Public Service Superannuation (Age of Retirement) Bill 2018: Second Stage

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

Minister of State at the Department of Public Expenditure and Reform (Deputy Patrick O'Donovan)

I welcome the opportunity to introduce the Public Service Superannuation (Age of Retirement) Bill 2018 to the House, on behalf of my colleague, the Minister, Deputy Paschal Donohoe. This Bill is the first of two statutory actions identified under the heading of "Public Service Pensions Reform" in the Government roadmap brought forward in March last, which outlined an action plan for radical reform of pensions over the five years from 2018 to 2023. The second action under the roadmap was to provide for the conversion of the existing pension-related deduction applied to public servants into a permanent additional superannuation contribution for public servants. This latter action has already been legislated for and will come into effect from January 2019. Both actions will contribute to the future sustainability of public service pensions.

The changes proposed in this Bill regarding the compulsory retirement age in the public service will be voluntary on the part of the employee and are intended to enhance the options available to employees as they approach retirement. This is important because as we live longer, healthier and more active lives, we need to recognise that we must also provide the maximum opportunity and choice for the active engagement of older people in society. Compulsory retirement age in the public service and in the economy generally, has been the subject of discussion for a number of years in light of the fact that people are living longer, healthier lives and are anxious to continue to make a contribution to work and to society. Society is adapting, as it should, to this reality and this legislation is another step in that direction for public servants.

The age of eligibility for the State contributory pension is currently 66 years, at a time when many public servants have a compulsory retirement age of 65. As we all know, the age of eligibility for the State pension is due to increase further, to 67 years in 2021 and to 68 in 2028, and this Bill recognises and future-proofs the statutory compulsory retirement age for public servants before those increases are scheduled to occur.

In line with the Government decision of 5 December last, the purpose of the Bill is twofold: (1) to increase to age 70 the compulsory retirement age for public servants recruited before 1 April 2004, other than the uniformed pension fast accrual group; and (2) to ensure that the additional service by a public servant up to the age of 70 can benefit from pension accrual subject to the maximum of 40 years’ service. The provisions for compulsory retirement age in the public service have been addressed in legislation over the years on a piecemeal basis. Compulsory retirement age for public servants is generally determined by their date of recruitment to the public service. Public servants recruited between 1 April 2004 and 31 December 2012 have no requirement to retire on age grounds while those recruited since 1 January 2013 are members of the single public service pension scheme and have a compulsory retirement age of 70. The group of public servants recruited before 1 April 2004 are, therefore, the only group who are currently required to retire before the age of 70. They generally have a compulsory retirement age of 65 and it is that group that I am catering for in this Bill. Selection of the age of 70 as the new compulsory retirement age under this Bill followed extensive discussions with public service employers and consideration of the other options available, such as synchronising compulsory retirement age with the age of eligibility for the State pension. In addition, it is only six years ago that the age of 70 was agreed as an appropriate compulsory retirement age for members of the new single pension scheme. In taking a decision in that context, consideration was given to the benefits of having a specific age limit, which reflected increases in longevity while at the same time respected the existence of a retirement horizon.

While there can be no right answer as to what the perfect compulsory retirement age might be, the age of 70 would, I suggest, strike the right balance. Selecting the age of 70 not only aligns the potential working horizon for a public servant with the increasing age of eligibility for the State pension but it also allows people who feel fit and healthy to work beyond that eligibility age, should they wish to do so. Selecting age 70 also helps to bring about a consistency in retirement ages in the public service by matching the compulsory retirement age of the pre-2004 public servants with that of single scheme members. When the Government made its decision last December, it agreed that the new legislation would not apply to the uniformed pension fast accrual group, such as gardaí, prison officers, members of the Permanent Defence Force and firefighters, who are required to retire early for operational reasons. It was agreed that issues regarding the retirement ages for these groups could only be dealt with at sectoral level where the detailed policy, operational and manpower issues relevant to those groups could be appropriately considered. On that basis, retirement ages for these groups remain a matter for the respective Ministers.

