration. All such contributions would be welcome. If the Senator is so minded and believes his pay or that of any Sinn Féin Member is excessive, he should lead by example and I will be happy to facilitate him.
The other House discussed at some length the general principle of having a public service salary ceiling of €100,000. The problem with this proposal is that it would put us on the road to privatising public services. Acute hospitals, for example, would no longer be manned by consultants, cardiologists and other experts in medicine if such a ceiling were in place. One would have a private system and members of the public would either pay for it or be excluded from it, whichever would be Sinn Féin's choice. Public servants should be treated in the same manner as private citizens and one should not determine that a person should be squeezed because he or she works in the public service. One achieves equality through a fair taxation system. All income, whether generated in the public or private sphere, should be treated the same. A fair taxation system equalises matters and we have a progressive taxation system. As I indicated, the marginal rate of income tax, if one includes the pension levy and universal social charge, is of the order of 62% on public servants earning in excess of €100,000.
The need to ensure a positive incentive is in place for effort, work and career advancement is being increasingly brought to my attention by working people. We should not pander to voices in the media who argue that everything done in the public arena is excessive and public servants are overpaid. I do not accept the logic of the Senator's view on that matter.
Sinn Féin does not believe everyone working in the public sector is overpaid. Many public servants are on low incomes and the vast majority of them earn less than €40,000 per annum. I hope I will be given an opportunity to respond to the Minister's challenge to Sinn Féin representatives to hand back their salaries and make the contribution we say we make——
I will offer the Senator such a facility if he wishes.
To set the record straight for the Minister, Sinn Féin's approach saves the State money. Deputies earn a salary of €95,000——
The figure is €93,000.
——and have take home pay of approximately €60,000. Sinn Féin Deputies take €32,000 in take home pay.
That does not benefit taxpayers.
The rest goes to the party.
Martin McGuinness's bank statements do not show utility bill payments.
I know this is a sore point for the Minister and Senators but if they bear with me, I will complete my point. The Minister referred to net pay.
His statement did not show any bill payments.
They like to throw around accusations and make comments but do not like to listen. Perhaps the Minister will listen for one moment for a change. To return to my point, a Deputy's net pay is approximately €60,000, of which Sinn Féin Deputies take half and use the other half to employ someone. This means each Sinn Féin Deputy takes somebody off the live register, thus achieving savings for the State. Moreover, tax is paid on the full €95,000 and on the €30,000 in income of the person employed. The Deputy is, therefore, out of pocket because tax is paid twice and the State benefits twice by having a person taken off the live register and paid from the Deputy's salary and having this employee's after-tax income taxed again. I assume this makes sense to the Acting Chairman, Senator Quinn, although it may not make political sense to a Minister who is, I am sure, very comfortable on his salary, as are those who like to put their full salaries in their pockets rather than taking people off the live register. Sinn Féin wants to get people back to work and provide a first class constituency service.
I did not realise Deputies' salaries were to be part of a social employment scheme.
They can be.
If that is what the Senator wants, he cannot argue for Deputies' salaries to be lower.
It is the Minister, not Sinn Féin, who can lower salaries.
Perhaps we should increase Deputies' salaries in order that Sinn Féin could start an employment scheme of its own. The bottom line is that I am interested in ensuring a fair scheme is in place. We have moved well beyond the substance of the amendment and I do not propose to further elaborate on this issue. However, people on the average industrial wage would scarcely be able to attain the lifestyle of those who are giving lectures on this matter, whether it is the homes they own or the transport arrangements they have.
Like the Minister, I do not wish to prolong debate on this issue. It is hard to take a lecture from Sinn Féin about saving the State money because its representatives employ someone on some of their salary.
Is it so dreadful to employ someone?
Any Deputy or Senator who employs a child-minder or somebody else——
That is ridiculous.
It is the same thing. He or she is giving someone on the live register a job and that person is paying tax on his or her earnings.
I pay child-minding expenses out of my salary.
The Senator should not lecture us from the moral high ground.
We have greedy Senators who take the lot pointing fingers at people who take others off the live register.
I ask Senator Cullinane not to interrupt.
They are champagne socialists.
Having listened to Senator Cullinane without shouting at him, it is inappropriate that he is shouting at me. I am making a fair and reasonable point that any Senator or Deputy or any other person who earns an income and employs somebody out of his or her earned income is creating employment and enabling the employee to pay tax on the earned income. This is not something on which any of us should seek to gain moral advantage. To argue that this practice is of great benefit to the taxpayer is to overstate the case.
A number of self-employed Members invest the salary they receive in their businesses to employ people to do the work they did previously. They never mention the fact that they have practically no income from this job because they use their salary to employ people to do the work they would ordinarily do in their enterprise. Sinn Féin Members continually tell us how wonderful they are. They are not wonderful; they do what every other Member who has a business, whether a doctor, farmer or solicitor, does when he or she employs someone to do his or her work. This constant lecturing about how wonderful they are——
The discussion has strayed from the substance of the amendment.
Question put: "That the words proposed to be deleted stand."
Vótáil.
Will the Senators claiming a division please rise?
Senators David Cullinane, Trevor Ó Clochartaigh and Kathryn Reilly rose.
As fewer than five Members have risen, I declare the question carried. In accordance with Standing Orders the names of the Senators dissenting will be recorded in the Journal of the Proceedings of the Seanad.
Amendment declared lost.
Amendment No. 5 has been declared out of order.
Amendment No. 5 not moved.
Question proposed: "That section 10 stand part of the Bill."
