SELECT COMMITTEE ON FINANCE, PUBLIC EXPENDITURE AND REFORM (Select Sub-Committee on Public Expenditure and Reform) debate -
Thursday, 21 Jun 2012

Public Service Pensions (Single Scheme) and Remuneration Bill 2011: Committee Stage

Chairman

I welcome the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and his officials. The purpose of the meeting is to consider the Public Service Pensions (Single Scheme) and Remuneration Bill 2011. The Bill was referred to the select committee by Dáil Éireann. It is proposed to conclude consideration of the Bill today at 7 p.m. and to resume consideration of the remaining sections, if there are any to be concluded, at a meeting next week. Is that agreed? Agreed.

I remind members, those in the public Gallery and everyone present that we are in public session and that all mobile telephones should be switched off. Before we commence consideration of the Bill I draw the attention of members to minor typographical errors on the main amendment list they have received. First, the heading "SECTION 10" should appear above amendment No. 30 and, second, in amendments Nos. 18, 57, 58 and 114 it should say to insert 23* before the existing 23 in the Bill and not after. That will be reasonably clear when one looks at it.

Deputy Mary Lou McDonald

Perhaps the Chairman will guide us on those matters as we come to them.

Chairman

We are just flagging them now and when we get there we will remind members. They are just typographical errors.

SECTION 1

Minister for Public Expenditure and Reform (Deputy Brendan Howlin)

I move amendment No. 1:

In page 7, subsection (1), lines 39 and 40, to delete all words from and including "Public" in line 39 down to and including "2011" in line 40 and substitute the following: "Public Service Pensions (Single Scheme and Other Provisions) Act 2012".

I thank the members for attending. A great deal of the amendments are technical, just by the nature of the Bill, which is a pensions scheme and therefore much of it is technical in nature. It is difficult when reading amendments to have a full understanding of them. I am around a good while. We will bring anyone through any part that causes difficulties with the help of officials.

The amendment relates to the Bill's Title to better reflect its changed contents. Members will be aware that we have dealt with one issue, namely, judges' pay, through a quicker legislative mechanism, the Financial Emergency Measures in the Public Interest (Amendment) Act 2011. I will propose to delete the remuneration elements of the Bill when we get to them. For that reason I want to remove the reference to remuneration in the Title, which is the purpose of the amendment.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 2:

In page 8, subsection (2), lines 1 and 2, to delete all words from and including "Parts” in line 1 down to and including “3” in line 2 and substitute the following:

"Part 2 (other than subsections (5) and (6) of section 51) and sections 66* (other than paragraph (a) in so far as it inserts a definition of “pension adjustment order”), 68** (other than in so far as it inserts subsection (1B) into section 2 of the Financial Emergency Measures in the Public Interest Act 2010), 69*** and 70****”.

This is a technical change, it being necessary to remove the references to Part 3 in the subsection. As I said previously, Part 3 of the Bill as published consisted mainly of legislative amendments whose main effect was to facilitate a pay reduction for new members of the Judiciary whose pay rates were determined in legislation subsequent to the enactment of the people's decision in the referendum. These provisions in Part 3 of the published Bill were transferred to the Financial Emergency Measures in the Public Interest (Amendment) Bill to which I referred, now the Financial Emergency Measures in the Public Interest (Amendment) Act. On that account, the original Part 3 sections in the current Bill now lapse and are proposed to be deleted.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 3:

In page 8, between lines 5 and 6, to insert the following subsections:

"(3) The Court Officers Acts 1926 to 2008 and sections 61* and 62** may be cited together as the Court Officers Acts 1926 to 2012.

(4) The Courts (Supplemental Provisions) Acts 1961 to 2008 and sections 63*** and 64**** may be cited together as the Courts (Supplemental Provisions) Acts 1961 to 2012.”.

I understand that there are a number of groupings.

Chairman

Amendments Nos. 3, 4 and amendments Nos. 150 to 154, inclusive, are related and therefore will be discussed together.

Deputy Brendan Howlin

All of the amendments are grouped because they relate to the judges and court officers legislation, which has been amended to provide for cost-neutral early retirement. When we put the amendment on judges' pay to the people, one of the commitments we made was that in wanting to treat judges like everyone else, in that when there was a general pay reduction it would apply to them as it would to all other civil and public servants, they would also be treated the same for all other areas. The judges themselves pointed out to me that they could not avail at the time of the cost-neutral early-retirement scheme. I propose to provide for that in the legislation.

Amendments Nos. 3 and 4 are technical amendments. The first simply updates the collective citations or formal naming protocols for all of the relevant statutes on court matters. The second deletes these lines since the repeal to which they would give effect has already been made in the Financial Emergency Measures in the Public Interest (Amendment) Act 2011 which made the Judiciary subject to pension-related deductions and to a pay cut.

Amendment No. 150 is a technical amendment designed to reference the Acts of 1961 and 1991 in which the provisions dealing with the superannuation of judicial officer holders are set out. This amendment makes statutory provision for the introduction of the actuarially reduced pension for a judge of the Supreme Court, the High Court, the Circuit Court or the District Court in circumstances in which he or she may wish to retire prior to reaching the statutory age of retirement. The provision ensures judges will be treated in exactly the same way as other public servants who have had access to the terms of the cost-neutral early-retirement scheme since April 2004.

Amendment No. 152 makes statutory provision for the introduction of the actuarially reduced pension scheme for the Master of the High Court or the Taxing Master in circumstances in which he or she wishes to retire prior to reaching the statutory age for retirement. The provision ensures the Master of the High Court or the Taxing Master will be treated in the same way as public servants who have had access to the cost-neutral early-retirement scheme since April 2004.

Amendment No. 153 amends the superannuation scheme to reduce the vesting period for judges to two years and the vesting period to two years for a person holding the office specified in these sections. I will give members the English version when I finish running through the amendments.

The statutory retirement age of a judge of the Supreme Court, the High Court or the Circuit Court is 70 years and 65 years for a judge of the District Court, although District Court judges may apply for an annual extension to allow them to serve until they are 70 years. Amendment No. 154 provides that a judge of the courts listed, the Master of the High Court or the Taxing Master may apply to have an actuarially reduced pension paid from the age of 60 years. The reason for the scheme for judges, the Master of the High Court or the Taxing Master is to make provision such that eligible persons may apply to have an actuarially reduced pension once they reach the age of 60 years. Former officeholders benefit from an accelerated pension accrual rate and the statutory maximum retirement age is 70 years rather than 65 in the case of public servants.

When we introduced the referendum on judges' pay, we said that in bringing down judges pay by the same volume, or quantum, that applied to public servants in the same pay grade, we would treat them in the same way for every other purpose. In terms of the cost-neutral early-retirement scheme which was introduced in 2004, if one is within a certain boundary and one wants to retire, one can do so in the public service at an actuarial rate that does not give rise to an extra cost to the State. The actual level of contributions and the profile of one's likely lifespan are used to give one a pension which will not be more costly to the State than if one works until the due retirement age. The normal retirement age for judges of the superior courts is 70 years. I suggest 60 years is the minimum age they must reach before they can apply to participate in the cost-neutral early-retirement scheme. The minimum age is 55 years for other public servants as their normal retirement age is 65; therefore, it is pro rata. I hope what I have said is clear.

Deputy Sean Fleming

We are discussing amendments Nos. 150 to 154, inclusive. The Minister might take me through some of them because this is the first opportunity we have had to hear him speak about them. It would have helped if we had received an explanation before today because we are only hearing what the amendments are about for the first time.

On amendment No. 153, the Minister has said he is changing the vesting period from five years to two. Is he saying that until now a judge had to be five years in the job before he or she could receive a pension and that now he or she will only have to be two years in it? If that is the case, it is wrong. We held a referendum to take away these special arrangements for judges. The people who voted in favour of the constitutional amendment - I forget the percentage - would be horrified if we were to vote through amendments to give judges special new pension scheme arrangements. I am prepared to listen to the Minister's explanation, but it seems to fly in the face of what the people voted for. I am shocked that we are trying to put in place new special arrangements for judges who were probably not happy with what happened in the first instance.

Deputy Brendan Howlin

As the Deputy rightly said, the vesting period is the period for which one has to serve before one becomes entitled to a pension. The vesting period for the entire public service is two years; therefore, the aim is literally to bring judges into line with everybody else. It is not a special arrangement but to deliver on the commitment given. One would virtually receive no pension having served for only two years; it is the click-in period throughout the rest of the public service. If one has served as a law officer of the State in a public capacity and as a judge for a short period of time, the two years could be added. It is not a stand-alone provision. I want to make it crystal clear that it is not a special arrangement for judges but the reverse. The aim is to make judges equal to everybody else, as we promised to do when we asked the people to vote in favour of the constitutional amendment. We were not looking for a cruel and unusual punishment for judges; we simply wanted them to be treated in the same way as everyone else. When there is a general reduction in pay, they must take the pain the same as everyone else. I am very conscious that the Judiciary look at legislation and do not want any lacuna such that it can state we promised to treat it in the same way as everyone else but that in this instance, it is not.

Deputy Sean Fleming

I fully accept the Minister's explanation. Had I had an explanation to read last night, I might not have had to ask the question, but we have to watch what is going through.

On amendment No. 154, we are talking about judges, but there is a reference to the Master of the High Court and the Taxing Master. As far as I know, they are not judges. Why are they being included? I do not believe they should have the same arrangements as judges. Perhaps the Minister is treating them in the same way as everyone else.

In regard to the retirement age of 70 years for judges, who else in the public sector has a retirement age of 70?

Deputy Brendan Howlin

Everybody will when this legislation is enacted.

Deputy Sean Fleming

The retirement age of 70 years will apply to everybody else, except Oireachtas Members.

Deputy Brendan Howlin

Elected officers will be excluded. The President and Members of the Oireachtas may be over 70 years if the people so choose.

Deputy Sean Fleming

What about the Master of the High Court and the Taxing Master?

Deputy Brendan Howlin

We could have a good debate on this issue because I do not believe the Deputy's views on this matter and mine are very far apart. However, it is not within my purview; it is one for the Minister for Justice and Equality to deal with. These are court officers and their pay and conditions are determined under statute. I was advised that I had to deal with the matter in this way.

Deputy Sean Fleming

Are county registrars and others who are court officers included? Will the Minister give me the full list?

Deputy Brendan Howlin

These are the only people included in the provisions.

Deputy Sean Fleming

What does the amendment do for them?

Deputy Brendan Howlin

It gives them an entitlement to avail of the cost-neutral early-retirement scheme. That is all that is involved.

Amendment agreed to.

Section 1, as amended, agreed to.

Section 2 agreed to.

SECTION 3

Deputy Brendan Howlin

I move amendment No. 4:

In page 8, lines 9 to 11, to delete paragraphs (a) and (b).

Chairman

This amendment was discussed with amendments Nos. 3, 4 and 150 to 154, inclusive.

Deputy Stephen S. Donnelly

May I ask a procedural question?

Chairman

Yes.

Deputy Stephen S. Donnelly

When we discussed amendments Nos. 3, 4 and 150 to 154, inclusive, together, Deputy Seán Fleming spoke. We then moved on, but I had questions also. Once we have discussed a group of amendments, is that the end of the discussion?

Chairman

Yes.

Deputy Stephen S. Donnelly

In that case, I seek clarification on amendment No. 154.

Chairman

When we discuss the section, the Deputy may intervene. We are all learning.

Deputy Stephen S. Donnelly

Yes.

Amendment agreed to.

Deputy Mary Lou McDonald

I move amendment No. 5:

In page 8, paragraph (e), line 15, to delete “Act 1965.” and substitute the

following:

"Act 1965;

(f) section 6 of the Superannuation and Pensions Act 1963;

(g) section 7 of Superannuation and Pensions Act 1963;

(h) section 78, Local Government (Superannuation) (Consolidation)Scheme 1998;”.

It will not come as a surprise to the Minister that I ask him to accept my amendments as I propose them in order to deal with the existing anomalies and inequities in respect of pension pots in the Civil Service. While I accept the new scheme does not envisage special treatment for senior new entrants, be they Secretaries General or city and county managers whose pensions are to be treated in the same way as all others relative to pay, etc., we are debating this legislation in a climate in which the State faces most severe economic difficulties and crises. In the context of the new legislation, it would be a real shame – almost inexplicably so – not to deal with the existing anomalies and privileges enjoyed by those at the higher echelons. That is my rationale for amendment No. 5 and I ask for the Minister's support.

Deputy Brendan Howlin

I do not believe it will come as a shock to the Deputy that I cannot accept the amendment. She is correct that we are establishing a new single regime for all public servants. There will be slight differences in that some professions will enjoy fast accrual, but, by and large, the same general arrangements will apply across the public service for everybody who will be recruited from now on.

The Deputy knows that, in so far as I was able, I made a number of changes to existing arrangements, confined by the advice of the Attorney General on property rights that are constitutionally protected. We introduced in October last year a new regime to apply to Secretaries General appointed after that month. We abolished the TLAC terms and nobody has been appointed under them since. We also determined that no new arrangement would apply the old arrangements for severance pay and all the benefits that had accrued for city and county managers. The Department responsible for local government is drafting the necessary amendments to Articles 66 and 78 of the local government superannuation scheme which will be implemented by way of statutory instrument. It is anticipated the amendments will be finalised in the near future to facilitate the formal signing of the statutory instrument.

We have asked individuals with significant remuneration - over €200,000 - to take voluntary reductions. Everybody in the Civil Service earning above this amount has already done so. Therefore, there is no civil servant in receipt of a payment above that figure. We have applied very rigorous controls, sometimes under enormous pressure. The committee probably needs to debate how we will deal with pressures in the semi-State sector to get people of calibre to run semi-State companies. I am conscious of the valid point made by the Deputy that, in current economic circumstances, we must give the best example we can. We have done so.

This legislation is groundbreaking in and of itself. There is a national doctors' strike in Britain today. The doctors are protesting at the capping of their pensions. Some of the points the Deputy makes are outside the scope of this legislation, but perhaps we will want to return to them in examining remuneration and pension entitlements in the public sector.

Deputy Mary Lou McDonald

We have covered this ground many times and I have heard the Minister's response. Does he recognise the difficulties, notwithstanding each of the developments that he catalogues as a success in dealing with those at the higher echelons in respect of pay, etc.? He is introducing a new scheme that has some merit, but I cannot accept that, as we deal with this legislation, we are not grasping the thorny issue. He knows the practice to which I refer is clearly indicative of the sweetheart deals and pension arrangements that the likes of city and county managers and Secretaries General enjoy.