There are a small number of other groups for whom the new retirement age of 70 will not apply. These are groups who, by convention, have no compulsory retirement age, for example, the President and Members of the Houses of the Oireachtas. These groups are excluded and will continue to have no compulsory retirement age. Certain groups, such as the Judiciary, whose retirement age is provided for in courts legislation are being excluded from the Bill and their retirement ages will continue to be covered by the existing legislation. Finally, the new compulsory retirement age will not apply to public servants who have retired and been rehired on contract. Their fixed-term contract terms will continue to apply. For the benefit of Senators, I will now briefly outline the main provisions of the Bill which have been drafted as an amendment to the Public Service Superannuation (Miscellaneous Provisions) Act 2004. Section 2 of the Bill identifies the public servants to whom this Bill will apply, described in the Bill as "relevant public servants". These are effectively all pre-2004 public servants, other than those whom I have mentioned earlier.

Section 3 provides for a new compulsory retirement age of 70 for relevant public servants as defined in the Bill. It also provides that the new compulsory retirement age may be increased further in the future by ministerial order under certain circumstances.

Section 4 gives effect to the Government’s decision to provide that service between the age of 65 and the new compulsory retirement age of 70 would benefit from pension accrual, subject to the maximum accrual of 40 years' pensionable service. Section 5 provides that any statutory instrument which sets a compulsory retirement age, which has been made under any enactment, should reflect the new compulsory retirement age provided for in this Bill.

Schedule 1 to the 2004 Act details the public service bodies to which the 2004 Act does not apply. These are mostly commercial State bodies. Section 6 updates this Schedule by adding the Shannon Group plc and Teilifís na Gaeilge to the list. Both of these bodies have a commercial mandate and were established since 2004. For the avoidance of doubt, a global reference is being added to the Schedule to exempt any pre-1922 public service body of a commercial nature established by an Act of Parliament.

Section 7 and the Schedule to this Bill contain consequential amendments to various sectoral Acts which provide for a compulsory retirement age for an individual public servant or class of public servant, so that those provisions reflect the increase in the compulsory retirement age provided for in this Bill.

I understand that there is wide political support for the introduction of this measure and I look forward to hearing the contributions of Senators to the debate today. I know that staff interests are anxious to have the legislation enacted at an early date and the Minister, Deputy Donohoe, and I will endeavour to secure early dates for further consideration of the legislation in the other House. I commend this Bill to the House.

Senator Gerry Horkan

I thank the Minister of State for bringing the Bill before the House. I think he is aware that Fianna Fáil will support the Bill, as he made reference to it in his speech. It is unfortunate that it has taken so long to get to this stage because it was stated as far back as last December that the Minister intended to resolve the anomaly regarding the compulsory retirement age, yet here we are in July and the Bill will not be enacted for some time.

It is good to see the retirement age increasing to 70, if people want that to be case. The measure does not apply to certain sectors and people who have their full service may want to retire earlier and now, that is at least their choice. As the Minister of State outlined there is a gap between 65 and 66 when people can get the contributory State pension. Will he assure me that public sector workers are entitled and do get their public sector pension from whenever they retire? I think it is a lump sum equal to a year and a half's salary followed by their pension based on their years of service from the day they retire. I would welcome clarification from the Minister of State in that regard.

People are currently affected by the rule. Could the Minister of State outline to us what he is going to do for people who are currently being forced to retire and do not get their contributory pension for some time? Is there any ability to retrospectively deal with them? I accept that we cannot go back forever but would it be possible to start with people affected from today, the day the Bill was introduced in the Seanad, and that the Minister would consider outlining measures to deal with people who are caught before the legislation is enacted if that is possible to do. I know there are people, including some of the ushers in this House, who will be affected. I know it is a question of timing and that not everybody will be affected but I would like to find out if there is a way to deal with the cohort of people who are affected by the timing of the legislation being enacted.

The Minister of State was very comprehensive and he outlined the measures included in each section. I will not repeat all he said. I am not sure whether the Minister of State made reference to it but I think there is a future provision that may be going up as high as 75 for compulsory retirement. Could he outline if that is the case? I do not doubt that in ten, 20 or 50 years' time people will be living even longer than they are now and that is very positive. With the increased number of people in the workforce and the amount of people who are living longer, perhaps there will be a requirement, subject to a person being healthy and well, to further increase the compulsory retirement age. Again, it would be the choice of the individual to continue to serve. I thank the Minister of State for introducing the Bill and I look forward to it being speedily processed through both Houses. I ask him to address the anomaly I raised.

