I welcome the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and his officials.
Public Service Pensions (Single Scheme) and Remuneration Bill 2011: Committee Stage (Resumed)
SECTION 12
Question proposed: "That section 12 stand part of the Bill."
We concluded the last meeting with a vote on the list of allowances. Was that amendment to this section?
No. Amendment No. 38 was to section 11.
It was defeated and that was the end of the matter. Are we still on section 11?
No. That section was also disposed of; the question on it was put after the division on the amendment.
I intend to table a Report Stage amendment on the general issue we discussed previously, if it is feasible to do so.
Question put and agreed to.
SECTION 13
Amendment No. 39 has been ruled out of order because it involves a potential charge on the Exchequer.
Amendment No. 39 not moved.
Amendment No. 40 was discussed with amendment No. 29.
Amendment No. 40 not moved.
I move amendment No. 41:
In page 19, subsection (3), lines 36 and 37, to delete all words from and including "to" in line 36 down to and including "retire" in line 37 and substitute the following:
"to provide for either or both an age and a maximum service limit (however expressed) at which any class or classes of public servants could or is required to retire or be retired or discharged".
Amendment agreed to.
Section 13, as amended, agreed to.
SECTION 14
I move amendment No. 42:
In page 20, subsection (2)(b), lines 23 to 25, to delete all words from and including “in” in line 23 down to and including “be,” in line 25 and substitute the following:
"in accordance with section 1(1)(a) of the Superannuation (Prison Officers) Act 1919 (inserted by section 5 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004) or section 10 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004, as the case may be,”.
Are we not covering Deputy Stephen Donnelly's amendment?
There is no amendment.
Section 13 was being opposed.
No one indicated that when I put the question on section 13.
Why was the amendment not called?
Opposition to the section had been signalled, but there was no amendment.
This is a technical amendment to correct a legislative cross-reference in the Bill, as published. The Bill referred to irrelevant sections of the 2004 Act and did not reference the 1990 Act. We have been advised by the Parliamentary Counsel that this should be corrected.
Amendment agreed to.
Question proposed: "That section 14, as amended, stand part of the Bill."
The United Left Alliance is opposing this section primarily because it refers to section 25. There is a technical amendment consistent with our opposition to that section which deals with the extra contributions required from fire fighters, prison officers, members of the Garda and persons in similar categories who must retire earlier because of the nature of their job. They are being required to make extra pension contributions under section 25. This section refers to the same issue and on that basis we oppose it.
That has nothing to do with the section. We will deal with the relevant section when we get to it. Section 14 refers to normal pension age. Certain workers in the public service have fast accrual pensions. They include fire fighters, members of the Garda, Army personnel and Members of the Oireachtas. Proportionately, fast accrual is reflected in the increased contribution required from those to whom it applies. By comparison with the private sector, it is still a good deal.
We will deal with the matter when we come to section 25.
Question put and agreed to.
Section 15 agreed to.
SECTION 16
Amendments Nos. 43 and 49 are related and will be discussed together.
I move amendment No. 43:
In page 21, subsection (2), lines 5 to 7, to delete all words from and including "Other" in line 5 down to and including "members" in line 7 and substitute the following:
"In respect of Scheme members to whom section 19 relates, the rate of contribution”.
These amendments make minor changes to harmonise the text with the inclusion of the line in the table of contribution rates for ordinary non-fast accrual.
Single scheme members who are dealt with in section 19. Amendment No. 49 simply lists the accrual rates for ordinary single scheme members - the people who do not have fast accrual - primarily for completeness and information purposes. Amendment No. 43 is an independent consequential amendment on this inclusion.
Amendment agreed to.
Amendments Nos. 44, 47, 86 and 87 are related and may be discussed together by agreement.
I move amendment No. 44:
In page 21, subsection (2)(b), lines 13 and 14, to delete “as adjusted when not
working on a full-time basis" and substitute "as adjusted".
These amendments are for technical for drafting purposes. The phrase, "when not working on a full-time basis" is proposed for removal to avoid repetition within the clause and changes that harmonise the wording in other sections so there is no meaningful change, simply a textual change.
Amendment agreed to.
Amendments Nos. 45 and 48 are cognate and may be discussed together by agreement.