I cannot debate this new arrangement and not address the elephant in the room. The Minister claims the legislation is groundbreaking, but what would really make it radical and constitute the cherry on the cake would be dealing comprehensively, categorically and neatly with this issue. I realise the intention of the legislation is to deal with new entrants. The Minister has given his rationale for this previously, but he needs to break from it in this instance. It is patently wrong that a small number of people enjoy overly generous pension arrangements. Implicit in the bringing forward of this legislation is a recognition that this arrangement cannot be stood over. I ask the Minister politically to follow the logic of his own argument. While I know we will return to it, it is a real shame and a lost opportunity that he is not dealing with this matter in the legislation.

Deputy Brendan Howlin

We are not fundamentally at odds in the points we have discussed. I stated publicly that until I had entered this job, I had never heard of TLAC terms, which was probably my own fault. I did not realise such a generous provision for Secretaries General had been arranged in 1987 and that it had been in effect ever since. I have ended these terms, but I cannot do so retrospectively. Unfortunately, this is in accordance with the advice I have received.

On the amendment, I am advised that the repeal of sections 6 and 7 of the 1963 Act, as proposed by the Deputy, could have prospective effect only and could not have an impact, even if we were to accept the proposal, in any case in which there is a right to added years or severance payments on retirement. This is the legal advice from the Attorney General's office. Even were I to accept the amendments, they would be moot. We should not be tokenistic in primary legislation.

The Deputy has rightly referred to this as prospective legislation, in that we are looking into the future and changing the basis for the calculation of all public servants' pension entitlements in an affordable, fairer and flatter way. This does not mean that we cannot try to address in another vehicle matters that are of concern to the Deputy. I will see what I can do, consistent with the Constitution. For example, when I introduced the 20% additional pension levy on pensions in excess of €100,000, only a narrow avenue was available. It needed to be constitutionally sound without being a frail provision that would knock down the entire edifice were it perceived as being confiscatory in its scope. In a subsequent amendment, Deputy Fleming wants to go beyond my 20% in terms of-----

Deputy Sean Fleming

It has been ruled out of order.

Deputy Brendan Howlin

We might be able to discuss it.

Chairman

Among yourselves, perhaps.

Deputy Sean Fleming

Under the section.

Deputy Mary Lou McDonald

May I comment?

Chairman

Allow the Minister to conclude.

Deputy Brendan Howlin

Fairness is important and we must signal measures. I am not at odds with the amendment. However, we can put a good basis in place with the enactment we have and I cannot accept this amendment. Even if I could, it would not have an effect.

Deputy Mary Lou McDonald

I am not seeking a tokenistic gesture. The Minister has his advice and I have mine. The Minister's is from the Attorney General and it is a racing certainty that he will not share it with us.

Deputy Brendan Howlin

I have just supplied the advice.

Deputy Mary Lou McDonald

That is how I understood it, but I like to see advice written down. I am kind of fussy that way.

Deputy Brendan Howlin

We do not get written advice on every section.

Deputy Mary Lou McDonald

Even if the interpretation was contested, it would be worth doing. Without straying from the specifics of this legislation, many people wish that much of the tough medicine being doled out could be contained in some manner.

Deputy Brendan Howlin

I agree.

Deputy Mary Lou McDonald

It is not the case. The Minister's advice is not universally shared in terms of the argument on a provision not having retrospective effect and so on. It is a pity that the Minister will not accept the amendment. He has bottled it again.

Deputy Brendan Howlin

I thought I might get through one debate without being accused of bottling it, but that was unlikely. Between Deputy Higgins's "monumental" and Deputy McDonald's "bottling", there will always be certainties.

Amendment put and declared lost.

Chairman

Amendment No. 5a is out of order, as it incurs a potential charge on the Exchequer.

Deputy Mary Lou McDonald

Will the Chairman elaborate?

Chairman

It is being disallowed because it would constitute or lead to a charge on the Exchequer. It seeks to prevent the raising of the age of eligibility for the State pension, thereby keeping eligibility earlier and involving a consequential cost on the Exchequer. This is the basis on which the amendment has been ruled out of order. Only a Minister can move an amendment that involves additional costs to the Exchequer.

Deputy Mary Lou McDonald

I must seek promotion at some stage.

Chairman

That is always possible.

Deputy Brendan Howlin

I am sure it is inevitable.

Deputy Mary Lou McDonald

The Minister is kind.

Amendment No. 5a not moved.

Section 3, as amended, agreed to.

Section 4 agreed to.

SECTION 5

Chairman

Amendments Nos. 6, 7, 26, 67 and 75 are related and may be discussed together. Is that agreed? Agreed.

Deputy Brendan Howlin

I move amendment No. 6:

In page 9, subsection (1), line 27, to delete "this Act" and substitute "the Scheme".

These are minor drafting amendments of a technical nature. All that this amendment does is change "this Act" to "the Scheme". In essence, the Bill will become an Act and the Act will be the pensions scheme itself. This amendment gives it the proper citation.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 7:

In page 9, subsection (1), line 30, to delete "this Act" and substitute "the Scheme".

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 8:

In page 9, subsection (1), to delete lines 32 to 37 and substitute the following:

" "fully insured for social welfare purposes" means holding an office or employment in respect of which the person concerned is an employed contributor within the meaning of section 12(1) of the Social Welfare Consolidation Act 2005—

(a) who is liable for an employment contribution payable at the rate specified in section 13(2) of that Act, not being a person to whom article 81, 82, 83 or 88 of the Social Welfare (Consolidated Contributions and Insurability) Regulations 1996 (S.I. No. 312 of 1996) applies, or

(b) to whom article 87 of those Regulations applies;”.

This technical amendment was proposed following consultation with the Department of Social Protection, which advises that the reference to Article 87 of the 1996 regulations should be inserted because it includes non-commissioned officers and enlisted personnel of the Defence Forces who pay a different PRSI class but are effectively fully insured for PRSI purposes.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 9:

In page 10, subsection (1), line 13, to delete "Chapter 2” and substitute “this Part”.

This is a drafting amendment.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 10:

In page 10, subsection (1), lines 13 and 14, to delete "on the retirement, resignation or death" and substitute the following:

"as a consequence of the retirement, resignation or death".

This is a drafting amendment.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 11:

In page 10, subsection (1), to delete lines 16 to 21 and substitute the following:

" "net pensionable remuneration", in relation to a Scheme member, means an amount by which the pensionable remuneration of such Scheme member in respect of a pay period or series of pay periods exceeds twice the maximum personal rate of contributory State Pension payable from time to time to a person who has no adult dependant or child dependant;".

This is a drafting change to improve the clarity of the definition. It involves a slight re-ordering of the words of the definition in the Bill as published.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 12:

In page 10, to delete lines 26 to 33 and substitute the following:

" pension" means the benefit or benefits, other than any lump sum, payable periodically---

(a) to a person, in respect of his or her service as a pensionable public servant, as a consequence of his or her retirement, discharge, resignation, or otherwise ceasing or having ceased to be a pensionable public servant, or

(b) in respect of such service, to another person as a consequence of death or otherwise,

but does not include payments, or so much of any payment, paid solely in respect of any injury caused as a result of such service;".

This amendment is technical in nature and serves to clarify the definition of "pensioner", in particular making clear that the definition includes a survivor's pension and children's pensions.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 13:

In page 10, line 42, after "Scheme" to insert the following:

"or which is stated in a written offer of appointment to the position, office or post to be a pensionable position for the purposes of the Scheme".

This amendment ensures that, on commencement of the single scheme, all job offers will be made on a single scheme basis, even where the recruitment campaign for a particular post may have begun, been advertised or notified before the scheme's commencement. The amendment will not affect the rights of newly-appointed persons who have worked in the public service at some point in the 26-week period prior to being appointed to be enrolled in the pre-existing public service scheme rather than the single scheme.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 14:

In page 11, line 20, to delete "or has been approved" and substitute "or which has been approved".

This is a technical amendment.

Amendment agreed to.

Chairman

Amendments Nos. 15, 18, 50, 57, 58, 114 and 120 are consequential on amendment No. 76 and may be discussed together with that amendment. Is that agreed? Agreed.

Deputy Brendan Howlin

I move amendment No. 15:

In page 11, subsection (1), line 25, to delete "section 22” and substitute “sections 22 and 23,”.

I will explain this body of amendments, which looks daunting and complicated but is not. They all relate to the inclusion of the Comptroller and Auditor General in the terms of a new calculation of benefit. Amendments Nos. 15, 18, 57, 58, 114 and 120 are technical amendments subsequent to the insertion of the new subsection (23) Comptroller and Auditor General pensions terms. Amendment No. 15 ensures that the table of contribution rates for the Comptroller and Auditor General covers both contingencies, fully insured PRSI and appointees that are not so covered.

Amendment No. 76 provides pension terms for future holders of the constitutional post of Comptroller and Auditor General. The Comptroller and Auditor General is not a statutory officeholder but is instead afforded a place in Article 53 of the Constitution. As such it is considered - and I am so advised by the Attorney General - more correct to provide a separate section for his or her benefits under this scheme, rather than to include it in the generality as I had up to now. Therefore it is simply to put in a specific stand-alone provision for the Comptroller and Auditor General because of the constitutional nature of that office.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 16:

In page 11, subsection (1), to delete line 27 and substitute the following:

" "preserved lump sum" has the meaning given in section 27;

"preserved pension" has the meaning given in section 27;”.

This is a minor amendment directed at improving the Bill's definition of preserved benefits. It does this by inserting definitions of the actual specific preserved benefits dealt with later in the Bill. "Preserved lump sum" has a meaning given in section 27, and "preserved pension". It disaggregates both terms.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 17:

In page 11, to delete lines 32 and 33 and substitute the following:

"(c) the holder of a judicial office,”.

Since the enactment of the European Parliament (Irish Constituency) Members Act 2009, newly elected members of the European Parliament are automatically enrolled in a pension scheme administered and funded by that parliament. On that account MEPs, whom I had included in the original published Bill, will not be members of this single scheme. This amendment secures their exclusion by dropping them from the definition of public servant. For clarity and consistency of treatment with other single scheme members, it is considered appropriate that judges are expressly listed as a constituent group in the definition of public servant. In essence, I had a category C as MEP, but I am now dropping MEPs and putting judges in their place.

Amendment agreed to.

Chairman

Amendment No. 18 has already been discussed with amendment No. 15.

Deputy Brendan Howlin

I move amendment no. 18:

In page 13, subsection (1), line 5, after "23,” to insert “23,”.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 19:

In page 13, to delete lines 14 to 21 and substitute the following:

" "relevant authority" means the Minister, or—

(a) such other Minister of the Government or such public service body as the Minister may prescribe under section 8(1)(b) in relation to all or any part of the public service, or

(b) any body corporate as the Minister may prescribe under section 8(1)(b) in relation to all or any part of the public service;”.

This is a drafting amendment. There is no change in the fundamental definition.

Amendment agreed to.

Chairman

Amendments Nos. 20, 41, 95, 96, 101 and 144 are related and may be discussed together by agreement.

Deputy Brendan Howlin

I move amendment No. 20:

In page 13, subsection (1), lines 29 and 30, to delete "the pension age for such person" and substitute the following:

"upon such person attaining either or both the age and maximum service limit (however expressed) at which he or she could retire or is required to be retired or discharged".

These amendments all relate primarily to the need to cater in the text for the particular terms of the Permanent Defence Forces, the PDF.

Amendment No. 20 is a technical amendment designed to ensure that the references to pension age for the uniformed fast-accrual personnel - they are the gardaí and the military - which are covered by section 25, are precise and unambiguous. In this context it makes appropriate reference to the maximum service limit concept whereby certain military ranks may be required to be rotated out of the PDF after completion of a set number of years of service. Right now, it is 21 years in the case of the enlisted ranks. It is one of the places where it is judged that one can be required to be retired.

Amendment No. 41 sets out a requirement for ministerial consultation between the relevant line Minister - either Justice and Equality, or Defence - and the Minister for Public Expenditure and Reform in relation to the setting of retirement departure age rules in public service employment. The amendment comprehensively defines situations in which such bilateral ministerial consultation should occur, including situations where departure is indicated by way of reaching a service limit, which is a number of years, rather than absolute age. Therefore it is based on the number of years of service as opposed to reaching a particular age. This will cater in particular for Defence Forces personnel who, unlike most other public servants, may have their service terminated after reaching a particular service point regardless of their chronological age at that point.

Amendments Nos. 95, 96 and 101 are minor technical amendments ensuring proper coverage of certain military ill health departures and removing some redundant content in the Bill.

Amendment No. 144 is consistent with similar adjustments elsewhere in the Bill, and references in particular the process by which members of the Permanent Defence Forces may leave service.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 21:

In page 13, subsection (1), to delete lines 32 and 33 and substitute the following:

" "Scheme member" has the meaning given in section 10;”.

This is a drafting change only for the avoidance of doubt. Full precision is achieved by effectively locating the definition of "scheme member" in the appropriate later section. The definition in the Bill as published was arguably incomplete. We have had time to re-trawl everything and for clarity we are putting this in a different location.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 22:

In page 14, subsection (3), line 16, to delete "In this Act" and substitute "For the purposes of this Act".

This is a minor drafting amendment on the advice of the Attorney General's office. There is no change to the meaning. We are saying that the words "In this Act" are being replaced by "For the purposes of this Act".

Amendment agreed to.

Question proposed: "That section 5, as amended, stand part of the Bill."

Deputy Sean Fleming

I have an objection. I have a number of questions for the Minister on the section itself, as we have been talking about the amendments up to now. At the end of page 8, there is reference to the definition of a child. We are talking about a pensioner who may have a child under the age of 16 or between 16 and 22 if they are in full-time education. The issue of child benefit payments for children in full-time education over 18 years has changed recently. There was a time when parents could get child benefits for students in third-level education up to the age of 22, but that has changed in recent times. Is there a linkage or a consistency between what the Minister is proposing here? It seems to be running counter to the social welfare code in that child benefit is now discontinued. I might not like that but that is the way it is. Why would we include that category of children in terms of public servants' entitlements to a pension, while excluding others in receipt of social protection payments?

Further down on page 9, at line 17, it mentions the consumer price index and all items. Can the Minister explain what the term "all items" means? I understand that the cost of housing is not included in the consumer price index, although mortgage interest is.