A number of amendments related to this section have been ruled out of order, but I want to address some of the issues under the section. It would be helpful for all of us if we could put aside some of the earlier conversations and debate because they do not do justice to the issues. I hope the Minister accepts that. It would be better for all concerned if we stuck to——
Some could lead by example.
Absolutely. I did not raise the issue — others did — but I will defend a position if it is raised.
The Senator's moralising was just too much for me.
We do not moralise. We like to put things into a context to show where we come from on the issues. The Minister does not have to agree with us, but we believe in equity in pay.
I am afraid I know the Senator too well.
We believe in equity in pay. As a member of SIPTU, the Minister might accept that is a good position for someone to have when wanting to address differentials in pay.
To return to section 10, concerns have been raised with us with regard to the six month provision which may adversely affect certain groups of workers, for example, women who leave the workplace for a period to look after their children. I know this issue was dealt with on Committee Stage in the Lower House, but I would like to hear the Minister's response to this because it is unclear in the legislation how this affects workers who take leave of absence that exceeds the six-month deadline on or after the operative date of the scheme. The purpose of amending and extending the six-month deadline to two years is to provide for greater flexibility. Our amendment was ruled out of order on the basis of it involving a charge on the Exchequer. However, it related to this window whereby current employees would leave the public service for a period of no longer than six months and where, if their leave exceeded six months, they would re-enter the service, but would move from the old scheme to the new scheme. We ask that the period be extended from 26 weeks to 104 weeks to allow for greater flexibility. I hope the Minister appreciates the point we are making. I am aware the amendment has been ruled out of order, but given we can raise the issues under the section, I ask the Minister for a response.
There is a certain irony, if not contradiction, in the view being expressed by the Senator now and the view he expressed in the context of the last amendment. Apparently, if Members of the Oireachtas are out for two years, by way of an election, they should not be allowed to come back into the same scheme but he wants to provide that for everybody else, in this particular amendment. There is no logic in that. If the Senator was a Member of the House, there was a quick election and he lost his seat, the Senator does not want to be allowed to get back into the same scheme that he might have been a member of for 15 years. That was the substance of the Senator's last amendment. However, a general civil servant is to be allowed to go off for two years and come back into the same scheme. There is no consistency in that.
The view is that a person should be allowed to come back into the scheme if there is a gap of around six months. Anything beyond that is not acceptable. We must have a cut-off point and we believe six months is fair. Of course, if an individual is on a structured career break, that does not apply. Therefore, an individual can take a structured career break and come back and slot into the same scheme. That would cater for most reasonable situations.
There is consistency here and the example I gave was of women who might leave the workforce for a period to look after their children. There is a big difference between them and public representatives who get elected, lose their seats and, perhaps, get re-elected. There is a distinction there. There are certain categories or groups of people in certain circumstances for whom flexibility is required. Our position, therefore, is consistent because it recognises that problems may exist. That is the purpose of the amendments we tabled. There have been several discussions on this issue on Committee Stage in this House and in the Lower House. The Minister understands the point being made. I do not expect him to come back on this and he has made his point. We will also be opposing the section.
Question, "That section 10 stand part of the Bill", put and declared carried.
Sections 11 and 12 agreed to.
SECTION 13
Amendment No. 6 is out of order because it could give rise to a potential charge on the Exchequer.
Amendment No. 6 not moved.
I move amendment No. 7:
In page 20, lines 19 to 23, to delete subsection (2).
This amendment deals with the imposition of a retirement age of 70, which we do not support. We do not agree with increasing the minimum retirement age from 65 to 67 or 68. Furthermore, the maximum age is a matter of choice. People should be able to make a decision as to whether they want to remain in the workforce. Forcing people to retire at 70 is wrong. There are many people over 70 who want to remain in the workforce and they should be allowed to do so.
In previous conversations the Minister has pointed to what he sees as an inconsistency whereby on the one hand we do not want an increase in the retirement age but we also do not want it to be capped at 70, but this must be about choice. I believe that 65 is an appropriate retirement age. A similar discussion was had in the Northern Ireland Assembly. My party tabled a number of amendments to a Bill dealing with the retirement age which sought to keep it at 66 but, unfortunately, those amendments were defeated. My party takes a consistent approach across the island. We want people to be able to retire if they wish at 65 but if they wish to continue working beyond the age of 70, that option should also be open to them.
We had a very full debate on Second Stage about the issue of the retirement age and about the merits of even having a mandatory retirement age. The Minister very fairly made the point that 70 is the maximum in the Bill and that it seems a reasonable proposition, while taking on board the very persuasive arguments put forward by Senators from both sides of the House about the merit of having a mandatory retirement age at all. Many people expressed the view that we should examine the possibility of abolishing the mandatory retirement age, in a human rights context. In the meantime, as the Minister has said, 70 seems to be a reasonable upper age.
We had a very good debate on this matter and many valid arguments were made. I am inclined right now, because of the pressures on employment and so on, to leave an upper age limit in place and I believe 70 is a fair upper limit. Most people, to put it bluntly, would like to retire well in advance of 70. Some limit is required in order to have proper workforce planning. It is very difficult to manage a service if one doesn't know when an employee is going to retire. If there is no limit in place, do we leave it to the individual to determine when he or she retires? One could have, in a hospital or a critical care unit, for example, a number of key people leaving at very short notice. We need to have some workforce planning and that is why an upper ceiling is there.
However, as I said on Second Stage, this is an issue that will probably be revisited at some point. There is a reasonable case to be made that because people are healthier for longer, the more choice they can be afforded, the better, as far as is practical.