I move amendment No. 45:
In page 21, subsection (2)(b), line 15, before “hours worked” to insert
"number of".
This is a technical drafting amendment to bring about consistency of expressions with other sections of the Bill. The purpose of the changes is to write better English.
Amendment agreed to.
I move amendment No. 46:
In page 21, subsection (3), line 19, to delete "which".
This is a minor drafting change in page 21, to delete the word, "which".
Amendment agreed to.
I move amendment No. 47:
In page 21, subsection (3)(b), lines 29 and 30, to delete “as adjusted when not
working on a full-time basis" and substitute "as adjusted".
Amendment agreed to.
I move amendment No. 48:
In page 21, subsection (3)(b), line 31, before “hours worked” to insert “number of”.
Amendment agreed to.
I move amendment No. 49:
In page 21, between lines 41 and 42, to insert the following:
"
|
Persons to whom section 19 refers |
3.5% |
3% |
".
Amendment agreed to.
I move amendment No. 50:
In page 21, between lines 44 and 45, to insert the following:
"
|
Persons to whom section 23 refers who hold office on a basis which is fully insured for social welfare purposes |
7% |
6% |
|
Persons to whom section 23 refers who hold office on a basis which is not fully insured for social welfare purposes |
- |
13% |
".
Amendment agreed to.
Amendment No. 51 in the name of Deputy Donnelly has been ruled out of order as a potential charge on the Exchequer.
I ask the Chairman to explain that ruling.
The consequence of taking this amendment would be a potential charge on the Exchequer because it seeks to remove the provision whereby public servants who are entitled to retire earlier have to make higher contributions, thereby preserving the same level of eligibility with lower contributions. It would lead to a higher cost which would be a charge on the Exchequer and only a Minister can make a proposal to amend legislation or to introduce legislation that constitutes a charge on the Exchequer. That is a constitutional provision which none of us has any means of changing, at least, not here anyway. I rule the amendment out of order for those reasons.
Amendment No. 51 not moved.
I move amendment No. 52:
In page 22, subsection (4)(a), line 11, to delete “member’s contribution” and substitute “member’s contributions”.
This is a drafting amendment.
Amendment agreed to.
Amendments No. 53 is consequential on amendment No. 54 and they may be discussed together by agreement.
I move amendment No. 53:
In page 22, subsection (5), line 14, to delete "All contributions" and substitute "Subject to subsection (9), all contributions”.
These amendments are connected. The Central Bank is part of the euro system and is an independent body under the Treaty on the Functioning of the European Union which states in Article 130 that national central banks must not be interfered with by national governments. In particular, the Central Bank's guaranteed independence means that it must pay its staff itself. I have had discussions with the European Central Bank on this matter but in order to give comfort to the European Central Bank, who issued an opinion on this legislation which we sought, the amendments make clear that the Government will not, for example, use Central Bank pension contributions for other financial purposes. This amendment, therefore, serves to uphold the independence of the Central Bank of Ireland. It ensures in particular that the Central Bank cannot be liable for financial pension contributions for single pension members other than those in respect of its own staff.
The definition of the Central Bank and its scope has changed over the years. Speaking from recollection, we have dealt with legislation governing the Central Bank and the Financial Regulator in the past. They were separate bodies but they are now under the remit of the Central Bank. In addition to the Central Bank staff, are the staff of the Financial Regulator, Matthew Elderfield's section, included in this provision? The Central Bank is in the process of taking over consumer protection in financial matters which were formerly dealt with as consumer protection by a different Department. Some of these matters will now be dealt with by Mr. Elderfield. Will this legislation allow staff who are employed in the consumer protection agency and who now be working on consumer rights in financial services be absorbed? What is the definition of which staff are included now and in the future? The remit of the Central Bank can change over the period and this legislation will not have any financial impact until almost 40 years hence when new recruits are retiring in the future, by which time there may not be an Irish Central Bank. It is hoped there will be a real European Central Bank at that stage. What number of staff work in the Central Bank because the staff numbers have increased significantly, even though there are fewer banks to regulate?