The following line refers to the consumer price index published by the Central Statistics Office or any equivalent index. That opens the door for EUROSTAT or anyone else to change the definition of the consumer price index. The CPI is fundamental to everything in this context. It runs through the inflation rate concerning pension increases over a period of 40 years. The CPI is fundamental to what a person's pension will be at the end of their 40 years in the public service, yet the text includes the words "or any equivalent index". If there is to be a change of index it should be done by way of legislation instead of using any equivalent index. I do not know who will define the equivalent index. Does it come back to the Oireachtas to approve such a change? I think the Minister understands my point, that the definition is far too loose.

On page 11, line 6, there is a reference to pensionable remuneration, which can be discussed at length. Item (b) refers to allowances to which section 11 relates. This refers to pensionable remuneration, including basic pay excluding overtime, as well as allowances and emoluments to which section 11 relates. This brings us on to the big debate of the review of 800 allowances the Minister stated he is conducting. On the following page, there are some different allowances to which I think I referred. In section 11, the Bill refers to an “allowance ... or its equivalent granted on a permanent basis before the operative date”, and I think it is premature to conclude this issue while the Minister is reviewing the allowances. If this Act comes into force before completion of the review some of which may require statutory amendments, will all of the 800 allowances that could fit in under this category get in? The Minister might review the allowances subsequently later in the year, and where stands the proposed changes that will inevitably be made to some of these allowances? That matter must be considered.

In section 11(2)(a), the Bill refers to these allowances if they are permanent in nature. The Minister must give us a list. It is difficult to expect us to approve legislation dealing with the pensionability of items that specifically refer to allowances where what is an allowance is currently under review. It is inappropriate to proceed with finalising legislation without knowing what we are talking about.

I am still on section 5. That is the third point on section 5.

Deputy Brendan Howlin

Will I deal with those few points and come back to Deputy Fleming?

Deputy Sean Fleming

I am happy to do whatever the Chair wishes. These are substantive issues.

Deputy Brendan Howlin

I am being piled up with points. I have not taken notes and I will deal with them as I can.

First, on the definition of "child" in section 5, as Deputy Fleming will be aware, I have had directly, and through my officials, exhaustive consultations with the public sector unions on these matters. This is a fundamental and difficult change for them. I am grateful that, without saying that they are enthusiastic about it because they are not, and do not want to say that they are, there is a degree of understanding that we need to make fundamental changes that will lessen the pension demand on the State in the future.

While we are reducing the basic level of pension, one of the agreements I came to with them is that we would not reduce the current entitlement in the case of children. What that section on definitions mirrors is what applies currently. I do not want to target the children of future pensioners. I will leave that entitlement there. The definition simply mirrors what is there. If there are future changes, obviously, that will be done in primary legislation separate from this. It is not my intention to do that.

In terms of the consumer price index point, everybody understands what the CPI is. I am putting in all items. There would be an argument, for example, to exclude mortgage interest payments for pensioners because most pensioners would not pay a mortgage. Some obviously would, but that would not normally be part of the demands on a pensioner. I thought, to be as generous as possible, we would include all items of expenditure in the CPI and that is why that is there.

Deputy Fleming makes a point on an "equivalent index published from time to time". The idea is that this is robust legislation for the future and if there is a different name or title given to the CPI by the Central Statistics Office in the future, we will not need to come back to amend primary legislation as long as it is understood that it is the same thing - it is equivalent - or there will not be any ambiguity about the legality of pension entitlements. That is what that idea is to capture. There is not a difficulty with that.

The bigger issue is that of the allowances of which Deputy Fleming spoke. It is true that I am reviewing allowances. I do not want to over-hype this. We had an interesting discussion on this matter previously at this committee, if Deputy Fleming will recall, on allowances payable, for example, to the Government Chief Whip or Ministers in attendance at the Cabinet. That is a misnomer. It is something we might look at in the future, which is, when we classify basic pay as an allowance. It is now almost an anachronism. I get an allowance for being a member of the Cabinet. It is my wages for being a member of the Cabinet - it is not an allowance - and it should be classified as such. The same applies with a principal teacher. A principal teacher gets his or her teaching pay and an allowance for being a principal teacher. It is actually a different grade and it is part of pay.

There are allowances that probably are not justified now and we will be addressing those when I get through Government on the allowances review that we have finished. There will be a significant number of what are called allowances which are actually pay rates and we might be better off to call them that and classify them as such in future.

Although maybe I should not be saying it out loud yet, I had interesting discussions with my colleague, the Minister for Education and Skills, on these matters. There are many allowances payable in the education sector which would be better were they a wage structure applicable to specific jobs' functions.

I do not agree with the Deputy that one needs to know what all the pensionable allowances are. Anybody who has a pensionable allowance already will continue to have the pension entitlement that has accrued to date but if that allowance ceases after the review, obviously, any pensionability will cease with the allowance. There is no issue with that and it does not need to be captured here in relation to any piece of legislation.

Was there any other point of Deputy Fleming's presentation that I missed?

Deputy Sean Fleming

I want to come back on those.

Deputy Brendan Howlin

Have I hit all the issues?

Deputy Sean Fleming

Yes, there were three.

I understand the Minister does not want to change the definition of what is considered a child under the current arrangement, but we are saying to those on social welfare that if their child is over 18, they cannot claim for him or her as a child dependant. Those are the ones most in need. We are saying to retired public servants that we will give them the equivalent of an allowance for a pension for children up to the age of 22, but we will not, through the social welfare code, treat children of social welfare recipients equally.

Deputy Brendan Howlin

No.

Deputy Sean Fleming

Would the Minister explain?

Deputy Brendan Howlin

The social welfare code of which Deputy Fleming speaks is an allowance for the children of live social welfare recipients. We are talking about the surviving children of deceased public servants here. It is quite different.

Deputy Sean Fleming

Would the Minister run that by me again? Has there to be a parent involved here to receive that?

Deputy Brendan Howlin

The parent would be dead. The public servant who has accrued a benefit would be dead and his or her surviving child would benefit up to this age.

Deputy Sean Fleming

Up to 22. Would that pension be reckonable as means under the social welfare code?

Deputy Brendan Howlin

The child of a former civil servant deceased who is in full-time education can receive a portion of the pension up to the age of 22.

Deputy Stephen S. Donnelly

On the CPI argument, this is something for the Minister's consideration. If one includes all items in the legislation, that ties the hands of the Minister to make an appropriate decision and apply the most appropriate CPI for the pensioner. The issue is that the consumption basket for pensioners would be quite different from a consumption basket including all items. If I understand the Minister's previous statement correctly he is trying to be as generous as possible by including all items, but it could end up working the other way around. It could end up working such that by including items which are not in the typical pensioner's consumption basket,-----

Deputy Brendan Howlin

Like?

Deputy Stephen S. Donnelly

-----such as mortgage payments, the Minister may end up giving them less. The CPI, the inflator that the Minister applies, may end up inadvertently being less than the consumption basket for a typical pensioner. I wanted to check my understanding of that was correct.

Deputy Brendan Howlin

The advice I received was not to exclude measures that would be more beneficial, even if they applied to pensioners. I am advised that the proposed formulation would have that effect. I will take further advice in light of what the Deputy has to say, however.

Deputy Stephen S. Donnelly

I am not convinced it would have that effect. Take, for example, the impact of mortgage payments.

Deputy Brendan Howlin

I will consult the CSO directly.

Deputy Stephen S. Donnelly

I understand what the Minister is trying to do.

Deputy Brendan Howlin

I will have an answer for the Deputy by Report Stage.

Deputy Stephen S. Donnelly

I thank the Minister. Further to Deputy Fleming's comments on section 11 -----

Chairman

We are on section 5. I recognise that the section refers to section 11 but we will deal with the latter section when we come to it.

Deputy Stephen S. Donnelly

We have been speaking about it for the past ten minutes.

Deputy Brendan Howlin

I do not want to be instructive but it would be helpful if we had a joined up discussion.

Chairman

We will have an opportunity to return to section 11 because I will not be skipping over it.

Deputy Stephen S. Donnelly

I do not mind when we deal with section 11. I merely referred to it given that it was already under discussion.

Deputy Brendan Howlin

I think it is useful to discuss it now.

Deputy Stephen S. Donnelly

On a point of clarification, I do not understand the point of section 11(1)(b). Can the Minister explain the difference between paragraphs (a) and (b)?

Chairman

It would me more appropriate to deal with the Deputy's question when we come to section 11.

Deputy Stephen S. Donnelly

I do not mind when we do so.

Deputy Brendan Howlin

The Deputy is going beyond the current discussion to the meat of section 11, which I will happily deal with when we come to the section. I apologise to the Chairman, who was absolutely correct.

Chairman

That is what I thought. Have members any other comments to make on section 5?

Deputy Sean Fleming

In regard to page 12, line 22, there is a reference to the Schedule under a wider description of what a "public service body" entails. The Schedule is set out at the end of the Bill but we are being asked to pass section 5, which refers to the Schedule, when I have an issue with the Schedule.

Deputy Brendan Howlin

Every Bill that comes before the House is dealt with in that manner.

Deputy Sean Fleming

Perhaps the Chairman will insist that we deal with the matter later but I have a problem with the Schedule.

Deputy Brendan Howlin

The Deputy can speak about the Schedule when we come to it.

Chairman

It is better to deal with the Bill systematically. I am trying to be flexible but at the same time it makes sense to deal with it in order.

Deputy Sean Fleming

It is amusing that the definitions refer to issues we will be discussing later. We will deal with them when we come to the Schedule.

Question put and agreed to.

Section 6 agreed to.

SECTION 7

Deputy Brendan Howlin

I move amendment No. 23:

In page 15, lines 2 to 5, to delete subsection (2) and substitute the following:

"(2) Nothing in subsection (1) shall be read as limiting or restricting the performance of any function (including the making or amendment of a superannuation scheme or arrangement) in respect of the service of members of a pre-existing public service pension scheme.”.

This is a technical amendment which ensures that the subsection's reference in parenthesis to the powers to make or amend pension schemes is consistent with the definition of pre-existing public service pension schemes set out in section 5.

Amendment agreed to.

Section 7, as amended, agreed to.

SECTION 8

Deputy Sean Fleming

I move amendment No. 24:

In page 15, subsection (1)(a), line 8, after “Part”, to insert the following:

"save that the Minister shall not make regulations in relation to the linking of —

(i) a scheme member’s pension entitlements to the consumer price index,

(ii) pension entitlements of pre-existing members of public service pension schemes,

(I) In respect of the exemptions provided for in subparagraphs (i) and (ii), any changes to a scheme member’s pension entitlements or those of a pre-existing public service pension scheme member, shall only be permissible by way of primary legislation,

(II) The Minister shall make regulations in respect of subsection (2)(c) and (d)”.

Section 8 gives the Minister wide-ranging powers to make regulations. I tabled amendment No. 24 because I think the issues covered by the section should be dealt with in primary legislation. A significant number of court rulings have been made in regard to addressing issues through statutory instrument and regulation rather than by primary regulation. The section enables the Minister to introduce considerable change because he has not yet decided on several matters. I ask that any such change be introduced by way of primary legislation.

Deputy Brendan Howlin

The net issue is the linking of increases to the consumer price index, CPI. I want the power to provide for this. I am not seeking a generic power to do things that are not overtly contemplated at present. I want to grant me or my successors the power to link increases to the CPI and, as I am making this explicit in primary legislation, I do not understand why Deputy Fleming takes issue with it. Many Acts contain a catch-all phrase to effect that the Minister can provide for any other matter he or she may wish. I am not asking for that. I am specifically asking for the power to link increases to the CPI. The Deputy might disagree with that but it is a clear and overt power that will set out in Statute if this Bill is enacted. That is all I or my successors will be able to do.

Deputy Sean Fleming

The House has less scope to debate these matters. Our general approach should be to do as much as possible through primary legislation.

Deputy Brendan Howlin

I agree. Section 46 would require a statutory instrument to receive a positive vote in the Dáil. Section 46(2) states:

An order under subsection (1) may be made only if—

(a) a draft of the order has been laid before both Houses of the Oireachtas, and

(b) the draft has been approved by resolution passed by each of those Houses.

Deputy Sean Fleming

That is helpful.

Amendment, by leave, withdrawn.

Deputy Brendan Howlin

I move amendment No 25:

In page 15, subsection (1)(b), line 14, to delete “or parts”.

This is a drafting amendment.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 26:

In page 15, subsection (1)(e)(i), line 26, to delete “this Scheme” and substitute “the Scheme”.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 27:

In page 16, subsection (2)(b)(iii), lines 3 and 4, to delete “are to be made” and substitute “is to be made”.

This is a drafting amendment.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 28:

In page 16, subsection (2), between lines 11 and 12, to insert the following:

"(e) where a Scheme member is or has been in receipt of benefits under Part 2 (which relates to social insurance) of the Social Welfare Consolidation Act 2005 in respect of periods relating to one or more of the following:

(i) incapacity for work;

(ii) maternity;

(iii) health and safety;

(iv) adoption;

(v) occupational injuries;

the inclusion of certain money amounts as referable amounts for the purpose of the calculation of benefits sections that would, in the opinion of the Minister, be appropriate having regard to some or all of any shortfall in pensionable remuneration of the member during the period of receipt of such benefit by him or her under the Social Welfare Consolidation Act 2005;".

This amendment provides the Minister for Public Expenditure and Reform with powers to make suitable regulations if and as necessary in respect of pension treatment or single pension scheme members who are temporarily absent from a public service job cover, where such persons continue to receive some or all of their pay during such absence and receive, for the duration of the absence, a related social welfare benefit. A key example meeting the above conditions would be maternity leave. This subsection provides that the Minister can, if necessary, make regulations ensuring that the interplay of social insurance and the new single scheme pension accrual does not disadvantage a woman on maternity leave or any other relevant category of person.

Amendment agreed to.

Section 8, as amended, agreed to.

SECTION 9

Chairman

Amendments Nos. 29 and 40 are related and may be discussed together.

Deputy Mary Lou McDonald

I move amendment No. 29:

In page 17, subsection (2), lines 1 to 6, to delete paragraph (c).

It appears that we are at the crux of a contradiction in respect of the retirement age. On the one hand, there is a manoeuvre to raise the retirement age and, on the other, there is a cut off point of 70 years. While I do not think anybody should be obliged to work to the age of 70, nor do I think a legal cut-off point should be created at that age. That is the rationale behind amendments Nos. 29 and 40.