I wish to state the Fianna Fáil policy on this matter, as set out in a document we published earlier this year. That document was drafted by my colleague, Senator Mary White, who has done a lot of work on this area. Our policy is that Fianna Fáil seeks to end the compulsory retirement of persons at the age of 65, whether in the public or private sector. While the provision in this statute does not go as far as our party policy would require, it does take us a step further along the road and on that basis, I will not be opposing this section and will not be supporting the amendment. However, this is something that the Minister has said he will return to and my party will be vigorously pursuing the matter in the context of a changing economy, hopefully. It is a step forward that the lower age of 65 is being changed and we are moving towards full equality for people of all ages.
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Section 13 agreed to.
Sections 14 to 18, inclusive, agreed to.
SECTION 19
Amendments Nos. 8 to 15, inclusive, are related and will be discussed together, by agreement.
I move amendment No. 8:
In page 25, subsection (1)(a), line 9, to delete “year for the pension, and” and substitute the following:
"year for the pension, that amounts to no more than €60,000, and".
This group of amendments seeks to cap public sector pensions at €60,000. The majority of retired public sector workers — perhaps the Minister has the exact figure — are in receipt of an average annual pension of €30,000, yet we have a situation where former Secretaries General, Taoisigh, Ministers and other public servants receive annual pensions in excess of €100,000. This is simply unacceptable. It was unacceptable in the good times and it is certainly unacceptable now, given the current economic situation. My party is of the view that some in the upper echelons of the public sector have been over-paid and some of their entitlements, such as pensions, have been far too generous, in comparison with those on the lower scales. This is one of the unfortunate realities that has confronted all of us in public life in recent years.
Some economic commentators and economists have tried to drive a wedge between public sector workers and private sector workers. They have made the argument that all public servants are on Rolls Royce pensions but the reality is far removed from that. The Minister will accept that the vast majority of public sector workers do not have anything like Rolls Royce pensions. Someone on an average wage of €30,000 or €40,000 has a small pension to which he or she pays in. People should be mindful that public servants make a contribution to their pension fund. Moreover, the pension levy was introduced which means public servants make a significant contribution to their pensions.
Sinn Féin believes there should be a cap on the basis of the need for equality just as tax allowances, available to people in order that they can invest in their pension pots, are capped. This would bring about a more proportionate and fair way of ensuring equity when people avail of taxpayers' money to invest in their pension pots. Many high earners in the private sector can put vast amounts of their salaries into pensions and avail of tax relief at the top rate of 41%. While there is a cap, we believe it is far too high. We have taken a consistent approach by seeking to change the position of private pension contributions and public payments. I do not believe that anyone who works for the State should get a pension in excess of €60,000 per year. That is approximately €1,100 per week, a vast amount of money for anyone to earn.
I am unsure how many public servants would be affected by this proposal. It may only be a small amount of people and, if so, then it should be no big deal for the Minister to accept it. We are not calling for this provision to be made retrospectively. It should be for new entrants. We take the view that, starting from now, anyone who retires should not get a pension above or beyond €60,000. We believe this is reasonable. This is not being proposed because we are trying to be in any way selfish towards people who are in the upper echelons of the public service and who are well paid. We believe the Government should be fair and proportionate and realise the position of the vast majority of working people, especially in the private sector.
As the Minister is aware, many of these people have seen their private pension pots decrease dramatically because of what occurred in the economy generally and because of investments in pension funds. Many people have been left without their pensions. Waterford Crystal is one example but there are others. I met several workers from Diageo recently. Almost 300 workers have lost their jobs between the plants in Dundalk and Kilkenny. Given the problems with the pension pot they will not get their proper entitlements and the pot is essentially insolvent.
On the one hand people in the private sector, often low and middle income workers, have small pensions and in many cases they have seen their pension pots reduced dramatically. On the other hand they see some people at the top of the public service with what are gilt edged or gold plated Rolls Royce pensions. The perception among the public is that all public servants are on these pensions but this is not the case.
If there were a cap of €60,000 it would deal with the issue because there would be a fair, proportionate and reasonable cap in place. I call on the Minister to produce the figures if this €60,000 cap was to be applied. Does he have any idea how many would be affected? Do the Minister or his officials have the numbers of how many people would be affected?
I read these amendments and I was surprised and somewhat shocked to see that the Senator is proposing to insert an absolute figure into legislation which, as Senator Cullinane noted, will only apply prospectively. It seems to be no more than bad legislating to provide for a cap of a set amount — Sinn Féin is proposing a cap of €60,000 and I note a figure of €37,500 is referred to in amendment No. 14. The suggestion is that this would be put into the legislation as a prospective figure. In other words, in 20, 30 or 40 years' time people would be subject to this absolute cap. That is simply bad legislating. The provisions of the calculation scheme set out in the legislation represent an eminently fairer and more sensible way of dealing with the complex calculations of pension figures.
Everyone wants to see fairness and equity. Senator Cullinane referred to the dreadful position in which Waterford Crystal workers found themselves as part of a private pension scheme. We are discussing a public pension scheme and the issue is to ensure there is a fair and reasonable method of calculation. This is what is set out in the legislation. The inclusion of an absolute figure set in stone in the legislation for decades to come for people who will retire in future is not an example of good legislation.
I have no problem imposing a cap but the Sinn Féin argument is the pure politics of envy. So few people get this type of pension or would ever get it. Most people who will get a public sector pension will get a small pension. It is fair to say that those who have retired on large pensions have caused considerable public resentment. I know this only too well from those I have spoken to in my area after the general election. The enmity was directed not only at politicians but at senior public servants as well. There are not too many of these and to make this a political issue and to suggest that Sinn Féin is championing the poor by including this vast cap that will apply to virtually no public sector work is wrong and cynical. It heightens the tension between the private and public sectors.