I will not trespass into the area which is the remit of my colleague, the Minister for Finance, Deputy Noonan. I will confine myself to what is encompassed by the Bill. This is pensions legislation and we are part of a monetary union whose central bank is the European Central Bank, a division of which is the national Central Bank of Ireland. We have expanded the number of people in the Central Bank on foot of a number of oversight recommendations from groups such as Nyberg, who have made particular proposals about strengthening the oversight role. We have also reversed some of the decisions to break up the Central Bank made during the light touch regime of a former Government. Deputy Fleming is correct that the Financial Regulator is now part of the Central Bank structure. In fact, Matthew Elderfield is a Deputy Governor of the Central Bank. All of the Central Bank staff, including Matthew Elderfield and his people, are covered by this provision as is anyone who is by definition an employee of the Central Bank. To be clear, I am advised that this legislation will only impact on new entrants.
The Financial Regulator is charged with the regulation of several financial products, including insurance and a wide variety of issues. I understand matters such as hire purchase agreements are not regulated. The regulator only regulates institutions which take deposits. Many financial institutions in the financial area do not take deposits.
Those are questions the Deputy needs to ask of the Minister for Finance.
I do not wish to delay the Minister but it is a fair point. The role of the Central Bank, as it touches on the role of the regulator and also on consumer affairs and the regulation of the insurance industry and God knows what as the years go by, may be expanded-----
That is a matter the Deputy can properly explore with the Minister for Finance, the scope and function of the Central Bank. My job is to ensure that those who are employed by the Central Bank are covered under the provisions of this Bill. There was an issue to do with ensuring the statutory independence of the Central Bank system and this is the purpose of this section of the Bill.
There is no harm in flagging a matter of interest.
Who regulates debt collection?
I have no idea.
The Central Bank does not.
Every bank is a debt collector of some sort and the Central Bank regulates the banks. Does the Deputy mean unofficial enforcers? I will leave it to the Minister for Finance, Deputy Noonan to answer that question.
I was just wondering if it was a role of the Central Bank because debt collection is, sadly, becoming big business.
Deposit-taking institutions are regulated but institutions which do not take deposits are not regulated. Hire purchase, for example, is not regulated because it does not involve the taking of deposits.
I am anxious not to stray from the subject matter of the Bill.
To clarify, are debt collectors subject to these pension obligations?
The definition section sets out the categories of persons covered by the provisions of the Bill. Does Deputy Richard Boyd Barrett have any other issues to raise in regard to amendments Nos. 53 and 54?
Amendment agreed to.
I move amendment No. 54:
In page 22, between lines 42 and 43, to insert the following subsection:
"(9) Where this Part has been applied to the Central Bank of Ireland in accordance with section 6, then—
(a) contributions made under this section in respect of Scheme members who are employed by, or hold any office or other position in the Central Bank of Ireland shall be dealt with in such manner so as to ensure that those contributions are only available for the purposes of the payment of any pension or lump sum to or in respect of the service with the Central Bank
of Ireland by such Scheme members, and
(b) the Central Bank of Ireland shall not be liable for any pension or lump sum in respect of any employment by, or holding of any office or other position in, a public service body other than the Central Bank of Ireland.”.
Amendment agreed to.
I move amendment No. 55:
In page 22, between lines 42 and 43, to insert the following subsection:
"(9) Scheme members shall be entitled to purchase years of notional service and the Minister shall publish purchase tables and the rate of contribution for notional service before the enactment of this Bill.".
This amendment seeks to allow members of the new single pensions scheme to purchase years of notional service and asks that the Minister publish details of the rates of contribution for notional service before the Bill is enacted. Many teachers, for example, come to teaching later in life and will not qualify for the 40 year pension. I will not mention the names of the various insurance companies involved, but many such teachers choose to enter into a private scheme of additional voluntary contributions, AVCs. These contributions are deducted, with the consent of the Department, directly from the teacher's pay and transferred to the companies concerned. Many of those who opt to make these additional contributions to bring their pension up to the full amount on retirement are finding that the schemes offer very poor value and that the level of commission charged is high. It would make far more sense if public servants in that position could supplement their pension contributions by purchasing additional notional service directly from their employer - that is, the State - rather than having to go through a third party. If that could be done, the tables should be published in order that people would know how much they would have to contribute and what their entitlement would amount to at the end of each year.