It strikes me as arbitrary in choosing 70 years. Why not 72 or 75? The additional difficulty is that there are some exceptions to that age limit. There is a provision for 70 or a higher age where it is deemed appropriate or by order of the Minister. It is a mistake, as well as a contradiction in terms of the impulse of the legislation and other initiatives taken by the Government, to put in place those exclusions for workers over the age of 70.

Deputy Brendan Howlin

I have given careful consideration to the Deputy's amendments. A countervailing and strong argument that many reasonably advocate is that there should be no age limit, people should work for as long as they like and are able to. It is argued the idea of an age limit is an anachronism in a modern society.

There are others who say there should be a retirement age to allow for a horizon for people to plan a retirement and enter into a different life pattern. There is also an argument that we should be making way for younger people at certain scales. There are certain categories of manual work in the public service which people are not capable of doing after a certain age. These are countervailing arguments that one needs to balance. There is no right answer but different answers.

On balance, I am persuaded there should be an age limit and a retirement horizon. Seventy years is about right. I do not believe people should be required to work to 70 necessarily. That is why there are provisions for actuarially reduced early retirement for people who make those choices. At the same time, people should not feel they can keep going forever. We can all think of instances where that would not be the best.

On balance, I am not inclined to accept the Deputy's amendment. However, these may well be revisited. Section 9(2)(c)(ii) allows for this matter to be revisited.

Deputy Mary Lou McDonald

Just to reiterate the point, this is not about upping the ante and enforcing a situation where citizens of 70 years of age would be forced to work.

Deputy Brendan Howlin

I understand that.

Deputy Mary Lou McDonald

It is about the freedom to do so. The correct balance is to strike the right age at which there is an entitlement to retire. Notwithstanding that entitlement, it must also be recognised there is a freedom to continue if the person so wishes, depending on his or her physical condition in the case of some lines of work. The pension age has been raised to 67 which is not a wild distance away from the age of 70.

The Minister has stated there are certain positions which people over 70 could not carry on doing. Why has he made an exception of holders of public office?

Deputy Stephen S. Donnelly

I support Deputy McDonald on this. The 65 year retirement age comes from Bismarck, introduced at a time when life expectancy was 28 years.

Deputy Brendan Howlin

Bismarck's retirement age and the mortality age were very close at the time.

Deputy Stephen S. Donnelly

It is something of a legacy issue, therefore.

I understand the need for a balance. Will the Minister reconsider it, however?

Deputy Brendan Howlin

Does the Deputy think the retirement age should be open-ended?

Deputy Stephen S. Donnelly

Yes, but the pension should be such that if one wants to retire at 68 years and has hit the 50% target, then so be it.

There are two issues which strike me in this case. First, there is the support ratio. The most terrifying figure I saw in the previous Government's White Paper on pensions was that the ratio of workers to pensioners is falling. Currently it is 6:1 but by 2050 it will be 2.4:1. Supporting pensioners, particularly public sector pensions which obviously are pay-as-you-go rather than contributory, will be a significant problem in the future. I might be one of those pensioners relying on 2.4 workers to pay my pension. It provides a powerful counterargument to the Minister's legitimate argument about crowding out the workforce. This is all about long-term planning over the next several decades. Allowing people to continue to work would be a useful safety valve.

Yesterday, I had a conversation with a medical consultant about this legislation. He is strongly opposed to it. He gave the example of a colleague, an eminent surgeon, who retired recently at 65 years or whatever the compulsory age is.

Deputy Brendan Howlin

There is no compulsory retirement age of 65.

Deputy Stephen S. Donnelly

Okay, he retired anyway. The medical consultant made the point that on a Friday evening his colleague was saving lives but the following Monday he could no longer do that. This medical consultant pointed out the case of an eminent US cardiologist who is working and saving lives every week at 82. It seems to me that it is not necessarily a clever move to introduce this age limit. Will the Minister have another think about this, considering these two striking reasons?

Chairman

It is important that it would be at the instance of the employee. In other words, if the individual surgeon, say, wished to stay on, then that would be simply a matter for him or her. At the same time, an employer would have to intervene if there were a concern as to the person's ability to do a job. An individual may feel able to do it genuinely but the employer might have a genuine concern that he or she could not.

Deputy Stephen S. Donnelly

Yes, of course there have to be some testing parameters around it.

Deputy Brendan Howlin

I have to be very careful here as I do not want to go into any matters of ageism. When one gets to a certain age, one needs special medical certificates to drive a car, for example. As one ages, eyesight and other matters disimprove. At the same time, health supports have improved remarkably and I hope in the next 40 years they will continue to do that. As I said earlier, however, there is a balance between being able to plan in a workforce for exits, what vacancies will arise as a result and so on. What if the person retiring just gives one month's notice because there is no retirement age in place? This would cause difficulties.

We all know people who have convinced themselves of a capacity that is beyond prime. There are people who think they are as good as they always were but might not be. These issues are difficult sometimes. As Deputy Donnelly rightly said, the old retirement age was 65 and everybody recruited prior to 2004 expected to retire at 65. I suggest the average age of retirement from now on should be 70. Many individual workers and occupations will not want to go to 70, to be quite blunt, because they will not feel able to do vigorous manual work to that age and it would not be appropriate. There are fast accrual jobs in the public service, for example the Permanent Defence Force and the Garda Síochána, and because of the nature of the job their members retire much earlier. Section 9(2)(c)(ii) refers to an age later than the age of 70 years being provided for by order under section 13 so there is capacity to do this.

Deputy Mary Lou McDonald

Will the Minister answer my question on specified exceptions?

Deputy Brendan Howlin

I apologise as I meant to return to that point. The only two exceptions are the elected Members of the Oireachtas and the President, because it is a matter for the people to elect whomsoever they wish and we should not debar somebody. With regard to the Presidency, I would alter the lower age limit. The people should be entitled to elect either to the Houses of the Oireachtas or as first citizen any citizen they determine and we should not circumvent this.

Chairman

Subject to the constitutional exclusions, which are not very many.

Deputy Brendan Howlin

Yes.

Deputy Mary Lou McDonald

Does the Minister see the absolute contradiction in this? In the case of Oireachtas Members or the President the upper age limit is set aside. I do not have an issue or difficulty-----

Deputy Brendan Howlin

It is not set aside; it is not for me-----

Deputy Mary Lou McDonald

Certainly.

Deputy Brendan Howlin

-----and it is not for us, I would suggest,-----

Deputy Mary Lou McDonald

Certainly.

Deputy Brendan Howlin

-----to dictate to the people whom they could-----

Deputy Mary Lou McDonald

Absolutely not.

Deputy Brendan Howlin

However, it is for us to regulate-----

Deputy Mary Lou McDonald

Hold on-----

Chairman

I ask the Deputy and the Minister not to talk across each other. I ask the Minister to finish.

Deputy Brendan Howlin

It is for us to determine who should work in our hospitals and our education facilities. We must set the criteria for these. The democratic space is different. I know the Deputy has difficulties with this and I looked askance at her amendments, which I should not reference yet, with regard to capping pensions generally at €60,000 but pensions for Oireachtas Members at €37,000. Whether she regards the Oireachtas as a category for cruel and unusual punishment I do not know.

Deputy Richard Boyd Barrett

They do visit such punishment on everybody else.

Deputy Brendan Howlin

I do not agree with that, and it is not "they" as you are one of them now.

Deputy Mary Lou McDonald

I ask the Minister to follow my logic and we will deal with the cruel and unusual punishment I propose separately. The difficulty is that there is a very specific lower end age exclusion in respect of the office of the President-----

Deputy Brendan Howlin

With which I disagree.

Deputy Mary Lou McDonald

It is all the one whether the Minister disagrees with it. It is there.

Deputy Brendan Howlin

True.

Deputy Mary Lou McDonald

However, if one were to be logical about the position, to impose an upper age limit would be entirely consistent with it.

Deputy Brendan Howlin

Does Deputy McDonald agree with the lower age limit?

Deputy Mary Lou McDonald

No, I do not.

Deputy Brendan Howlin

Then why would she want to impose an upper age limit?

Deputy Mary Lou McDonald

I am not saying what I want to do.

Deputy Brendan Howlin

I thought you were.

Deputy Mary Lou McDonald

The Minister needs to be consistent in the approach to this. If the view is-----

Deputy Brendan Howlin

I am consistent.

Chairman

Please allow Deputy McDonald to continue.

Deputy Mary Lou McDonald

If the view is that one can be over 70 and elected to this esteemed institution or as Head of State it raises a very obvious question in respect of why one would exclude people of the very same age group, subject to physical ability.

Chairman

Is it not the case that Members of the Oireachtas and the President are not employees in the sense we understand the employment relationship? They are elected under the Constitution to represent the people. They are not employees.

Deputy Mary Lou McDonald

I grant the Chairman this is a clear distinction. As a matter of personal preference early retirement is terrific. People should expand their horizons and do other things. I do not argue for an enforced regime. However, it strikes me as arbitrary to choose 70 and make provisions for specific categories, albeit they are different. It is an obvious inconsistency and one I do not support.

Chairman

Does Deputy Boyd Barrett wish to speak?

Deputy Richard Boyd Barrett

I might as well comment at this stage.

Chairman

You might as well. We are dealing with amendments Nos. 29 and 40.

Deputy Richard Boyd Barrett

I am still trying to figure out which amendments we are discussing. Are we discussing what has been tabled by Deputies McDonald and Donnelly listed on page 5?

Chairman

No. Deputy Donnelly has not tabled an amendment; he has signalled opposition to the section and we will come back to him with regard to this.

Deputy Richard Boyd Barrett

That is us.

Deputy Brendan Howlin

The other amendment is on page 17.

Deputy Richard Boyd Barrett

I slightly disagree with Deputy McDonald on this point. For whatever reason, perhaps after attempts to remove their automatic entitlement to medical cards or, as may possibly happen soon, to remove certain benefits that pensioners receive, these pensioners might decide they want somebody aged 75 or 80 to represent them and they would be quite entitled to do so, or to elect such a person as President.

Deputy Mary Lou McDonald

I support that. That was the thrust of my argument.

Deputy Richard Boyd Barrett

It is a different category and we must accept it. I am coming at this from a somewhat different angle. This is part of facilitating the upward push with regard to the retirement age and I find it all regressive. As a society we have been fighting to relieve people of the burden of toil-----

Deputy Brendan Howlin

It has not burdened the Deputy too much.

Deputy Richard Boyd Barrett

What?

Deputy Brendan Howlin

Sorry, I am being bold.

Deputy Richard Boyd Barrett

I did not catch with the Minister said.

Deputy Brendan Howlin

I withdraw it.

Deputy Richard Boyd Barrett

As a society we have been fighting to relieve people of the burden of toil imposed on the vast majority of people. It was generally held that the progressive move was for people to be able to retire earlier not later. I still hold to this traditional left-wing socialist view that we should allow people to retire earlier and enjoy their old age. It always sticks out in my mind that when I studied geography in the early 1980s it was in all of the curriculum books and it was standard for the teachers to tell us the big problem we would have in the 21st century was people would have so much leisure time. At the time it was thought the advance of technology and the reduction in the burden of work would mean people would be able to retire earlier and would have a huge amount of leisure time, and because more wealth would be generated we would have the resources for people to enjoy the latter part of their lives. This was a logical argument but now we are moving in the opposite direction and it is regressive. The attempt to spin it by talking about giving people the option to work a bit longer if they like is nonsense. It is justification for a regressive cut.

As well as those under pressure to work longer when they should be retiring and enjoying their old age, the other big losers are young people looking to come into the jobs. The longer people work the longer younger people are crowded out from jobs in the public service. At a time when we have so many unemployed young people the idea we would in any way encourage or facilitate people to work longer in the public service makes no sense at all. I reject the entire logic behind increasing the retirement age and facilitating people to work longer. The retirement age should be 65 years or lower.

Deputy Peter Mathews

We are pausing for a moment to question things in big picture terms. It is not a bad idea to pause for thought. It is timely that someone like Mr. Niall Ferguson, the economic historian, has pointed out that a large imbalance is being created between the generations in the developed countries and economies of the world. The younger generation is being financially enslaved by the burdens of public debt, which are increasing because they are taking on the burdens of private debt. As stated by the Minister, we need to strike a balance between the age at which people raise families, work and retire. Finances aside, people who retire expect to be able to take it easier mentally and physically and to support, through their experience of life, their children and grandchildren. The temptation is to extend the retirement age from 65 years to 70 years. However, it is a temptation we should resist. We are doing this so that we will not have to trigger pensions and replacement wages and salaries for the people moving onto pensions. I believe the Minister should hold back on doing so. Somewhere between 60 years and 65 years makes physical and chronological sense within the lifetime of a human being.

For instance, the 21 year lease - the chairman will be familiar with this - was common up to the Second World War because traditionally in the land of the states and the agri-production of yesteryear the average life expectancy was 42 years and the age at which one could sign a lease was 21 years. One figure was then subtracted from the other, the result being a 21 year lease. There was a reflection in the reality of the times which was cemented in the commercial legality. We must be careful to reflect the realities of existence for families and people nowadays. We should not throw it around like an algebra equation. I believe 65 years is the appropriate age for retirement. I am speaking from the prejudiced position of my being 61 years on my next birthday.

Deputy Brendan Howlin

Both perspectives, in terms of no limit and a lower limit, have been articulated from the Opposition benches and I am trying to strike a balance between them.

The proposal before members gives me the power to alter the age beyond 70 years, if deemed appropriate. While listening to Deputy Mathews, I was thinking about a funeral I attended some years ago of a colleague of ours. When walking with the cortege with another colleague from the House I passed the comment that the person whose funeral we were attending had not lived long after retiring from the House and that there was a lesson to be learned from that. The retort from my colleague was "Yes, do not retire" which was not the lesson I intended to impart. Different people have different views.

Deputy Sean Fleming

The Minister stated that people in elected offices, including the President and Members of the Oireachtas, would be excluded from the requirement to retire at a particular age. Are members of local authorities included?

Deputy Brendan Howlin

They are not employees. They are not entitled to a pension. They are not part of the single scheme.

Deputy Sean Fleming

Is the allowance paid to members of local authorities not pensionable?

Deputy Brendan Howlin

It has nothing to do with this.

Deputy Sean Fleming

It is not pensionable.

Deputy Brendan Howlin

No.

Chairman

Does Deputy Donnelly wish to speak on the amendments? I was going to call him on the section, to which I know he is opposed.