Senator Paddy Burke

I welcome the Minister of State to the House. I very much welcome the Public Service (Age of Retirement) Bill 2018. It is great to see that the age of retirement is being increased up to 70 years of age. We know people are living longer and they want to work longer. Life expectancy has increased and people are living far healthier lives. They eat better and take more exercise. It is only right that this Bill caters for people who work in the Civil Service, who are the only ones who had to retire at the age of 65. It is great that the age has been increased to 70.

I do not intend to hold up the Bill but I have a number of questions to put to the Minister of State. One concerns superannuation payments. When people have paid their 40 years' worth of contributions, most of them have paid for their pension. They might have it paid at 65 but if they work until they are 70, will they no longer have to pay the superannuation contribution?

Job sharing is very much a feature of the Civil Service and the public service. I do not see how job sharing could continue after one would reach the age of 65 because if one was on a full pension one would be entitled to half one's pay from the pension. Why would somebody work half a week in addition to whatever he or she would be getting in a pension payment? The only exception would be someone who had not accrued full pension rights who might see it as an opportunity to bring up his or her pension requirements to the 40 years' service.

I welcome the Bill and wish the Minister of State well with it. As Senator Horkan said, there are quite a number of people in the Houses such as ushers who have been caught out and I hope something can be done to rectify the position and give them their full entitlements.

Senator Máire Devine

Sinn Féin believes in the full abolition of mandatory retirement. Our Bill, the Employment Equality (Abolition of Mandatory Retirement Age) Bill 2016 is currently on Committee Stage in the Dáil, and would completely remove an age of retirement. This time last year, the Citizens' Assembly voted overwhelmingly in favour of abolishing mandatory retirement on the basis of age with a vote of 86%. Nobody should be forced to leave a job because of age. There is a clear appetite for change and I hope the Government will enact the Bill.

That said, I welcome this Bill as it does take some steps towards a more age-equal public service. The Bill recognises the fact that for those public servants who began their employment before April 2004, a gap exists between their mandatory age of retirement at 65 and the age at which they can receive the contributory State pension, CSP. This gap reveals a lack of joined-up thinking between Departments and we welcome it being closed. It is even more important since the age at which the CSP can be received is due to increase from 66 to 67 in 2021 and 68 in 2028. However, an important point is that this mandatory age of retirement does not mean public servants cannot retire before the age of 70 - if they wish to do so, they can.

A further rationale for this Bill is that it is a response to demographic change and the effects of an ageing society. We all know 70 is the new 60. The current arrangements deny public servants the choice of working beyond the age of 65, but the merits of this Bill fall beyond this consideration. It is essential that workers have the choice and capacity to exercise agency, and determine the conditions of their work and the length of their working life. Mandatory retirement at the age of 65 foreclosed that right, and the provisions of this Bill go some way towards addressing that.

Furthermore, it is unwise to facilitate or force any loss of experience in the public service. We have much to learn from those who have cultivated a knowledge base and expertise through experience in our public service. We should not force them to leave and take their knowledge with them. It is important that their experience and skills are available as a learning resource for those who will remain in our public service after those to whom I refer choose to leave. The Bill gives some provision to allow this.

I wish to raise one concern in particular. A circular was issued on 15 December 2017. It applied to civil servants recruited prior to 1 April 2004 and who reached the age of 65 years between then and December 2017. The circular ensured that if a retired employee was rehired, he or she was paid at the minimum point of the pay scale rather than the point at which he or she had retired. This was an interim arrangement and ensured that a rehired civil servant could continue to draw salary until he or she was eligible to receive the contributory State pension. However, it is not clear whether those who availed of these interim arrangements will be able to be rehired under the terms of the Bill before the House, work on the basis of their previous salary scale and then retire at the new mandatory age of 70 years. For example, I spoke to a teacher this morning who will turn 65 years of age before the Bill is enacted. She will take a financial hit by being placed on the interim arrangement. Yet, it seems from section 2 she will be excluded from continuing to work until the age of 70 years. Perhaps the Minister of State could clarify that. If he cannot provide clarity on the matter, we recommend that amendments be brought forward to address this lacuna. Such amendments should provide for those who availed of the interim arrangements but who are excluded from these provisions.