When I studied law under Senator Bacik one of the things I learned is that there must be some mischief that one is trying to correct, something that needs fixing.
I taught Senator Byrne well.
Nothing here needs fixing because so few people are involved. Senator Cullinane is giving the impression to those among the general public who do not have these pensions that everyone in the public sector will be on such pensions. We need to show that people are on a fair pension. I agree that the pensions of some in the private sector have been wiped out and a great deal of work must be done in that area. However, the State is an employer and has responsibilities as well.
The public anger on pensions rose to the extent that people assumed that I had a pension at the age of 33 years after being in the Dáil for four years. That shows how ludicrous it was. Since there was so much emphasis on the small amount of people with high pensions people almost accepted anything put before them. A rumour spread about me to the effect that I would have a pension. I heard it said that it was terrible because I was only in the Houses for a few years but because I was in Fianna Fáil I would get a pension. This was totally false and incorrect. The pensions of everyone in the Chamber will kick in at 65 years if, God be good to us, we are still alive then.
This amendment is a flag being waved by Sinn Féin that will have no practical effect. It will simply create a sense in the public that everyone is being wronged and that other people are on these high pensions when, in fact, they are not.
Senator Cullinane is next.
Before Senator Cullinane gets a second go perhaps I will get a first go.
Of course.
Senator Cullinane misunderstands the structure of this legislation entirely. No pension calculation in the legislation is based on a monetary amount. It is based on a career average. Senator Bacik rightly noted that it would be unwise to insert a notional capped figure in money terms of €60,000, or €37,500 for an Oireachtas Member, payable to all new entrants in 40 years' time. Senator Cullinane is a brave man to predict the value of the euro in 40 years' time. That is when a new entrant would accrue a pension entitlement under this provision. It is a nonsense to try to cite a monetary value in the future in a Bill that is structured in a completely different way. The Bill is structured on a career average basis. The calculations were the subject of negotiations with the trade union movement and arbitrated by the Labour Court. We have accepted the figures and the careful balance of calculation in it. We should not upset that calculation.
Senator Byrne among others made the fair point that there is resentment and that there is a selection of people at the top of politics, public administration, the Army or the Garda who retire with remarkably generous payments. This was why I introduced an increase in the pension levy on such people of an additional 20% on top of all the taxes.
I am unsure whether anyone would be at a level where they would get a pension of €140,000. Perhaps it might apply to a former Supreme Court judge or a Chief Justice. The tax and levy imposed on that reduces it substantially for the existing pension holder. The very basis of the legislation, however, is to ensure that does not happen in the future. People received generous lump sums because they were related to their final salary. The new structure will be based on a career average and the pension will not be related to final salary. Once the Bill is brought into effect, future pensions will be calculated on the basis of annual contributions and they will be based on the salary for every year worked and updated in reference to the consumer price index.
The notion of an annual cap, picked out of the blue now and applied some time decades hence, does not sit into the Bill and does not make logical sense.
First, I must respond to Senator Byrne. This is not about making politics. One could argue that any point made by a politician is making politics. The question is whether or not one believes that setting a cap is the right or wrong thing to do. Sinn Féin believe it is the right thing in this instance.
I am conscious of the perception of public servants. It is for that reason that we seek to have a cap introduced. There is a popular perception that almost every public servant is in receipt of a very generous pension but that is not the case. I do not know if the number of those affected is small. I have asked for the figure, and party colleagues in the Dáil have submitted parliamentary questions asking how many people would be affected by the amendment — that is, how many are in receipt of a pension in excess of €60,000. Former Ministers and Secretaries General certainly are. Many people are in receipt of pensions in excess of €60,000. When the size of such pensions comes into the public domain, especially when the figures are in the region of €100,000 or €130,000, and people see former members of the upper echelons of the public service, particularly former politicians, receiving pensions of more than €2,000 a week while the newspapers contain reports of representatives of the IMF saying people on social welfare should take a hit, carer's allowance should be cut or the medical card should be limited, they see the unfairness of the pension system. The Minister asks why we picked the figure of €60,000 and why we want to put it into legislation that will remain in place for ten, 20 or 30 years. The Government picked the figure of €250,000 as a public sector pay cap.
It is €200,000, and that is for the here and now, not 40 years hence.
Exactly, but the Minister can change it. As in any legislation, the amendment will empower the Oireachtas to make those changes. To prevent the Government from having to come back each year to seek the consent of the Oireachtas to increase the pension entitlement, the Minister, if he accepted the principle of a cap, could link the cap to the consumer price index. That could be a way to do it. However, to rubbish the notion of a cap and say one cannot put a limit on the pension someone in the public service can potentially receive is simply wrong.
The Minister is correct when he says people in the public service are now making a greater contribution to their pensions. A significant amount of the salary of Oireachtas Members is also deducted to fund our pensions, as well as the pension levy which all workers pay. I accept that. People also pay into their own pension funds. There is nothing wrong, however, in saying someone should not receive a pension in excess of a certain amount. How the amount is calculated and dealt with on a year-on-year basis is a different issue which could be worked out if the Minister was minded to accept the amendment. We cap pay in certain sectors.
The point of principle remains. We believe that no public service pension that is paid this year should be in excess of €60,000. If that figure needs to be adjusted in the future, or linked to the consumer price index, that is a different issue. Sinn Féin wants the Government to accept the principle of having a cap, but it is obviously something the Government does not accept.
There seems to be a disparity between the proposed cap on salaries of €100,000 and the cap on pensions of €60,000. That does not take into account the averaging of salaries, which I think is a good way of imposing a cap because it will prevent people from coming near the cap. The Sinn Féin figure for the cap is too high; very few will be affected by it. If Sinn Féin had its way and salaries were capped at €100,000 per year no one would qualify for a pension of €60,000.