Deputy Stephen S. Donnelly

Yes, my name is attached to a number of the amendments.

Deputy Richard Boyd Barrett

Does Deputy Donnelly have to be present for the whole debate?

Chairman

No, he can directly substitute.

Deputy Brendan Howlin

Deputy Donnelly is welcome to remain for the whole debate.

Deputy Stephen S. Donnelly

I wish to comment on the reference to section 17 in section 16, which is relevant to the amendment. Perhaps the Minister will clarify the following. It states in this section that there is provision under section 13 for exceptions to be made. Would it be a reasonable interpretation to say that section 13, which is relevant to this section in terms of the exemption, gives Ministers the power to sign a statutory instrument? For example, am I correct that the Minister for Health could under this Act create a directive to say that medical consultants can retire at a specified age and would this apply to new and existing scheme members?

Deputy Brendan Howlin

First, all of this will apply only to people embraced by the new scheme. Second, "the Minister" means the Minister for Public Expenditure and Reform and not a line Minister.

Deputy Stephen S. Donnelly

Would that provision give the Minister the authority to, for example, issue a directive that the age at which medical consultants can retire will be moved to 75 years?

Deputy Brendan Howlin

I would have that legal authority but I would have to lay the matter before the House and it would have to be voted on by it.

Amendment put and declared lost.

Question proposed: "That section 9 stand part of the Bill."

Deputy Richard Boyd Barrett

Does the Minister not think there is a problem in terms of young people seeking these jobs? That is the other side of this equation.

Deputy Brendan Howlin

I am not sure the Deputy was here when I originally addressed the issue. I stated that there are now in the public domain two distinct lines of thought. One point of view, which is a fair argument, is that there should be no age limit in the current environment for people who are robust and want to continue to work. There is a grey movement in the United States whose members are very trenchant on that. There are others who would agree with Deputy Boyd Barrett's perspective that we should legislate on the ending of the period of work and entry into an easier lifestyle and the implications of this for workforce planning, movement within the workforce and accessibility for younger people so that we have a proper age profile in the workforce, which is an equally valid argument. I am trying in this legislation to strike a balance between both. Deputies McDonald and Boyd Barrett have differing perspectives on this. There is no right answer to this. There will be people who will want the age limit set at 70 years or higher. I recall having conversations on this with the late Dr. Garret FitzGerald, who was an extraordinarily active individual well beyond any normal retirement age. He told me that being involved in writing and so on kept him active. There is validity in that, just as there is validity in saying there should be a horizon that people can work towards so they know they will have a different lifestyle. They can plan for that. It is real issue as many people fall into retirement rather than planning for it. If there is no defined horizon, there is more of a likelihood of falling into retirement without proper preparation and planning for a completely different lifestyle.

Deputy Richard Boyd Barrett

I know this will go through but this is a rationalisation for another imperative. We are providing interesting arguments to justify what is another imperative of the so-called pensions bomb. There is pressure from the troika, including the EU authorities, to reduce the cost of retirement.

Deputy Brendan Howlin

We are not hiding that.

Deputy Richard Boyd Barrett

All this other stuff is gloss on that fact. There is another way to address the issue about which the Minister is speaking, which concerns older people wanting to contribute to society and not becoming depressed because they reach retirement age. The first action would be not to cut pensions, which we are doing, as those people will have fewer resources after they retire to do what they want. The impact of cutting people's pension entitlements, which this legislation also does, means people will be under a certain financial pressure to keep working on a full salary instead of retiring when they may want to. Similarly, if we provided greater resources for community, voluntary and local services so people had other avenues to engage in meaningful activity after their retirement, the prospect of retirement might not be so bleak. It seems this is just pressuring people to work longer to save money, which is why I oppose it.

Deputy Stephen S. Donnelly

I have a quick question on the establishment of the scheme. This is for new public servants but does the Government intend to publish legislation to address current pensions? I know that is slightly off the topic but it is a quick question. Could it be done?

Chairman

The Minister may address it briefly but we will not have such a discussion at this time.

Deputy Stephen S. Donnelly

It is a "Yes" or "No" answer. It is relevant to the establishment of the scheme.

Deputy Brendan Howlin

It would be worth putting down a parliamentary question so we could debate it properly. I have already laid out the reasons that cannot happen. Preserved pensions are a constitutional right; they are a property right under the Constitution. There is very limited scope to deal with the issue and I have dealt with already in so far as I can. We can debate it further and I have an open mind on it going further. This relates to future pensioners.

Deputy Peter Mathews

Constitutionally, there is an embargo on going there.

Deputy Brendan Howlin

Yes.

Deputy Peter Mathews

The defined benefit schemes in the private sector have been looked at recently, and it seems they will be left high and dry as the tide will have gone out on many of them. Where is the constitutional protection for those people?

Deputy Brendan Howlin

The Deputy would need to get his lawyers on that. We are not in the business of giving legal advice here.

Deputy Peter Mathews

It is the same area.

Deputy Brendan Howlin

No.

Deputy Peter Mathews

It is the same result.

Question put and agreed to.

NEW SECTION

Chairman

Before moving on, I draw the attention of colleagues to one of the typos I mentioned earlier. On page 5, before amendment No. 30, the heading "SECTION 10" should appear.

Deputy Sean Fleming

I move amendment No. 30:

In page 17, before section 10, to insert the following new section:

"10.—(1) The Minister shall bring forward proposals/discussion document on the existing mechanism for the management of public service pensions within 6 months from the date of enactment of this Bill.

(2) Such discussion document would include the following—

(a) the possible establishment of a single government body that would manage all public service pensions, with specific reference to any cost saving that would accrue to the Exchequer resulting from the establishment of such a body,

(b) the possible establishment of a mechanism whereby all scheme members should have the option of paying additional voluntary contributions into an Exchequer pension fund, the actuarial valuation of which to be applied to such payments when pension entitlement is paid out.”.

I am asking the Minister to come forward with a proposal where a discussion document would be published dealing with a mechanism to manage the public service pension schemes. I mentioned this on Second Stage. A plethora of organisations will be involved in the administration of pensions to retired public and civil servants. For example, the HSE and each local authority will probably have their own scheme, with a finance officer and others dealing with it. Each Department will have such a process, with different arrangements right across the public service. There is a case to be made in the interests of efficiency for having one responsible body dealing with this issue, possibly under the Minister's Department.

The amendment does not ask for the organisation to be established as it would be ruled out of order as a cost to the Exchequer. I have asked the Minister to produce a report on the issue within six months of the legislation being approved. There are savings to be made. As an example, the Department of Social Protection can pay out the State pensions from one organisation so why should another part of the public service not be able to pay out the pensions to retired public servants from one body? There must be enormous scope for improvement. There is another element to the amendment but we can deal with the idea of a single body first.

The second element relates to the possible establishment of a mechanism whereby all scheme members should have the option of paying additional voluntary contributions into an Exchequer pension fund. There is a similar proposed amendment for later in the Bill. I have had many complaints from retired teachers in particular over the years, including those who bought additional voluntary contributions to bring up their final pension entitlements. Those were deducted through the Department of Education and Skills pay cheque, although a private provider dealt with the additional voluntary contribution. Although the Department deducted the money with the consent of these people, the payment had to be made to a private provider. As Deputy Mathews stated, some of these people thought they had a defined benefit as a result of these additional voluntary contributions but that is not the case.

It may be even more efficient for everybody concerned, including the State, for the State to run the scheme. People may say this would be a monopoly and in breach of competition laws but it could be in the interests of the public service, the Irish taxpayer and the people who want to contribute upfront for a pension that would be drawn on retirement. This would be in a case where people may not have been in a position to achieve the maximum pension. This could be easily done under the concept of a single body.

Deputy Brendan Howlin

The two points in the amendment are that I would publish within six months of the enactment of the legislation a document aimed at establishing a single body to manage all public service pensions, which the Deputy mentioned previously. I agree not with the publication of the document but the setting up of the body in principle. I have already indicated to the Deputy to this effect. In November, when I spoke about the reform agenda, one of the initiatives I wanted to proceed with was a shared services initiative, and the first - which is up and running - is a human resources management shared service. I intend that we would have pensions administration across the Civil Service in the first instance and I hope this could migrate across the public service.

The concept which the Deputy is aiming at is firmly within my focus, although it will take some time to come about. It is a complicated process. As the Deputy knows, I have recruited a shared service manager who has extensive external experience in providing shared services. That manager has reported to the Cabinet sub-committee on that. Perhaps if there is an opportunity, be it before or after the summer recess, the committee might invite her to make a presentation about the advance on shared services.

Deputy Sean Fleming

Shared services obviously starts with human resource management. This pension issue, the subject of my amendment, is a subsequent element of that.

Deputy Brendan Howlin

There would be human resource issues. There is also the matter of payroll management so the entire payroll can be managed. The pensions would be managed by a single entity.

Deputy Sean Fleming

The essence of this is that I considered it more efficient and cost effective. Will that result in cost savings?

Deputy Brendan Howlin

We have carried out the analysis of the human resource management element of it. There is an up-front payment. The estimate we have is that it would accrue savings of approximately €12.5 million per year on human resource management.

Deputy Sean Fleming

Is that just within the Civil Service, namely, Government Departments only?

Deputy Brendan Howlin

Yes, the Civil Service.

Deputy Sean Fleming

How many organisations are dealing with it within the Departments?

Deputy Brendan Howlin

I do not have figures with me for the number of bodies and agencies.

Deputy Sean Fleming

Which of them is the Minister referring to? Is it the 15 line Departments?

Deputy Brendan Howlin

No. It includes their agencies, committees and so forth, but not the broader public service. There will be other elements we can include in due course. It would be useful for the committee to examine that on another occasion.

With regard to the second point the Deputy made about allowing for the purchase of pensions in the new scheme, that is provided for in section 18(b) of the Bill.

Chairman

To clarify, the top of page 6 of the book of amendments states it is section 9 but that should be section 10.

Deputy Sean Fleming

I had a quick look at section 18(b). It refers to any moneys as represent a transfer value of certain amounts. Is that AVCs? It seems to refer to somebody bringing in an amount of money. They are coming from somewhere else and bring a transfer value.

Deputy Brendan Howlin

The section refers to any other moneys as represents the transfer value of certain amounts that may be accepted on terms approved by the Minister. I can turn that into referable amounts in respect of each calendar year and so forth. I can explain it in detail to the Deputy subsequently, but it captures the point he is making. If people wish to make a lump sum payment towards their pension contribution-----

Deputy Sean Fleming

Or an AVC.

Deputy Brendan Howlin

It need not be a single payment; it can be a multi-annual payment or a number of lump sums to augment their pension entitlement. Under the new scheme, pension entitlement will be monetarised. It is a monetary value, so if somebody wishes to augment that, it will be possible to put more in.

Deputy Sean Fleming

Is this a new departure?

Deputy Brendan Howlin

Yes.

Deputy Sean Fleming

Can that happen at present?

Deputy Brendan Howlin

Not that I am aware.

Deputy Sean Fleming

Can public servants and teachers pay AVCs through the public sector? Can they make additional payments?

Deputy Brendan Howlin

I will get a formal reply to the Deputy on what the current situation is.

Chairman

Is that okay, Deputy?

Deputy Sean Fleming

The Minister agrees on the principle. Is he accepting the amendment?

Deputy Brendan Howlin

More than the principle, I agree with the action.

Deputy Sean Fleming

I will not press the amendment.

Amendment, by leave, withdrawn.

Chairman

Amendments Nos. 31, 32 and 34 are related and will be discussed together.

Deputy Brendan Howlin

I move amendment No. 31:

In page 17, subsection (1), line 10, to delete "the day this section comes into operation" and substitute "the operative date".

Amendments Nos. 31, 32 and 34 are minor technical changes to fully and accurately lay out the cut-off point for being in and out of the single scheme where a job offering is pending. The latter serves to refine for full clarity the wording used in connection with the pension status of the relevant cohort of trainee gardaí. Amendment No. 31 substitutes the phrase "the operative date" for "the day this section comes into operation". It is a technical way of saying the same thing.

Amendment agreed to.

Deputy Brendan Howlin

I move amendment No. 32:

In page 17, subsection (3)(a), line 34, to delete “after that date” and substitute “on or after that date”.

Amendment agreed to.

Chairman

Amendment No. 33 is out of order as it is a potential charge on the Exchequer.

Deputy Mary Lou McDonald

I would like to be given a further explanation of that ruling and to challenge it. The substance of that amendment and amendment No. 37, which has also been ruled out of order on the basis of being a charge on the Exchequer, relate to this window whereby current employees would leave the public service for a period of no longer than six months but if it exceeded six months, were they to re-enter the service, they must move from the old scheme to the new one. I am very concerned about that provision, particularly with regard to women or men who might take leave of absence for child rearing reasons or for any other reason. That is the reason I put down the amendment. I am challenging it being ruled out of order because this scheme is an entirely new scheme. It has not yet been devised. Unless the Minister is saying that the current arrangement is that if one leaves for more than six months one comes back to a different position, and that is not the current status quo, I do not see how one can argue that it is an additional charge on the Exchequer.

Chairman

At the risk of sounding dictatorial, which I do not wish to be, it is not a question of an opportunity to challenge the ruling. I am making the ruling that it is out of order. I can explain why it is out of order but it is not subject to challenge under Standing Orders. The reason it is out of order is that the effect of the amendment would be to increase or seek to increase the length of time during which persons can leave the public service and then return with older, more preferential pension arrangements. That increases or potentially increases the uptake of more preferential pension arrangements and will consequentially be a cost or potential cost to the Exchequer. I have given you the reason I have ruled it out of order, but the ruling is not subject to challenge. That is the position under Standing Orders.

Deputy Mary Lou McDonald

Are they subject to observation?

Chairman

Absolutely, and the Deputy has expertly done that already.

Deputy Mary Lou McDonald

That really baffles me. I am not challenging your authority, Chairman, as you have made the ruling, but this is a new scheme. We must be able to debate whether a six-month period between somebody exiting and re-entering the public service, for whatever reason, is sufficient. You have to consider the dimensions of that, including what I believe is a particular gender dimension to it.

Deputy Brendan Howlin

Can I trespass on your generosity for a moment?

Deputy Mary Lou McDonald

I am not giving you cheek, Chairman, but I am really baffled by the ruling. This is a new scheme.

