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.