My argument is that this Bill does not go far enough in radically challenging the ageism that obtains in our public service. However, it will make some positive changes to those who wish to continue to work past the age of 65. It will positively benefit the well-being of older individuals and the public service in terms of the retention of expertise. However, the concerns we have raised regarding those who will fall through the cracks by being on the interim scheme before this Bill is enacted must be addressed and a viable solution worked out. I look forward to hearing the response of the Minister of State.

Senator Alice-Mary Higgins

I am supportive of the Bill. I welcome the Minister of State and thank him for bringing it to the Seanad. The Bill is important for several people. I know that some individuals have spoken about the sense that they have been pulled away from work that is important to them through the mandatory retirement age and cut off, in some cases, in terms of their contributions.

While I welcome the Bill and will be supporting it, there are some key issues that I wish to highlight. As the Bill sets out, it should not be mandatory to retire at 65 years of age. We should allow for persons to continue to work until 70 years of age, although that may change. It is important that we do not make it a requirement to work until 70 years of age. I know that is not provided for in the Bill. In any event, as a statement of policy for the future, it is important that we allow for persons who may have had long working lives to be under no expectation to work until 70. We already have fast-paced lives. I realise that public servants will be affected differently. In the wider context of our pension policy, we have a pension age that is increasing significantly to 68 years and that is to rise at a pace somewhat faster than will be the case in many other European countries.

There is a real concern about this matter. A public consultation is taking place this summer in respect of the contributory pension. I urge everyone to engage with the process. The concern to which I refer relates to the total contribution approach. We had been promised that the total contribution approach would be introduced in 2020 and that it would require 30 years of contribution. There is concern now that total contribution may now become 40 years. That could have a negative impact on several people who have been planning for retirement with 2020 in mind.

It is important that we do not contribute to a situation whereby people will be required to work until 70 or 75 years of age in order to access full pensions. Given the gaps in the years of the recession and austerity, there is a concern for many in that regard. Overall, I recognise that this is something of a broader question that falls outside the brief of the Minister of State. It relates more to the Minister for Employment Affairs and Social Protection.

I support the Bill. It is constructive. I wish to voice my concern – this has been expressed by previous speakers – about those who have reached 65 years of age during the interim period. Some of these individuals find themselves on the lower point on the pay scale. While I recognise that the one-year contract extension they have signed may be unable to be changed, it is important that the Bill would provide a route back for those persons. This should involve a process whereby at a date subsequent to enactment, should the one-year period of extension expire for a person, the person will be able to access the benefits of the Bill and return to employment at the previous pay scale. That is important and it is something that we can do. I recognise that it is likely to be the subject of an amendment. Perhaps it is best if the Minister of State brings forward the relevant amendments on Committee Stage. I imagine that we would all support them.

I respectfully disagree with my colleague in respect of job-sharing. One thing we know from Age Action and many other groups is that many people in their 60s and 70s want to move towards job-sharing. It allows them to maintain their connection to the workplace, contribute experience and, in many cases, provide mentorship to those who will take over roles in future. In fact, there is considerable benefit in job-sharing-----

Senator Paddy Burke

That was not the point I was making. I said if they were job-sharing they would be working for nothing.

Senator Alice-Mary Higgins

I appreciate that. I also appreciate that there is a concern regarding pension payments and superannuation and valid points were made in that regard. My concern basically was that we should not prohibit job-sharing on any basis. For many people it is going to be about finance. Others are really dedicated to their work. They may wish to continue with that work and will want to contribute. Job-sharing may be the way for them to do it. I am sorry if I misconstrued the points made by the other Senator. In any event, the key issue is that we do not want to prohibit job-sharing.

Minister of State at the Department of Public Expenditure and Reform (Deputy Patrick O'Donovan)

I thank the Senators for their wide-ranging support. It is important to point out that the main provisions of this Bill are to take the existing situation for those who reach 65 years and raise it to 70 years. That is the crux of it.

Senator Paddy Burke made a particular point. The issues that exist for those pre-65 years of age will be the same issue for those over 65 years of age. We could have a situation whereby a public servant has accrued or paid for the maximum amount of 40 years of service but that person could be 62 years of age. That person will continue to pay into the pension until reaching 65 years of age. The same will apply under this legislation. There is nothing different other than the age level.