Chairman

Let me explain. I understand where the Deputy is coming from, but the point is similar to what I said earlier. It is for the Government and Minister to make proposals that have the effect of a charge on the Exchequer. Nobody else can do that under the Constitution. If your amendment has that potential effect, I must rule it out of order. That is the reason I am doing so. You can maintain a perfectly reasonable argument as to why the Minister ought to have done something that he did not do, but I cannot allow your amendment. It is clearly out of order, for the reasons I have explained. There is a genuine, legitimate debate to be had but the point is that the amendment is out of order.

Deputy Mary Lou McDonald

The difficultly it places you in, Chairman is that, notwithstanding the fact that this is a new scheme and the fact that there is a legitimate debate to be had, as a Member of the Oireachtas I cannot bring the amendment forward to fully participate in or influence that debate because it is out of order.

Chairman

No, not where it is a potential charge on the Exchequer. That is the way the legislative system works under the Constitution. I cannot change that and neither can you.

Deputy Mary Lou McDonald

I understand the concept of a charge on the Exchequer. However, in these circumstances there is a new scheme. What is the current position?

Deputy Stephen S. Donnelly

The charge on the Exchequer will be incurred in approximately 40 years.

Chairman

I am in the Chair. I am not debating anything. I am just running the meeting and I have ruled it out of order. I have given the Deputy some latitude to make her point. Does the Minister wish to comment?

Deputy Brendan Howlin

I do not wish to trespass on your ruling so I will not open a debate. For clarity, however, what is at issue here is simply to reflect the status quo, which is six months for somebody migrating to the new scheme. The current scheme was brought in 2004, when the pension age increased. Let me clarify an issue. The public servant must sever the relationship with the employer, which is different from taking a career break, maternity leave, or time out. If one maintains one’s employment connection, that 26 weeks provision does not apply. It applies when one resigns, finishes up work in the public service, reapplies and gets a new job in the public service. It would make it very difficult if an individual was able to go and work in the private sector for two years, come back to the public service and reconnect to all his pension entitlements, having built up another pension entitlement in the interim.

Amendment No. 33 not moved.

Deputy Brendan Howlin

I move amendment No. 34:

In page 18, subsection (3), lines 1 and 2, to delete paragraph (c) and substitute the following:

"(c) a person stood admitted immediately before the operative date as a trainee Garda to the Garda College,”.

Amendment agreed to.

Deputy Mary Lou McDonald

I move amendment No. 35:

In page 18, lines 14 to 21, to delete subsection (4).

Deputy Sean Fleming

The special arrangements for Members of the European Parliament and Members of the Oireachtas.

Deputy Mary Lou McDonald

I thank Deputy Fleming. In this amendment I raise the issue of the exceptions in respect of the age limit of 70 years. We see it emerging again in the section and I ask the Minister to explain his reasoning.

Deputy Brendan Howlin

The Government decided that this single scheme pension scheme would apply to new Members of the Oireachtas and all officeholders, including Ministers of State and Ministers, in the same way it will apply to all new public servants. Unlike most public servants, Oireachtas Members do not have security of tenure and are subject to the will of the electorate. There is a considerable change in Oireachtas membership from one Dáil and Seanad to the next. I think Members will be acutely aware of the vagaries of the system on the day that is in it. The requirement to be re-elected from time to time means Oireachtas Members are different from the general body of public servants. This special factor was taken into account in the Bill for serving or former Oireachtas Members and Ministers. Accordingly, in the case of a Member of the Oireachtas and or officeholders, if the officeholder was first elected or appointed before the Bill becomes law, he or she will not be a member of the single scheme in respect of any future service following re-election or re-employment in the Oireachtas. This is considered a reasonable exception on the basis a Deputy, Senator or Minister may not be re-elected and does not have the same security of tenure as other public servants. Those who are elected for the first time after the Bill is enacted will be subject to the single scheme in the same way as everybody else.

We have given some thought to this. Some Members have never been elected on two consecutive occasions, coming in and out of the Oireachtas. That is the uniqueness of the situation. I would like to be fair to Members - and not have extraordinary positive or exceptional measures for them - and wish to ensure that standing for election is a choice people can reasonably make. If people had built up a pension entitlement and were then not re-elected at the following election but were subsequently elected, under these provisions they are not knocked out of the pension scheme and put into the single scheme. I think that is reasonable in the circumstances, but I know the Deputy will not agree.

Deputy Mary Lou McDonald

I wish to tease out the inconsistency in the argument. In our previous discussion on a matter that I acknowledge was ruled out of order, the Minister raised the prospect of staff leaving the public service for two years, working in the private sector and then, on their return to the public service, plugging back into the former pension scheme. The Minister has ruled that out for the general run of public and civil servants, but that is none the less a possibility for Oireachtas Members or Members of the European Parliament who leave, albeit involuntarily.

Deputy Brendan Howlin

Members of the European Parliament are not subject to the scheme.

Deputy Mary Lou McDonald

Okay.

Deputy Brendan Howlin

I beg the Deputy's pardon. MEPs are paid directly from the European Parliament but they are referenced in the scheme. I apologise to the Deputy.

Deputy Mary Lou McDonald

Albeit for elected Members, the Minister is drawing the distinction that it would prove to be an involuntary rupturing of the relationship.

Deputy Brendan Howlin

That is a big distinction.

Deputy Mary Lou McDonald

Yes. It is a distinction that is to the forefront of our minds. None the less I think it is a glaring inconsistency. I have made my point and I will not labour it.

Deputy Peter Mathews

It is like being fired.

Deputy Mary Lou McDonald

I know. I have been there.

Deputy Richard Boyd Barrett

I wish to raise a point of clarification. Let us take the case of a former Member, who was in the old pension scheme but lost his seat during the last election. Were he to be re-elected in the next general election, would he plug into the old scheme?

Deputy Brendan Howlin

Yes. That is the purpose of the section.

Deputy Richard Boyd Barrett

That seems very unfair. Did I not see another provision in the Bill for former public servants?

Deputy Mary Lou McDonald

It is 70 for others.

Deputy Richard Boyd Barrett

Staff have built up an entitlement under the old pension scheme but should they rejoin, having left the public service even for a period of six months after the enactment of this Bill, their subsequent service will be in the public service pensions single scheme. However, they will retain an entitlement to the benefits in the old scheme built up during their period of service under that scheme.

Deputy Peter Mathews

If a public servant leaves the public service and rejoins within six months, he or she will still be entitled to a pension under the old pension scheme.

Deputy Richard Boyd Barrett

In other words, the person continues to be a member of the old scheme, if he or she severs employment but rejoins the public service within six months, but if they are out for a period greater than six months, his or her entitlement is based on the portion of their service under the old scheme and then their remaining service is reckonable under the new scheme. Why does the Minister not apply the same provision to elected Members?

Deputy Brendan Howlin

I have explained that already.

Deputy Richard Boyd Barrett

I do not really understand it.

Deputy Brendan Howlin

For clarity, let me repeat it. Anybody who has worked prior to the commencement of this scheme and has a benefit accruing to him will have that preserved benefit. Should he leave the public service and then come back once the Act is commenced, this next scheme will be the basis on which his future pension entitlement will be determined, without obviously dislodging his preserved benefit, which would be an addition to it. However, in relation to some categories, such as Members of the Oireachtas, who lack security of tenure because they are elected and the turnover at each election on average is 25 Members and somewhat more in the last general election, we must have a reasonable support base that will attract people into the profession of politics. I know many believe there is a popular vein to be mined by flogging politicians and that any salary is deemed to be unacceptable and almost all payments of any kind are too much. While there were excesses in the past, which we dealt with by restricting expenses, although I see some Members are very good at claiming expenses, by and large people are disciplined and approach the public purse with due regard to the pressures on ordinary taxpayers. I think this is a reasonable approach to take to people who have a pension entitlement as Oireachtas Members but are rejected by the electorate, and leaving is not necessarily voluntary. Their position is different from those who decide to leave the public service by choice. It is quantifiably different if someone resigns, goes off and embarks on another career and comes back again or starts a different career. People have different views on it but that is mine.

Deputy Richard Boyd Barrett

Politicians' pay and expenses are a different issue. That is not the point we raise. For the record, it is not about flogging politicians or saying they should not be paid anything but it is a legitimate opinion that we believe the salaries of Deputies, ministerial salaries and the salary of the Taoiseach are too high by comparison with European levels.

Chairman

That is not a relevant subject for debate.

Deputy Richard Boyd Barrett

I know, but I am just responding to the Minister's point. I accept it is not the point we are dealing with in this case. It is nothing to do with flogging politicians; it is trying to understand what seems to me a big inconsistency, namely, why politicians that happen to be elected and have certain pension entitlements prior to the date that the new scheme is introduced carry those benefits or privileges forward after the scheme is introduced where everyone coming in after them - politicians or public servants of any kind - are going to have a less favourable pension? Why would it not be the case that they would retain whatever entitlements they built up previously when the old scheme applied, but as of the introduction of the legislation, they would be subject to the new scheme and that would put them in the same boat as everyone else? I do not see why at what some level is an arbitrary date for the introduction of the scheme that everybody who is an elected Deputy before that point will be exempt from a disimproved scheme in the future. Surely they should be subject to the same pension regime as anyone else. It seems to be protecting the old guard and having a two-tier scheme as long as the old guard continues to be in political office.

Deputy Sean Fleming

The topic is a tricky one and the circumstances of going for election are different. One can be sacked whether one likes it or not, which might not be connected to one's work rate but might be connected to the political mood. A couple of years ago changes were introduced to the pension scheme for Deputies and those who were elected before a certain period if they retired or were not re-elected they could begin to collect a small portion of a pension from such a time. I am in that category. If I was not re-elected at the previous election I would get a small pension but the former Minister, Mr. Charlie McCreevy, introduced a system for those elected since 2002 whereby one must reach one's normal pension age before getting a pension. Currently, different pension arrangements apply in the House for those who were elected prior to 2002 and are still sitting Deputies. A clear distinction applies based on when one was first elected. The amendment appears to reverse that by stating that if one is elected at a later date, one can avail of the old scheme if one was previously a Member. That is essentially what we are saying. It seems to be an incentive to encourage former Members to return. The only people who can benefit are current or former Members.

Prior to this election, Members were on a principal officer's salary and we had a seven year, long-term increment. Following the election last year people who were in receipt of that increment came in under the new rules at the first point on the principal officer's scale and lost the increment. Members such as I who had been in the House for more than seven years before the previous election were in receipt of an increment of between €7,000 and €8,000 after being on the principal officer grade for seven years but that did not apply when I got re-elected. The previous salary for Deputies was higher for those with long service. Those of us who were in the House before the change were not allowed to retain the old arrangement if we were re-elected. The same was the case with pensions on a previous occasion. The Minister seems to be taking a slightly different approach. Does he accept that point?

Deputy Brendan Howlin

I do.

Deputy Sean Fleming

There is a case to be made that the salary and pension entitlements should be equal for all those elected to the next Dáil and not to have a different arrangement for those who are fortunate to have been elected five or eight years previously.

Chairman

The Minister has indicated why he has made his proposal.

Deputy Mary Lou McDonald

A rationale for this legislation is to create a single scheme-----

Deputy Brendan Howlin

Yes.

Deputy Mary Lou McDonald

----- to iron out inequities and to have universality. This provision flies in the face of that. The Minister is speaking to the right audience when he says that it is different when one is in elected office, that one takes one's chances, it is tough out there, one might make it and one might not and that is politics. His point is well made but that is not a sufficient ground either to make a distinction between elected people and the general run of public servants and it does not form any rational basis for a distinction between people who are in the House or who were Members and a new batch who would assume elected office at a future date. It will be seen correctly by others in the public and Civil Service as a mechanism to protect a particular category of political person. That is not helpful to any of us. It is fundamentally unfair.

Deputy Peter Mathews

The Deputy is saying that every benefit that is being created for Oireachtas Members should be modular at the point that they became Members of the Oireachtas.

Deputy Mary Lou McDonald

Yes.

Deputy Peter Mathews

One could have a part A, B and C if one had three terms of office.

Deputy Mary Lou McDonald

For reasons of fairness and transparency the rules need to apply across the board. That is only fair and proper.

Chairman

We are still on amendment No. 35. Does the Minister wish to respond?

Deputy Brendan Howlin

Yes. There is a popular view at the moment that giving anything to Deputies is to be avoided. I have heard that articulated. We should also put on record the fundamental changes that have been made. Deputy Fleming referred to the changes that were introduced in the 2004 Act whereby the pension age of politicians was increased from 50 to 65. I do not think we got great fanfare for that but it was correct because the legislation equated everyone – all civil servants. The Deputy is wrong to say that it applied to pre-existing Members. It still applied to anyone who had been a Member of the Oireachtas prior to the enactment of the legislation, if they had turned 60.

Deputy Sean Fleming

Fifty.

Deputy Brendan Howlin

In that case it was 60 for returning Members, which was interesting. That was the provision that was made. I believe the provision is fair, but I accept that people feel strongly about it. I have been fortunate in that I have been elected consecutively in seven general elections but that is not the norm. Many Members have come in and out of the House. They have given up careers to become a Member. There are many downsides in the career choices people make to come into the Oireachtas. I do not make a great deal of that but we must be fair to Members of the Oireachtas in the future. Members who stand in the future know what they are buying into; in other words that the new single scheme will apply to them. They will understand that. One must take into consideration that Members have made career choices in the past on the basis of an understanding of a pension scheme that is to be changed for them against any personal judgement they make, unlike the generality of public servants whose pension scheme would only be changed if they voluntarily severed their position. They must resign their position and leave the public service. If such persons were to return to the public service after six months, the new pension regime would apply, whereas they would retain the old benefits if they were to return within six months. There is a quantifiable difference between these circumstances and the position of a Member of the Oireachtas who is rejected in an election. As Deputy Sean Fleming pointed out, losing an election may not be a reflection of a Deputy's work but may be a product of the political climate, the popularity of a political party, timing issues or the redrawing of a boundary. Deputies are occasionally defeated in elections for these reasons. On the basis that this would fundamentally alter the basis on which such persons' pensions would be calculated - they may have made a calculation when first elected - I judged that my proposal was fair and equitable and I am proposing it for that reason.

Chairman

The Minister has ventilated the issue reasonably well. It is clear.

Amendment put and declared lost.

Chairman

Amendment No. 36 is out of order as it gives rise to a potential charge on the Exchequer.