There is not a salary cap of €100,000.
Sinn Féin proposes a maximum salary of €100,000.
We do not have that.
Sinn Féin is looking for it.
We are dealing with the reality.
Please allow Senator Byrne to continue without interruption.
I do not mind Senator Cullinane arguing. I am arguing with him.
Sinn Féin proposes a salary cap of €100,000 and a pension cap of €60,000. Its members are simply flying a political flag and have not even thought about the figures and how they relate to each other.
We have. I just do not have them with me at present.
If there were to be a cap on pensions, I would set it lower than €60,000. That figure is meaningless because so few people would be affected by it and the Exchequer would not be affected. Citing the figure makes it look as though everyone is receiving one of these sixty-grand pensions. Averaging is a good way of imposing a cap. Someone who starts off as a junior civil servant and works his or her way up will qualify for a pension of much less than €60,000.
There seems to be an inconsistency in the Sinn Féin position and Senator Cullinane needs to think about it and explain it to the public. This is not reality. It is political flag-waving that is getting the debate nowhere.
Senator Byrne is absolutely right.
I expected Fianna Fáil to agree with the Minister on this. That is no surprise.
The Minister is agreeing with us.
I am trying to talk logic as opposed to politics. By and large, when I talk to Sinn Féin, either in this House or in the Dáil, I find I am talking to media-driven Members whose focus is not on the debate but on how it is perceived outside. The soundbite is everything.
Deputy Eamon Gilmore was very good at soundbites when he was in opposition.
Allow the Minister to speak without interruption.
The Minister cannot lash out remarks and expect them not to be challenged. It is he who is straying from the issue. He should stick to the amendments.
Senator Cullinane, you had an opportunity to make a contribution. Please allow the Minister to speak without interruption.
I know free speech has come lately to Sinn Féin.
The Minister should deal with the amendment.
That is a simple fact. The Senator can shout people down all he likes, in the best fascist tradition. In a House of Parliament we allow free speech and the sharing of ideas. If one does not like them one listens and then argues against them. One does not shout people down.
I am not shouting at all.
Or interrupt them constantly.
That is quite different.
It is not different. It is the same thing. It is bullying.
Let me deal with the basic issue, which is a simple one. The way we avoid having huge pensions in the future is to base them on a career average so that one's pension is not related to one's final salary. That is the basic model. What happened in the past will not, therefore, be replicated. In that context, plonking in a monetary value is meaningless. It is doubly meaningless when we have no idea what the value of €60,000 will be when pensions become available to the people to whom this scheme will apply and who will not accrue a pension entitlement for decades hence. Who knows what the value of €60,000 will be in 40 years' time? I have to agree with Senator Byrne. The purpose of the Sinn Féin amendment is to make political capital for today.
When the Financial Emergency Measures in the Public Interest Act 2010 was brought in, it was estimated that 1% of pensions were in excess of €60,000. Only a tiny portion would be anything more than that. The Financial Emergency Measures in the Public Interest Act 2012, which I introduced myself, increased the levy on such pensions so that the current marginal tax rate on pensions over €100,000 is 68%. When we talk about an additional €10,000, we must bear in mind that 68% of it will be taxed, taking into account income tax of 41%, the universal social charge at 7% and the pension reduction of 20%. The net income, therefore, is significantly less than the headline figures would suggest.
As I said in the other House, there is a case to be made in regard to pension caps in the public sector. In fact, the programme for Government includes a commitment in this regard. I have no difficulty with anybody seeking to purchase an enhanced pension, but the public purse should not be expected to contribute to that beyond the threshold. Work in this regard is being undertaken by my colleague, the Minister for Social Protection, Deputy Joan Burton, and the OECD is reviewing it as a particular job of work. It is a matter for another day and the Minister will no doubt bring forward concrete proposals in due course. In the context of the particular scheme we are discussing, the architecture we have agreed includes a very fair pattern of accrual of pension into the future.
Is the amendment being pressed?
Question put: "That the words proposed to be deleted stand."
The Committee divided: Tá, 26; Níl, 5.
Tá
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D’Arcy, Jim.
- D’Arcy, Michael.
- Gilroy, John.
- Harte, Jimmy.
- Hayden, Aideen.
- Healy Eames, Fidelma.
- Heffernan, James.
- Henry, Imelda.
- Higgins, Lorraine.
- Landy, Denis.
- Moloney, Marie.
- Moran, Mary.
- Mullins, Michael.
- Noone, Catherine.
- O’Keeffe, Susan.
- O’Neill, Pat.
- Sheahan, Tom.
- Whelan, John.
Níl
- Cullinane, David.
- Ó Clochartaigh, Trevor.
- Reilly, Kathryn.
- van Turnhout, Jillian.
- Zappone, Katherine.
Tellers: Tá, Senators Paul Coghlan and Susan O’Keeffe; Níl, Senators David Cullinane and Trevor Ó Clochartaigh.
Question declared carried.
Amendment declared lost.
Section 19 agreed to.
SECTION 20
I move amendment No. 9:
In page 26, subsection (3), lines 2 to 8, to delete all words from and including "equal" in line 2 down to and including "accrued" in line 8 and substitute "no more than €60,000.".
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Section 20 agreed to.
SECTION 21
I move amendment No. 10:
In page 26, subsection (2), lines 30 to 41, to delete all words from and including "subject" in line 30 down to and including "office" in line 41 and substitute "subject to a cap of €60,000.".