I will try to cover as many of the contributions made as possible. Senator Horkan asked about future increases to age. The proposed section 3A(2) states, "Subject to subsection (3), the Minister may, by order, prescribe an age, being higher than 70 years but not higher than 75 years, upon the attainment of which all relevant public servants shall, at the latest, retire." That has been put into the legislation as a safeguard in the event that another Minister in the future wishes to raise the ceiling. The idea is that we do not have to come back again.

Reference was made to the State pension, which is a matter for the Department of Employment Affairs and Social Protection and the Minister, Deputy Doherty. The Bill does not propose to make any changes to any aspect of pension legislation. That would be beyond the scope of the legislation. Obviously, the existing pension arrangements will continue.

Senator Paddy Burke also made a point in respect of job-sharing. It is a matter for each Department, public body or State agency to determine the need for job-sharing and the availability of skills and people who will be able to fit into certain categories and particular sets.

This legislation does not in any way inhibit the carrying out of the practices relating to job-sharing and the existing arrangements will apply.

It is important to state that this measure is not compulsory. We will not make people continue to work until they are 70. This will be completely voluntary. People may have entered the public service late in life, for whatever reason. They may have decided, following a particular stage in their life and with their family reared, that they wanted to return to work. Currently, they must retire at age 65. If they are a couple of years short to attain the right to accrue a maximum pension, unfortunately, they cannot do that.

Members asked the reason for deciding on age 70. As I said in my earlier contribution, we are trying to make sure we harmonise the retirement age across the board, as far as practicable.

Some people might ask if there should even be a maximum retirement age. The Government's view is that there should be because we have to budget, provide certainty in respect of the numbers involved and be able to plan for the development of the public service. We have to know on an annual basis who will be in our services, the skill sets they will have and how we will manage recruitment. That is very important and I believe, on reflection, people will appreciate that.

This measure is also a reflection of the fact that people are healthier and are living longer. In terms of the skill sets and experience of those working in local authorities, State agencies or Departments, we need a mechanism that allows them the opportunity to continue to empower younger people coming into the service. Lifting that ceiling will give them an opportunity to impart some of their knowledge, rather than walking out the door with it, so to speak.

Regarding people who have retired, and I appreciate there will be a greater level of discussion on that on Committee and Report Stages next week, an interim arrangement was made which was welcomed at the time. The expectation had been that there would not be an interim arrangement, that we would go straight down the legislative route and that a cohort of people would have fallen between the cracks without such an interim arrangement. We did not do that and made provision for that. However, it is important to point out that we are keeping the existing system for people who retire and are rehired. We had to take cognisance of those who have left the service, got their lump sums and are on pensions, and the budgetary impact of that. We had to be fair also to people already in that arrangement and follow the existing retire and rehire provisions.

This is important legislation. We are very anxious to try to have it passed in this House and taken in the Dáil as quickly as possible. All of us have been contacted by people about this issue. There are people in this House, in Departments and across the country who are very anxious to see it enacted so the sooner we can do that, the better.

I welcome the cross-party support for the Bill. I am aware issues will be raised on Committee and Report Stages but given the level of consultation that has taken place and the welcome responses from employee representatives, I believe the Bill will capture many of the concerns expressed. It is progressive legislation that reflects the position the country is in today but, as Senator Horkan stated, there is no reason that cannot be changed in the future as the longevity and health of our population increases.

I hope that with the co-operation of the Seanad we can progress the Bill. I welcome the Senators' comments. I will reflect on them with the Minister, Deputy Donohoe, who is also anxious that the Bill be progressed. I hope we can have further consideration of the Bill next week and that we reach the point where we are in a position in the autumn to bring it to the Dáil, hopefully without amendment. That will allow us deliver to the people who are approaching us constantly to know when they will be able to avail of its measures. We hope to have the legislation enacted as soon as possible. People who are 64 are approaching that deadline and they, and their families, are concerned. They have made arrangements. It is hoped we will be able to make provision for them.

I look forward, with the indulgence of the House, to coming back here next week to deal with the Bill. I thank the Senators for their contributions and for the spirit in which the Bill has been received. This is progressive legislation, the aim of which is to reflect the fact that people have a contribution to make in terms of their experiences, which are important, and we want to capture those in the best way possible.

Sitting suspended at 1.06 p.m. and resumed at 1.15 p.m.

Seanad Éireann debate -
Thursday, 12 Jul 2018