Deputy Sean Fleming

I accept the Chair's ruling which is similar to that made on an amendment in the name of Deputy Mary Lou McDonald. We will discuss the relevant point when the section is discussed.

Amendment No. 36 not moved.

Chairman

Amendment No. 37 is also out of order as it gives rise to a potential charge on the Exchequer.

Amendment No. 37 not moved.

Question proposed: "That section 10 stand part of the Bill."

Deputy Richard Boyd Barrett

While I do not propose to discuss the section at length, I oppose it because it facilitates the entire Bill. By creating a distinction between those who are subject to the new scheme and those who are subject to the old scheme, the section facilitates the new scheme, to which I am opposed. It creates a distinction between those to whom the new scheme will apply and those to whom it will not apply because they were working in the public service previously. The United Left Alliance opposes the new scheme because it disimproves the pension entitlements of ordinary low and middle income public servants. I oppose the making of this distinction because it facilitates an overall attack on public service pensions.

Deputy Stephen S. Donnelly

I would love to see much freer movement of people between the Civil Service and public sector generally, on the one hand, and the private sector, academia, politics and so forth, on the other. This brings us back to the point made by Deputy Mary Lou McDonald. My understanding of subsection (3) is that if a civil servant decides to work in academia or finance, for example, in London, before returning to the Civil Service after five years, he or she will be subject to the new pension scheme on his or her return. There is a significant difference in value between the new and old pension schemes, although we do not know its precise actuarial value. This provision will act as a major disincentive for existing public sector workers, including those who may work in the sector for the next 40 years. It will act as a brake and deter them from moving into academia, politics, the private sector and so forth. What are the Minister's views on the issue?

Chairman

To recall what the Minister stated earlier, the provisions are based on a severing of employment. This section does not contemplate circumstances in which a person takes a career break or moves on secondment to a university for the purposes of carrying out research. The employment must be severed, in other words, it is P45 land.

Deputy Stephen S. Donnelly

It will also apply where a public servant severs the employment.

Chairman

Yes.

Deputy Stephen S. Donnelly

If a civil servant decides, having worked for five years in the Department of Finance, to move to London to work in finance and subsequently returns to Ireland to work in the public service, for example, in Forfás, he or she will re-enter the public service under the terms of the new scheme. Is that correct? This means a person who wishes to pursue a dynamic career in which he or she moves in and out of different sectors will be penalised. Such dynamism is evident in other countries but not here and is extremely important.

Deputy Brendan Howlin

The Chairman put the matter well. It depends on the nature of the severing. Having examined the issue, I would like to encourage greater movement in and out of the public service. While such movement is common, it is not as common as I would like. I am reminded by my colleague that he was on secondment in London for three years. Such secondments are the norm and will not be affected by the 26 week threshold. I am developing schemes to allow for such circumstances.

One of the issues to arise in my discussions with employers is their reluctance to allow staff to move to the public service for longer than 12 months because in such circumstances their staff lose contact with the parent firm. That is the advice I have been given. We are trying to construct schemes to allow private sector staff to voluntarily enter the public service and public servants to be placed in business to gain experience. We could have schemes that do not sever the relationship with the public service.

In the case of a public servant who enters academia, he or she may remain in the same single scheme if the post is still in the public service. As such, the issue to which Deputy Stephen Donnelly alludes may not arise. When people leave the public service definitively, they must understand the new scheme will apply if they return subsequently. The timeframe needs to be understood.

Deputy Stephen S. Donnelly

I encourage the Minister to ensure that whatever flexibility finally emerges, it will facilitate an official of the Department of Finance who is offered a position by, for example, Morgan Stanley in New York. He or she should be able to take up the position, acquire fantastic employment experience and return to the public service after five years.

Deputy Sean Fleming

I ask the Minister to clarify whether the new scheme will apply to a person who has been in the public service for 20 years, leaves for a purpose other than taking up a post on secondment and returns to the public service more than six months after the date of leaving. The purpose of the amendment was to extend the six month threshold to 18 months and, in the case of Deputy Mary Lou McDonald's amendment, two years. We wanted to facilitate a longer break and allow such persons to return to the public sector under the old scheme.

I am a little amused by some of the points being made by Deputies on this side in objecting to politicians being allowed to return under the old arrangements, while seeking to allow civil servants to leave the public service and return under the old scheme. This is a slightly contradictory position.

Deputy Brendan Howlin

That is the tyranny of consistency.

Deputy Sean Fleming

The Minister gets my point.

Deputy Richard Boyd Barrett

I am consistent.

Deputy Sean Fleming

Last night I met a former Deputy who informed me that he was delighted to be employed as a special needs assistant in a local school. I will not mention the location. Public servants change occupations within the public service. A public servant of 20 years' standing could decide to leave the public service before returning to an entirely different post. If a person returns to the public service after five years, I assume the new arrangement will apply to the employment from that point onwards and that previous contributions will be preserved. When he or she retires-----

Deputy Brendan Howlin

The preserved benefits will obviously be available.

Deputy Sean Fleming

He or she will have two elements to his or her pension.

Deputy Brendan Howlin

It will be a hybrid.

Deputy Sean Fleming

No losses will be incurred. I raise this issue because people frequently misunderstand what is said in debates of this nature. Some public servants might now be concerned that if they left and came back later on, all of their years would be based on the new arrangement. I would like it clarified that this is not the case.

Deputy Peter Mathews

No, it is not. It is not like snakes and ladders; one does not go back to the beginning.

Deputy Sean Fleming

I have seen debates on these committees before, where the view is put out through the short-hand reporting that has to happen in the media. That might put the fear into some public servants that they will lose their good pension entitlements, to which they have already contributed and have accrued, if they left for a period and came back later.

Chairman

It is a preserved benefit. It is a property right.

Deputy Sean Fleming

We are taking that as granted, but one might not get that impression from listening to the debate. People might think they are going to lose if they leave and come back-----

Deputy Peter Mathews

The Deputy could describe it as a ratcheted modular pension.

Deputy Sean Fleming

That is a very difficult explanation of it.

Deputy Peter Mathews

If a person leaves the Civil Service after 20 years, goes to Morgan Stanley for five years and then comes back to the Civil Service, can the secondment involve being paid by Morgan Stanley?

Deputy Brendan Howlin

Yes.

Deputy Peter Mathews

Then it is ideal for everybody.

Chairman

We could go ourselves.

Section 10, as amended, agreed to.

SECTION 11

Deputy Sean Fleming

I move amendment No. 38:

In page 19, between lines 10 and 11, to insert the following subsection:

"(5) The Minister shall publish a full list of allowances which shall be classed as pensionable under the scheme.".

We touched on this earlier and it is in connection with these allowances. I have asked the Minister to publish a list of allowances that shall be classed as pensionable under the scheme. It is a very reasonable request. What are we talking about here?

Deputy Brendan Howlin

I have already addressed this issue. I am currently reviewing all pensionable allowances, some of which are a misnomer as they are actually wages. When that review is concluded, those allowances that are pensionable will be pensionable under the new provisions and those that are not will not be. There is no need for a list. I am certainly not in a position to have an exhaustive list of what is pensionable until the review is concluded. We can have that debate when the review is concluded, but it is not germane. We are talking about allowances that would be regarded as pay and as appropriate for pension purposes. It might be an allowance for a Minister, for a principal teacher, or for a Garda officer, in addition to their basic pay. For a Minister, the allowance is additional to his pay as a Deputy, while the allowance for the principal is in addition to that of his or her basic teacher salary, and so on.

Deputy Sean Fleming

I know about those things that have been called allowances but are really part of a salary, but they are not what I am talking about. I accept the Minister's point without going into the detail of the allowances, but surely that is a straightforward element of their review. There must be some other slightly more complicated allowances out there. If this legislation became operative, I would be worried that they would be considered pensionable and the review might change the status of some of the allowances. There is no point in having this review if it does not change the status of any of the 800 allowances. I am referring to the allowances that are currently deemed allowances, may be eligible under the scheme as it stands, but when the review is compete in the days, weeks and months ahead they might not be deemed as eligible. The allowances I am talking about are those that will be caught when the designation is changed.

Deputy Brendan Howlin

Once it is changed, the designation is changed automatically. Unless it deemed to be pensionable by me, it will not be deemed to be calculable for pension purposes under this scheme. I do not need to have a list for such allowances, because such a list would not be exhaustive in any event.

Deputy Sean Fleming

I thought the Minister has an exhaustive list available.

Deputy Brendan Howlin

I do, because I have not made the decisions on it, but I will be publishing them. There are allowances notionally on the Statute Book that are not paid to anybody anymore, and there are classes of employment in the public service that are not in existence any more. All of those will be dealt with. However, it does not impact on the process here, which simply allows for certain allowances to be calculated for pension purposes, but those allowances will be those that we deem to be calculable for pension purposes.

Deputy Sean Fleming

They might be deemed to be allowable today under the current review, and they will-----

Deputy Brendan Howlin

That will not restrict my-----

Deputy Sean Fleming

It might cost the Minister more to buy them out in six months if he includes them here.

Deputy Brendan Howlin

That is why I would rather not have a list for the Deputy.

Deputy Sean Fleming

Therefore, there is an issue. Some of them that are deemed pensionable now might not be deemed pensionable before the year is out, and by including them in this Bill, the Minister will strengthen the case of those who are looking for a higher level of compensation to give up these allowances. I am arguing here in the interests of protecting the taxpayer.

Deputy Brendan Howlin

I know what the Deputy is doing, but I would like to be clear about this because I do not want any confusion to arise. All I am doing is to provide legally for the calculation of certain allowances for pensionable purposes that are properly part of pay and should be so calculated. The Deputy is asking me to draw up the specific list of those, but I do not want to do that. I do not think it is appropriate in legislation.

Deputy Peter Mathews

Is it a question of trying to have the argument about qualification of allowances now or later?

Deputy Brendan Howlin

We will have the debate about allowances separately. I have had discussions with colleagues, including with the Minister for Education and Skills, about looking at allowances in a different way, but that is for another day.

Deputy Peter Mathews

So long as we can define them now as being substantively remuneration allowances.

Deputy Brendan Howlin

That is what I intend. There is no point in talking in the abstract until we see what they are. I do not want pension entitlements to accrue to payments that we would not, by broad agreement, consider to be remuneration. I am now going to tread in dangerous waters by opening up a debate here, but there are some things that have become pensionable in recent times that are pay, but are not core pay.

Deputy Peter Mathews

They are bonuses.

Deputy Brendan Howlin

That is a debate for another day.

Deputy Richard Boyd Barrett

Does this change the way in which allowances are treated in the scheme in this Bill when compared with the way they were treated before? That is what I would like to know.

Deputy Brendan Howlin

That is a fair question. In essence, the answer is "No". Any allowances deemed pensionable up to now would be pensionable in this scheme, but if I cease to designate them as pensionable, they will not be pensionable.

Deputy Richard Boyd Barrett

That decision will be taken later. It is not taken as a result of this Bill.

Deputy Brendan Howlin

Correct. The decisions I make, or the Oireachtas makes, on the current review will not be the end of it. There might be another review in 12 months' time which will not require an amendment of this legislation. It is just that other things might not be deemed pensionable in the future.

Deputy Sean Fleming

When the review is completed, if an allowance that is deemed pensionable now is not deemed pensionable by the Minister in six months' time, it will be taken off the list for the new scheme and the current scheme.

Deputy Brendan Howlin

The Chairman made the point about this. If somebody has a preserved pension entitlement already accruing, we cannot abolish that. It is the augmentation of that, once we de-designate it, that would cease.

Deputy Sean Fleming

So the Minister is saying that if an allowance is deemed not to be pensionable in the future, there will be no further contribution.

Deputy Brendan Howlin

Sorry?

Deputy Sean Fleming

If I understand correctly, what we are saying is that if there is a pensionable allowance that is deemed by the Minister to be non-pensionable in six months' time, it will not be included under the scheme for new entrants. What has been accrued to that point will be retained, but there will be no further contributions in respect of that allowance or further pension rights accruing. It will be preserved up to the point of de-designation.

Deputy Brendan Howlin

That is exactly the case.

Deputy Richard Boyd Barrett

For clarification, in the legislation that governed the previous scheme, did the Minister designate pensionable allowances?

Deputy Brendan Howlin

No.

Deputy Richard Boyd Barrett

So how was that governed?

Deputy Brendan Howlin

It is covered in a myriad of statutes.

Deputy Richard Boyd Barrett

What I am trying to figure out is whether there is anything new in this.

Deputy Brendan Howlin

No.

Deputy Richard Boyd Barrett

Is it new that the Minister will have the ability to designate in this way?

Deputy Brendan Howlin

No. What was deemed to be pensionable was decided in bilateral negotiations, wage rounds and so on. It was done in primary legislation, in wage agreements and by statutory instrument. There was never a comprehensive list in any Act that one could look at.

Deputy Mary Lou McDonald

Is it the case that the Minister can designate or de-designate an allowance or premium payment in writing? I am just trying to get a sense of the process.

Deputy Brendan Howlin

It depends on the individual allowance. We will have to look at the legal basis for any-----

Deputy Mary Lou McDonald

Section 11 states: "The Minister may in writing reverse, amend, adjust or otherwise change a determination to which this section relates but any such reversal, amendment, adjustment or change shall not affect rights accrued in respect of previous contributions". We have that point about previous contributions. What does it mean that the Minister can do that in writing?

Deputy Brendan Howlin

The first part of section 11 relates to existing allowances. The second part deals with future allowances and how things will be done. What was the question?

Deputy Mary Lou McDonald

It specifies here that the Minister can make these changes in writing. What does that mean? Does he write to the persons in receipt of the pension?

Deputy Brendan Howlin

That is a very good question. To whom do I write?

Deputy Mary Lou McDonald

There is no mechanism such as a statutory instrument.

Deputy Brendan Howlin

No; it is not meant to be an order. The idea is that it is not an oral order; it is a written order within my Department that is minuted and therefore available in public.

Deputy Mary Lou McDonald

That gives the Minister extraordinary discretion, does it not?

Deputy Brendan Howlin

It is the discretion enjoyed by the Minister for Finance since the enactment of the Ministers and Secretaries (Amendment) Act last year by me.

Deputy Mary Lou McDonald

That is extraordinary. For right or wrong - we will have a debate on that - the Minister has his list, and he will go through it deciding that this or that allowance is a bit outdated or wondering where a particular one came from. That is okay. These allowances have been built up through the various processes that the Minister has identified, such as wage rounds.