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
I move amendment No. 11:
In page 27, subsection (6), line 10, to delete "as a public servant" and substitute the following:
"as a public servant, however, the combined pension earned may not exceed an annual pension payment of €60,000.".
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Section 21 agreed to.
SECTION 22
I move amendment No. 12:
In page 27, subsection (2)(a), to delete lines 33 to 26 and substitute “cap of €60,000, and”.
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Section 22 agreed to.
SECTION 23
I move amendment No. 13:
In page 28, subsection (2)(a), lines 23 to 26, to delete all words from and including “maximum” in line 23 down to and including “and” in line 26 and substitute “cap of €60,000, and”.
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Section 23 agreed to.
SECTION 24
I move amendment No. 14:
In page 29, subsection (2)(a), lines 47 and 48, to delete all words from and including “maximum” in line 47 down to and including “that” in line 48 where it secondly occurs and in page 30, to delete lines 1 and 2 and substitute “cap of €37,500, and”.
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Section 24 agreed to.
SECTION 25
I move amendment No. 15:
In page 30, subsection (2)(a), lines 37 to 40, to delete all words from and including “maximum” in line 37 down to and including “and” in line 40 and substitute “cap of €60,000, and”.
Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Section 25 agreed to.
SECTION 26
Question proposed: "That section 26 stand part of the Bill."
I do not intend to say a great deal about this section. However, our very brave men and women in uniform are opposed to it and have made representations to and had meetings with the Department in respect of it. Perhaps the Minister might comment on what the representative associations of those to whom I refer have stated about the section.
We have received many representations from trade unions and other groups on section 26. It is important that we highlight the concerns expressed to us. This section deals with those in the fast accrual group, namely, gardaí, prison officers and firefighters. As the Minister will be aware, those in this group are obliged, for practical reasons, to retire at an earlier age than others. There are no 65, 66 or 67 year old firefighters, which makes sense. The accrual mechanism in the legislation unduly reduces the benefits of those in this group in comparison with those included in the standard accrual group. I recently received representations from SIPTU and a number of other trade unions on this issue. The workers to whom I refer have genuine concerns.
Those in the fast accrual group in the public service pension scheme are obliged to retire at the age of 55 years. In order to do so, they must accrue pension entitlements at a faster rate than their counterparts in the standard accrual group. Prior to the introduction of the Bill, trade unions were given to understand that while the new scheme would be considerably less attractive than the current one, it would replicate its terms and that those in the fast accrual group would only be obliged to absorb the same hit as their counterparts in the standard group. Unfortunately, this has not proved to be the case. As matters stand, those in the fast accrual group can earn 40 years' benefits for 30 years' service and this must be maintained. The accrual rate applying to the pension and lump sum needs to be adjusted in order to reflect the current position.
We are opposed to the section because the Minister and his Department need to return to the drawing board on this matter. That is also the view of SIPTU and other organisations which, I am sure, have also lobbied the Minister. The departmental officials who were tasked with drafting this legislation should undertake to develop a formula that will replicate that which applies under the current scheme. Those in the fast accrual group are obliged to retire at 55 years and it must be recognised that the length of their service will be limited by virtue of this fact. If the objective of the section is to maintain the differential in respect of the terms which currently apply with regard to 40 years' standard benefits earned over 30 years, the trade unions have suggested the following approach: an accrual rate up to 3.74 times the State pension would be 0.7% at a standard plus 33%; an accrual rate over 3.74 times the State pension would be 1.67% at a standard plus 33%; and a lump sum accrual at a rate of 5% at a standard plus 33%. This is just one proposal that has been made by the trade unions and I am sure the Minister has been lobbied by them on this matter.
This issue is important to the category of workers affected and we are of the view that the Minister should re-examine the position on section 26. We must ensure we get the legislation right. Despite the rancour associated with the debate up to now and the fundamental difficulties we have with the Bill, we recognise that he and the Government have moved a great deal further than their predecessors. We have differences of opinion with trade unions on average earnings, for example, and linkages with the consumer price index. We have taken a pragmatic view and accepted that much of what the Minister is doing is correct. It is common sense and we support it. Trade unions do not support all of what the Minister is doing. That is fair enough. They are entitled to their view but we as legislators must adopt the positions we believe are correct for all citizens and we have done that. This is one of the areas on which the trade unions have a genuine concern that should be examined by the Minister. In that context, we will oppose the section. I await the response of the Minister.
I cannot accept the amendment because it would delete the section and the net impact of that would be that there would be no fast accrual for those special services such as members of the Garda and the Permanent Defence Force and the normal scheme would apply to them. That is not what the Senator intends but it would be the effect of deleting the section. This is a special provision to allow for fast accrual and payment of pension on retirement early to those three categories, namely, the Garda Síochána, the Permanent Defence Force and fire service personnel.
We have had discussions with the trade union movement. It has a responsibility to advance the interests of its members. The purpose of the scheme is to make a fairer scheme generally. To put it bluntly, I cannot imagine anyone in the private sector giving such a Rolls Royce pension to anyone. Members of the Garda Síochána can retire at 55 years of age. A member of the Permanent Defence Force can retire at 50 years of age. One could be 40 years in receipt of a pension. Under this scheme everyone else in the public service will not be paid a pension until the age of 66, 67 or 68. It will be 68 by the time anyone will accrue a pension under the new scheme. Those people will have a pension from a much earlier age when they retire, rightly so.
Actuarially, to afford to pay a fast-accrual based pension in the way we calculate it from the age of 50 is regarded as an extremely good provision. Objectively, most people in the private sector would see that as a very fair provision for people on whom we depend, such as the Permanent Defence Force, the Garda Síochána and firefighters. It would not be fair to expect them to continue working until the age of 68 or 70, nor would it be fair to expect them to retire early and to have no entitlement to a pension until the normal pension age. We are making provision for them to accrue an earlier pension.