The Deputy made a similarly compelling case when we discussed this issue on the previous occasion. As I told him at the time, I agree that this type of purchase arrangement is a useful facility which should be facilitated. It is, in fact, facilitated under section 18(b) of the Bill which states referable amounts, as provided for in the Bill, shall include “any other money as represents the transfer value of certain amounts that may be accepted on terms approved by the Minister”. This will allow for the purchase of additional pension entitlement by way of a purchase arrangement that will be made available to staff. It is my view that such arrangements should be overseen on an administrative rather than legislative basis. The Bill contains an overarching enabling mechanism, but the detail will be worked out administratively. I anticipate that the options will be to purchase additional pension amounts by lump sum, either in one moiety or over time.
It should be noted that the single scheme is based on the accrual of money amounts towards pension and lump sum. That is the whole basis of the new pensions scheme. It effectively represents a discontinuation of service - in other words, years - as a measure of superannuation titles. This means that rather than purchasing future years of service, employees will be buying a monetary amount and adding that amount to the value of their pension. It would be incompatible with the design of this new scheme to insert a service-based element in respect of the purchase of benefits. I cannot, therefore, accept the methodology set out in the Deputy's amendment, although I agree there should be a provision for augmenting one's pension through direct action.
The Deputy referred to AVCs which are a private vehicle for topping up one's pension. That option will always be open to people, with various companies designing private schemes for various public service groups - teachers, gardaí and others - to supplement their public scheme provision. It is appropriate that there be a mechanism for people to supplement their pension by depositing additional monetary value into the scheme or by way of independent private schemes which might prove more attractive over time. Decisions in this regard are a matter for each individual.
On the last occasion the Deputy asked whether teachers could purchase additional service. The current position is that they can, in accordance with Department of Education and Skills Circular 0129/2006 which sets out the rules applying to such purchases. I take the opportunity to correct the record on the issue of the provision made for serving or former Oireachtas Members in the public service superannuation scheme. The Deputy has correctly said the age threshold was retained at 50 years for these persons when the new scheme was introduced, contrary to what I had incorrectly indicated on the basis of the speaking note provided for me. I hope this clears up any confusion on that point.
I do not propose to press my amendment, given that there seems to be some agreement on the principle that people may purchase additional service by way of a lump sum which, moreover, may be administered on a monthly basis rather than all in one go. However, I remain somewhat confused by some of the specifics the Minister mentioned. Will he clarify if I understand it correctly, that the facility will allow someone to purchase an additional monetary amount but not additional years of service?
Yes, the actual pension is not determined by years of service.
Will the Minister explain that philosophy? He is saying that under the current regime teachers can purchase additional years. People tend to understand their pension entitlement in years of contribution, with 40 years being the full provision. The Minister is seeking to change this, which, by the way, is not necessarily a bad thing. Will he clarify, however, how the number of years in employment will no longer be the determining factor?
We are undertaking a fundamental restructuring of the scheme. Up until now, all public servants worked towards a notional 40 years of service. There were fast accruals and other variations, but the basic premise was that one aimed for 40 years of service, after which one received a pension equivalent to 50% of one's final salary which was adjusted into the future with reference to the remuneration of current incumbents of the position one held at retirement. In very broad, vulgar strokes, this is the regime that has applied up until now. Employees who would fall short of the 40 year term could opt to purchase additional years in certain circumstances, as set out in the specific schemes.
The basis for the new scheme is quite different, being based not on the number of years of service but the amount of money contributed. In other words, one has a monetary value assigned to one's pension fund for every year one works, with the career average worked out on retirement. This will constitute a person's pension provision which will be benchmarked against the consumer price index. Again, this is a broad-brush representation of the replacement model. Employees can purchase additional provisions in the amount of two 80ths for every year worked. Purchasing an additional extra five years under the old scheme would amount to purchasing ten 80ths under the new, monetarised scheme.
I thank the Minister for his explanation. I understand there is a mechanism in place, whereby persons transferring within the public service - say, for instance, a member of a fishery board or the board of a VEC transferring to another body or into the general Civil Service - can bring across their existing pension egg by way of a lump sum payment into their new pension scheme. According to what the Minister has outlined, this transfer will be reckoned in terms of value of pension rather than length of service. Will people coming in from the private sector also be able to bring with them a lump sum or will any such arrangements require the involvement of designated bodies, as is currently the case?