Deputy Brendan Howlin

One cannot act arbitrarily in this regard. A Minister would not act in an arbitrary fashion. He would obviously engage in some discussions, as we have done, on these matters. The allowances have been built up in the past, for good reason in many cases - in the vast majority of cases - and there are compelling cases to be made for them. I have asked for a business case for all of them. Whatever decision I make on each one, I will need to have some justification. It is not a matter of my deciding to write a letter to somebody and abolish a certain allowance in a capricious way.

Deputy Mary Lou McDonald

In fairness, I am not attributing that motivation to the current Minister. However, as we read the section, there is nothing to prevent precisely that kind of arbitrary action.

Deputy Brendan Howlin

I would say a significant resistance from the people directly affected might be part of it.

Deputy Richard Boyd Barrett

My question is along the same lines. We can only understand whether this represents a significant concentration of power in the Minister's hands if we compare it to how this matter was dealt with in previous legislation. Then we can know whether this is a change. How was the subject of allowances and whether they were pensionable dealt with in previous legislation, and what were the powers of the Minister in that regard?

Deputy Brendan Howlin

The powers available to the Minister for Public Expenditure and Reform are no different from those available currently to the Minister or those that were available to the Minister for Finance before the enactment of last year's Ministers and Secretaries (Amendment) Act. In terms of how individual allowances became pensionable, that was a matter for negotiation in wage rounds. Often, a deal was reached; to solve a problem, a particular payment was made pensionable, ultimately by agreement with the Government, although it could have been done through a statutory instrument by a line Minister such as the Minister for Education and Skills. That is how it has applied up to now.

Deputy Stephen S. Donnelly

Could the Minister, in the next few days or within a week or two, provide a factual list of all allowances that are currently pensionable through the various agreements he just mentioned?

Chairman

It might be more appropriate to seek that information through a parliamentary question.

Deputy Stephen S. Donnelly

I can do that, but while we are here, I am asking the Minister.

Deputy Sean Fleming

That is what I have asked for in my amendment - the full list of allowances.

Deputy Brendan Howlin

I thought I had given a reasonable answer to Deputy Fleming's proposal. I do not want to draw up a comprehensive list as part of this legislation when I am reviewing all allowances.

Deputy Stephen S. Donnelly

But this is public domain information. There is nothing confidential about it.

Deputy Richard Boyd Barrett

It could be controversial, though.

Deputy Brendan Howlin

The only thing that is controversial is what should stay and what should go.

Deputy Stephen S. Donnelly

Exactly.

Deputy Brendan Howlin

To assemble a comprehensive list of allowances was interesting, as I said. There are allowances on the books that are not payable to anybody because certain categories of employee within the public service do not exist any more. We are talking about allowances that exist notionally. There are things that might have been appropriate at a time when we had different transport arrangements or a different geographical focus. All of these things are under review.

Deputy Stephen S. Donnelly

Is the Minister refusing to-----

Chairman

The Deputy must speak through the Chair. There is an amendment before the committee, which I will put once Deputy Fleming decides whether he wants to press it.

Deputy Sean Fleming

Yes.

Chairman

It is not a question of refusals. There are ways of eliciting information, including through parliamentary questions. Does the Deputy wish to press the amendment?

Deputy Sean Fleming

We have not yet finished discussing it.

Chairman

We can discuss it for as long as the Deputy wishes, but we must talk about the amendment.

Deputy Mary Lou McDonald

So, in writing, the Minister can reclassify, or whatever the precise terminology is, an allowance or premium payment. There is no place there for any kind of Oireachtas oversight of that process.

Deputy Brendan Howlin

There are parliamentary questions and debates of all kinds.

Deputy Mary Lou McDonald

That is all right, but the Minister simply has unilateral authority to classify or declassify allowances. There may be good grounds for doing so in some cases, but I am talking about the process, which is vested in the Minister, in writing, through no specified procedure.

Chairman

Just for clarification, there is a conciliation and arbitration scheme under which all of these matters are dealt with. I am simply intervening to establish that this is the case.

Deputy Brendan Howlin

Absolutely. All of these things go through a public service conciliation and arbitration scheme. Even when doing a circular within my own Department, we have a departmental staff council which has an input into any changes I make to the running of my own Department.

Deputy Mary Lou McDonald

I am not gainsaying that. I am pointing out the fact that it is a real flaw in the drafting of the Bill that some kind of brake or check on things is not specifically provided for. I have not moved an amendment to that effect, unfortunately.

Chairman

I was going to point that out to the Deputy, but she has pointed it out herself.

Deputy Mary Lou McDonald

The Chairman does not have to. I just wanted to say that it strikes me as a significant omission.

Deputy Sean Fleming

We are getting down to the real issue. The amendment before us consists of one sentence: "The Minister shall publish a full list of allowances which shall be classed as pensionable under the scheme." There is probably a timing issue because the Minister is currently working on it. How will he be sure he has included all of the allowances? As he said, one would be amazed at some of the allowances that are out there. He might tell me about that process.

As an Opposition spokesperson who is sitting at this committee today to deal, on behalf of my party, with the new pension scheme, I am just asking for the list. I am not asking the Minister to comment on it. Have the public sector trade unions been given this list? They must have. I want the same treatment for the Oireachtas that the Minister is giving to non-elected people. The Minister has just mentioned the conciliation process. I do not believe this process can be under way without the circulation of such a list to quite a lot of people who represent the public sector. All the Opposition is saying is that we want, on behalf of the Members of Parliament, at least to be given this list. At the end of the process, will the Minister publish the full list of those allowances that are being retained, those that are pensionable, those that are outdated and those whose categorisations have been changed? I believe that list has been circulated by the Government to a large number of people, and all we are asking in this amendment is that the Minister provide it to Members of the Oireachtas. I have asked for the list through parliamentary questions, and I have got the standard answer that the Minister will make a statement when the review is completed. That does not give us the list. It is a most reasonable request.

Chairman

The amendment is-----

Deputy Sean Fleming

It asks for the list.

Chairman

Sorry. The amendment does not state that the list should be given to Members of the Oireachtas; it states that the Minister shall publish it. We should be clear on what the amendment says.

Deputy Sean Fleming

I do not mind how he publishes it.

I was listening to the Minister earlier, but the more I think about it, the more I know the list is out there. There is no point in our being here, as an Opposition, if the Minister can walk over to his office and sit down with members of trade unions and discuss the list that he will not discuss with us. What are we doing here at all?

Chairman

We have the point.

Deputy Brendan Howlin

Let me be clear. I have not given this list to anybody. The list of allowances has not been circulated to a wide group of people. I have asked the line Departments to give me a list of all allowances that are payable under their remit, and they have done that. I then asked the line Departments to give me a business case for each allowance, and they have done that. It is my intention to publish the full list of allowances and the full list of business cases supplied for them - some adequate, some rather inadequate; members can make their own judgments in that regard - once I have concluded my deliberations and the Government has made a decision. Right now, however, both the list of allowances and the business cases are in a document that is being prepared for Cabinet. Once the Cabinet has made its decision, as is the norm, it will be presented to the Oireachtas and made public.

Deputy Sean Fleming

The Minister is saying he has asked the Minister of each line Department to work on the list for his or her own Department and present the business cases to him. Has that been discussed with the representatives of the public servants who are in receipt of these allowances in each Department?

Deputy Brendan Howlin

No, not yet.

Deputy Sean Fleming

What is the process for bringing this to a conclusion?

Deputy Brendan Howlin

I am bringing it to Cabinet.

Deputy Sean Fleming

The full list?

Deputy Brendan Howlin

Yes, with my recommendations.

Deputy Sean Fleming

Then each line Department goes back and discusses it with the trade union representatives at that stage?

Deputy Brendan Howlin

Yes.

Deputy Sean Fleming

Then, when that process is finished and conclusions agreed, Departments-----

Deputy Brendan Howlin

There will not necessarily be agreement on it.

Deputy Sean Fleming

Can this be done without the agreement of the public sector unions?

Deputy Brendan Howlin

Yes, of course.

Deputy Sean Fleming

Where does that fit in with the Croke Park agreement, if the unions say some of these are pay issues and the Minister says they are not?

Deputy Brendan Howlin

That will be a matter for debate.

Deputy Sean Fleming

I would still like to see this list.

Chairman

We understand that you would, but the Minister says he is not disposed to providing it.

Deputy Brendan Howlin

I do not have it with me.

Deputy Peter Mathews

Having listened to the discussion from all quarters, I am reasonably happy that section 11 addresses the current and future status of the allowances after the operative date, because it does a couple of things. It states that all pension entitlements that have accrued to date under the existing schemes are protected. That is the important thing. Even if the Minister changes his mind after the operative date, as Deputy McDonald pointed out, it will be within the correct structure that is envisaged in this legislation, and anything that has been agreed to that point is protected. The principle is that there is no dilution or diminution of the benefits that have accrued to date. For the sake of practicality, there are so many different types of allowance and remuneration that one could actually collapse the overall structure by pointing to one minute element of a list. It could be the snowflake that causes an avalanche. That is not practicable either. There is actually an in-built balance, a self-regulating balance, that protects the benefits accruing to date.

Deputy Brendan Howlin

I agree with what Deputy Mathews said. He has made a fair point. What Deputy Fleming wants is a debate on pensions, which is separate from what we are doing here.

Deputy Sean Fleming

We can delete the section and come back to it separately some other day.

Deputy Brendan Howlin

No, I will not be deleting the section. Two elements of this section should be acknowledged. It deals with the status quo, but in subsection (2) it also deals with the future. This is the first time conditionality is being imposed in law on allowances that are deemed to be pensionable. That is important.

Deputy Richard Boyd Barrett

Could the Minister say that again?

Deputy Brendan Howlin

It sets out, in subsection (2), a new conditionality for any allowance to be regarded as pensionable into the future.

Deputy Mary Lou McDonald

Are the conditions-----

Deputy Brendan Howlin

The Deputies can read it.

Deputy Sean Fleming

The conditions are that the allowance must be permanent and subject to contributions and the scheme member must have been notified of its being so treated.

Deputy Peter Mathews

The architecture is actually sound.

Deputy Brendan Howlin

Absolutely.

Deputy Richard Boyd Barrett

The more I listen to the debate, the less I am convinced. I am afraid I disagree with Deputy Mathews on this, as much as I agree with him a lot of the time. For example, the section states that the allowance should be permanent in nature, but without having a list of the actual allowances, we do not really know whether that is a good distinction.

Deputy Brendan Howlin

I am afraid I am completely lost on that.

Deputy Richard Boyd Barrett

The legislation states that for an allowance to be pensionable, it must be permanent.

Deputy Brendan Howlin

Yes. It is not a once-off payment.

Deputy Richard Boyd Barrett

Yes, but without having a full list of the allowances-----

Deputy Brendan Howlin

That is a conceptual idea.

Deputy Richard Boyd Barrett

If the Minister does not mind, I will continue. Without a full list of allowances, we cannot see potential grey areas between once-off and permanent allowances, which almost certainly exist. It may be precisely in these grey areas that controversy and conflict will arise over how workers see certain allowances; they may see them as permanent while the Minister sees them as not permanent. I am concerned that we do not have the full list and the only reason we do not have the full list-----

Deputy Brendan Howlin

This section only refers to allowances into the future so there is no list for these.

Deputy Peter Mathews

Section 1 deals with the current status and section 2 deals with the future status.

Deputy Brendan Howlin

Therefore, there is no list for future allowances-----

Deputy Peter Mathews

The employee will be notified that it is permanent. It will be known-----

Deputy Richard Boyd Barrett

Exactly, because the Minister has not negotiated them nor designated them because he is still involved-----

Deputy Brendan Howlin

I cannot give the Deputy a list for future allowances that do not exist.

Deputy Richard Boyd Barrett

Yes. I understand but-----

Deputy Peter Mathews

We are tired.

Deputy Richard Boyd Barrett

Yes, that is probably the case. However, in my view, we should have a list in conjunction with this Bill.

Deputy Brendan Howlin

I cannot have a list of things that do not exist; it is in the future.

Deputy Mary Lou McDonald

There are established allowances and premium payments-----

Deputy Richard Boyd Barrett

Absolutely.

Deputy Mary Lou McDonald

I would imagine there will be a natural follow-through from those falling under the old scheme into the new scheme. I think the Minister is stretching it by saying-----

Deputy Richard Boyd Barrett

In my view the list should be there.

Chairman

This is Committee Stage.

(Interruptions).

Chairman

Please allow Deputy Boyd Barrett to finish his contribution.

Deputy Richard Boyd Barrett

On the power that is being vested in the Minister to designate or not to designate, the Minister stated earlier that these would be subject to negotiation and to the public sector conciliation service and so on. Why is this not referred to in point four? This does not make that power vested solely in the Minister, subject to those things. It does not specify it. We just have it on the Minister's good word that he will ensure that proper consultation procedures will be used. However, we only have the Minister's word for this and another Minister might choose not to do so. The legislation proposes that the Minister may simply designate with the stroke of a pen whether certain allowances which workers currently enjoy, will be pensionable or not and it does not have that qualification by caveat.

Chairman

This may be a matter for the committee but it seems to me that the debate is becoming somewhat repetitious. I think we have covered ground several times over. I do not doubt that this is an important issue but we are going over the same ground back and forth at this point. I think we should proceed but I am in the hands of the members. Does the Deputy wish to press the amendment?

Deputy Richard Boyd Barrett

I think the points have been made now.

Chairman

I am not criticising anyone; I just remark that we have been dealing with this amendment-----

Deputy Richard Boyd Barrett

We are just teasing it out.

Chairman

I think the debate is becoming quite repetitious but I am still in the hands of the members. It is Deputy Fleming's amendment.

Deputy Sean Fleming

I wish to press the amendment. I have asked for a simple list of allowances which will be classed as pensionable income under the new scheme. The Minister says he cannot provide such a list. I am not happy with the response.

Amendment put:

The Committee divided: Tá, 3; Níl, 7.

Tá

• Donnelly, Stephen S.
• Fleming, Sean.
• McDonald, Mary Lou.

Níl

• Conaghan, Michael.
• Feighan, Frank.
• Howlin, Brendan.
• Mathews, Peter.
• Murphy, Eoghan.
• Tuffy, Joanna.
• White, Alex.

Amendment declared lost.

Section 11 agreed to.

Progress reported; Committee to sit again.

The select sub-committee adjourned at 6.45 p.m. until 2.30 p.m. on Wednesday, 27 June 2012.