The Senator has given a lot of figures. I can give him the basis of the calculations. They are done very carefully. We have had detailed discussions with the trade union movement. These matters have been rehearsed before the Labour Court as well. On balance, we are satisfied that this strikes a balance. Taxpayers have to pay for all those pensions and we must retain public support for them. While I accept what the Senators are saying, I have engaged with the trade union movement — my officials have done so directly — and they understand that this is a fair system that will allow those special categories of public servant who are front line in the real sense to have a much more favourable pension entitlement than the general body of civil or public servants.
I accept much of what the Minister said but the reality is that the workers involved and those in the trade unions are not in their view pushing for Rolls Royce pensions for those workers.
My father was a trade union official.
I accept that.
He taught me the basic rule of trade unionism from an early age. It is when you are asked what you want the answer is always "more".
To be fair to the trade unions involved, they have come up with what they feel are genuine alternatives. I outlined one of them. In fairness to the trade unions involved, they have engaged with the Department and lobbied the Minister strongly but it is not fair to say that they have not come forward with what they would consider as viable alternatives. They might not be acceptable to the Minister but the unions have worked constructively on the issue and they have legitimate concerns on the position that has been adopted by him in the legislation and the impact it will have on the workers concerned.
The Minister should accept the point that the unions have put forward alternatives. That must be put on the record of the House. From their perspective genuine alternatives have been tabled. I have given one example and there are a number of others which they discussed with the Minister as well. That information should be placed on the record of the House.
Does the Minister's reference to discussion with the trade union movement include the Garda Representative Association, PDFORRA and the other associations or were the discussions with SIPTU and other such unions? The GRA is not satisfied with what has been proposed. Its members think it is unfair.
Neither is SIPTU.
I know. SIPTU has been mentioned a lot but it does not represent gardaí, members of the Defence Forces and prison officers. It might represent fire officers. There are different categories of worker involved. A special case can be made for them that they provide a particular service that forces them to retire early. They feel that a further unfairness is being imposed on them because of this section. The Minister has said that the unions are happy with it but that is not the case. He might think it is a reasonable balance but from what I hear the representative bodies do not agree with that and they make a fair case.
I am the son a trade unionist. I was brought up in a trade union household. The job of a trade union is to represent its members. Whatever is on offer, it wants to do a better job. It is logical that trade unions want more. Our job is to be fair and balanced and to do a job for the taxpayer. The most important element of any public servant's pension in the future is to say that the pension will be there; that the State will be in a position to pay it, and that we can have certainty about that. That is why we must transform the situation because, as was outlined during the long discussion on Second Stage, the dependency ratio is altering and the capacity of the State to meet extraordinarily heavy bills in the future — 30 and 40 years hence — will be hugely demanding.
We must make these adjustments, which are for everybody. Some will not get an entitlement until the age of 68, because we are pushing out the general retirement age to link into the social welfare retirement age that was passed by the Houses last year, but I am not moving at all on the retirement age for those bodies. To actuarially work out a pension for someone who goes into a job at 22 or 23 and retires at 50 and then is potentially in receipt of a pension for 40 years is a significant contribution for the State to make. While I understand and applaud the rights of trade unionists to make a case for a better regime — of course they should do that — what is on offer is fair and, on balance, it is recognised to be so.
Question put and declared carried.
Sections 27 to 39, inclusive, agreed to.
SECTION 40
Amendment No. 16 has been ruled out of order as it would impose a potential charge on the Exchequer.
Amendment No. 16 not moved.
I move amendment No. 17:
In page 46, lines 1 to 23, to delete subsections (3) and (4) and substitute the following:
"(3) Pensions payable under the Scheme shall be indexed in line with the Consumer Price Index.".
I will be brief because I am interested in the Minister's response. We support the move to index pensions in payment in line with the consumer price index, CPI. Our difficulty with it is in the wording which creates uncertainty as it allows for the increase to be implemented at the Minister's discretion. I am aware that was the subject of a debate in the Lower House as well.
This section allows for the review of the pension in payment in line with the CPI, with which we do not have a difficulty but we are seeking to remove the ministerial discretion because we believe there must be certainty in that regard and it should be reviewed on a yearly basis. It is on that basis that we tabled this amendment. We believe there must be consistency. Workers must have confidence that their pensions will be re-evaluated in line with the consumer price index basis every year, and that is in step with their equivalence in other sectors.
That is an issue which was the subject of a great deal of lobbying, and I am sure the Minister was lobbied on it. We were, and we met a number of groups which had difficulties with some of what is contained in the legislation and requested that we table amendments to this effect. That is a serious concern of ours in regard to the Minister's discretionary element and we want to make sure that the pensions of people who work in the public sector are re-evaluated in line with the consumer price index year on year and not be just subject to ministerial discretion. I look forward to the Minister's response.
I explained this in the other House when a similar amendment was tabled. The Senator supports the idea of indexing in reference to the consumer price index but he wants to remove the mechanism I have suggested and insert the words "Pensions payable under the scheme shall be indexed in line with the Consumer Price Index." The problem with that is it does not state the "how" or the "where". Is it the CPI which is published every month?
Yearly.
It does not state that. Is it every six months, every year or every two years? There is no mechanism in what the——
The logic of Committee Stage——
There is no logic in law.
——is that we can accept the principle and come back on Report Stage.
The Minister, without interruption.