There are two aspects to this. First, what we are introducing will be a single integrated public service scheme. Unlike in the past, when someone moved from one organisation to another, it will now be a single, seamless scheme. As a result, people's pensions and contributions will remain unaltered as long as they remain in the public service.
Are the commercial semi-State organisations excluded in this regard?
I am about to deal with them, the private sector and what happens if someone is outside the public sector scheme. It will be a separate scheme and a person will bring with him or her whatever he or she has contributed previously and this will be parked. He or she will then contribute to the new scheme. If someone wishes to augment his or her contributions under the new scheme, he or she can monetise his or her previous value and buy into the new scheme or he or she can use other cash at his or her disposal to do so.
If a person brings a lump sum with him or her and if this is surrendered to the relevant authorities and placed in the fund, I presume the 1% that applies in respect of the fund will accrue.
A person will be buying into the scheme. The regulations relating to the scheme will be published when they have been drafted. This is why I stated we are going to do that administratively rather than in the primary legislation. What is important is that people will know exactly what they are going to get for their money.
For clarification, it would not necessarily follow that money which is bound up in a private pension - in other words, that which is associated with a person's private sector employment - could be liberated.
The rules of the relevant pension fund would apply in that instance. The Pensions Act would cover that to some extent but there are huge restrictions in terms of what can be moved.
Absolutely. As the Chairman is aware, that is one of the matters we are considering in the context of the pressures on mortgage holders. We are attempting to discover whether people might obtain access to some of the moneys involved. The Chairman is absolutely correct. In the vast majority of cases involving people who move from the private into the public sector, the preserved benefit would be parked and this would be paid out when they reach normal retirement age. I am merely referring to what would be the position if there was a mechanism whereby people could liberate their money. In such circumstances, the capacity to supplement the public scheme will be there.
The Minister is dealing with it at the receiving end rather than at the other end.
For clarity, the relevant fraction will be one 80th. My mathematical ability let me down. Under the old scheme, a person could get 50% of his or her final salary if he or she had 40 years' service. After that, he or she would receive 40, 80ths. In other words, a person accrues one 80th per year of service. I apologise for misleading the committee in that regard.
One of the points made in the digest relating to the Bill is that professionals transferring into the public sector are losing the ability to buy service which was available under the old scheme. I am not disagreeing with the change in this regard, I am merely stating that it is going to make it less attractive for professionals to join the public service. In the past, people may have taken pay cuts in order to transfer to the public service but they may have enjoyed much better pension arrangements. Would it be possible for the Minister to supply the committee with a table on which could be listed a few examples? If it will make matters easier, I could submit a parliamentary question in this regard. The digest relating to the Bill merely shows what the position would be for someone on €80,000 per year under the old scheme and the new one in the context of his or her pension. It would be useful if the Minister's officials could provide a few worked out examples of what would be the position in respect of people joining the public service at age 40 or whatever. Would it be possible for such examples to be provided in order that we might come to grips with this matter in the context of seeing the real numbers involved?
I will try to supply what the Deputy is requesting before Report Stage.
I thank the Minister.
Just for clarification, it is one 40th per year of service in the context of the final salary.
The contribution is one 80th. If, therefore, a person works for 40 years, he or she will receive 40, 80ths of his or her final salary. In other words, it is one half.
So a person who works for 25 years in the service would receive 25, 80ths.
Yes, that is the position in respect of the norm as opposed to that which relates to fast accruals.
So it is one 80th for every year of service up to a maximum of 40, 80ths.
Which is one half.
Is that what a person contributes?
No, that is the accrual rate. The contribution is fixed. A person gets one 80th of salary per year of service up to a maximum of 40, 80ths. This is the norm to which I am referring. When a person retires following 40 years' service in the public service, he or she normally gets-----
That is the position now. It is not the position with the new scheme.
No. As I have explained, the new scheme operates on a completely different basis.
I wish to clarify the position in the context of the scheme for teachers. On the shift from calculating on the basis of final salary to a career average method, will this have an implication in terms of how the scheme will be structured?
No, this is the old scheme. Anybody who is in the old scheme will remain in it.