There is no logic in regard to this. It is what is written down, and that would be a moot assertion because one would not know when, how or who would declare it. In the section I have given the power to the Minister for Public Expenditure and Reform to bring it into effect. The section explains that the CPI will be examined in the second year after the scheme comes into operation, and an increase shall be given within a year of that. The CPI is published on a monthly basis but it can take several months before the figures settle. There might be a spike or a diminution, and we need to have an average. I would anticipate pensions and reckonable amounts would typically be uprated together within, say, six months of the year end. I have given an assurance in the other House, and I give it readily here, that it is the firm intention that this will be done on an annual basis within, say, six months of the settled figures being produced by the CSO.
I was making the point that when amendments are tabled on Committee Stage and if a Minister is of the view that there is some flaw in the amendment he might accept the logic of the amendment and it can be dealt with on Report Stage. If the concern is that we have not specified the "how", we will not press this amendment, and we will return on Report Stage with an amendment that will specify the "how".
That is the way to do it.
We will see then if the Minister will accept it.
Is the amendment being pressed?
Amendment, by leave, withdrawn.
Section 40 agreed to.
Sections 41 to 46, inclusive, agreed to.
SECTION 47
Question proposed: "That section 47 stand part of the Bill."
As I said on Second Stage, this provision is unnecessary. It pre-empts the outcome of negotiations with public sector unions in regard to the Croke Park agreement. It is putting the gun to the head of the negotiators in that agreement. It is clearly signalling the Government's intentions by putting into primary legislation a possible outcome of those negotiations. Leaving this unnecessary section in the Bill, the Minister is forcing us to oppose the Bill in its entirety because we have a fundamental problem with this section. It is unrelated to the rest of the Bill, which is about new entrants to the public sector, and it will be the subject of negotiations on the Croke Park agreement. We should have those negotiations, if they are to be real, and see what comes out of them. The idea that there is some sort of convenience factor is not an argument that stands up to any scrutiny. It would be convenient to legislate for this if the Government decides to do it. It is not convenient to legislate for something the Government has not apparently decided on one way or the other, and it is a wrong precedent to establish in legislation.
This is the so-called enabling clause which provides for the Minister to uprate current public service pension schemes in line with the consumer price index but at an undetermined point in the future. That is part of our problem with it.
As this may be my last opportunity to speak on this section I want to indicate that we will be opposing the Bill. As I said earlier, we support career averaging and linking the pensions in payment to the CPI. That makes sense in terms of the logic the Minister outlined earlier. A situation could arise where somebody is appointed to the position of a county manager, remains in that position for a number of months and their pension is then calculated on their final salary. We fully accept the logic of the career averaging, which makes perfect sense, and the need to link pensions in payment to the CPI but our problem is that linkage is done at some undetermined point. That is one of our difficulties with it.
We also have a difficulty with what we would see as a two-tier element to this where new entrants to the public service will be treated differently from some existing public servants. We have had that debate but that is a genuine concern on our part. I accept that the Minister has gone some way to addressing what are important issues affecting public pensions which needed to be addressed.
I understand the views of the Senators, which they expressed on Second Stage. Senator Cullinane accepts the principle of applying the consumer price index and therefore I presume he is not opposing this section. I did not hear him say whether he was or was not opposing it but if he believes that increases related to the CPI is the way to go, then they are the way to go for everybody. We have not applied them because of the existing situation that applies under the Croke Park agreement. This is available for some future date if this Government or any future Government decides, in the generality of it, to apply the consumer price index increase rather than reference to any pre-existing salary point. If we applied this now or had done so for the past number of years, it would be greatly advantageous to public servants who have had no increase. Nobody in the public service has had an increase; in fact, they have had diminution.
For completeness in regard to Senator Cullinane's point about the modality of doing this, as he will read in section 47, if at some future date I or my successor Ministers determined to make such an order, a draft of the order would have to be laid before this House and fully debated, and the draft would have to be approved by a resolution passed by these Houses. The actual mechanism would have to be laid out, debated and voted on in this House before it could have effect. That should give all the assurances the Senators require.
As it is now 5 p.m., I am required to put the following question in accordance with an order of the Seanad of this day: "That section 47 is hereby agreed to and that, in respect of each of the sections undisposed of, the section is hereby agreed to in Committee; that the Schedule and Title are hereby agreed to in Committee; that the Bill is hereby reported to the House without amendment; that the Bill is hereby received for final consideration; and that the Bill is hereby passed."
Question put.
The Seanad divided: Tá, 30; Níl, 15.
Tá
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D’Arcy, Jim.
- D’Arcy, Michael.
- Gilroy, John.
- Harte, Jimmy.
- Hayden, Aideen.
- Healy Eames, Fidelma.
- Heffernan, James.
- Henry, Imelda.
- Higgins, Lorraine.
- Keane, Cáit.
- Landy, Denis.
- Moloney, Marie.
- Moran, Mary.
- Mullins, Michael.
- Noone, Catherine.
- O’Keeffe, Susan.
- O’Neill, Pat.
- Quinn, Feargal.
- Sheahan, Tom.
- van Turnhout, Jillian.
- Whelan, John.
- Zappone, Katherine.
Níl
- Barrett, Sean D.
- Byrne, Thomas.
- Cullinane, David.
- Daly, Mark.
- Leyden, Terry.
- MacSharry, Marc.
- Mooney, Paschal.
- Mullen, Rónán.
- Norris, David.
- Ó Clochartaigh, Trevor.
- Ó Murchú, Labhrás.
- Power, Averil.
- Reilly, Kathryn.
- Walsh, Jim.
- Wilson, Diarmuid.
Tellers: Tá, Senators Paul Coghlan and Susan O’Keeffe; Níl, Senators David Cullinane and Diarmuid Wilson.
Question declared carried.