Yes, they will continue with this. Career averaging is that it does exactly what is says on the tin, namely, it supplies an average across one's entire career. If, therefore, a person has climbed the career ladder to whatever point and if he or she buys further years of service, I presume that this will be more expensive than if he or she had bought in at a lower point. If their are no regulations in place, this would obviously skew matters. The entire purpose of the scheme is that the final pension payment will be a reflection of the average one is paid across one's career.
As I explained to Deputy Sean Fleming, people will no longer be buying years.
I know but it will be monetised at a particular level.
There will be a limit to what people can buy and this will be laid out in the regulations. If a person has five years' service, it will not be possible for him or her to buy a Rolls Royce pension by investing a wad of money.
Essentially, that is what I was asking.
There will be limitations imposed. The final design has not been completed in this regard but it will more or less mirror what is currently in place in the context of the ability to supplement. People who are a number of years short of a full pension and who wish, during the course of their careers, to ensure that their retirement is catered for in a little better fashion will be allowed to supplement their funds by making cash contributions. The details in this regard will be set out in the regulations. The enabling provision is contained in section 18 of the Bill. I will happily discuss the regulations with members once they have been drafted.
Amendment, by leave, withdrawn.
Question proposed: "That section 16, as amended, stand part of the Bill."
If a person transfers in from the private sector and if he or she invests €100,000 in his or her new public sector pension, will the State match this or make an additional contribution?
My next question relates to the table contained in section 16(3)(b), which relates to the contributions paid by public servants.
We have already dealt with that section.
No, we are actually on section 16 now.
I beg the Deputy's pardon.
Why are the contributions of individuals in the bottom three sectors listed in the table lower than those of the people in the other sectors? Is it the position that the people in the groups to which I refer will receive lower pensions? Will they not get half of their final salaries because they will be contributing less?
The Deputy can see from the table those who comprise each cohort. The reason that the contribution rates of those to whom he refers are lower is because they are integrated into the social welfare pension scheme. These individuals make PRSI contributions and the two pensions are aggregated into one. The bottom two groups comprise those who are required to retire early, namely, people who serve in uniform within the State - gardaí, Defence Forces personnel, prison officers and firefighters - and who are not normally allowed to remain in the public service as long as others.
The question is why do they pay so much less and contribute so much less of a percentage of their wage while they are there? Uniformed groups pay 3.3% versus 13% paid by those elsewhere.
No. They also pay a stamp. In calculating what they get, the social welfare proportion of it is integrated into the pension and their entitlement is less. They pay for that component that they get in terms of social welfare separately through a full stamp. If the Deputy reads through section 25-----
No. I understand who they are. I am just trying to understand the numbers. If we take the people on 4.3% or 3.3%, they pay about 9% less but PRSI is not 9%.
The Deputy can see how they are aggregated. If the Deputy looks at column 2, he will see they pay 5.7% plus 4.3%. That is the section 24 people-----
I beg your pardon.
-----and the section 25 people pay 4.2% plus 3.3%.
The difference is PRSI.
The difference is PRSI.
The logic being that if any of us pay PRSI, we have access to the State pension.
The contributory pension.
I thank the Minister for that.
I do not know if this has been done but would it be possible to get a table of the nominal employer contributions? I know these are not done as-----
We will do that.
From an actuarial basis, it could be calculated.
Yes, but, in fairness, we have a huge amount to do in the Department.
Let me explain why I think it is important.
We can all see why it is important but the question is whether the Minister is in a position to produce it.
I am not in a position to start working on that. It would be informative and all the rest but we have an enormous volume work to do in our hard-pressed Department to start to undertake that sort of work. I would have to contract it out and I am not going to spend money doing that.
If the Minister is not going to do it, he is not going to do so, but this is critical legislation dealing with public sector pay for the future. How much is the State contributing to public sector pensions? It is a fairly fundamental question.
The Deputy is right about this. We know the cost of pensions and the projected cost of these pensions but the Deputy is asking for a notional employer's contribution per individual.
At an aggregated level.
I would refer the Deputy to section 40. He will note that when the new scheme is up and running the Minister may from time to time carry out an actuarial review or a review and revaluation of the scheme or any part of it. The Deputy will note from section 40(2) that the actuarial-----
What page is that?
Page 43. I am probably completely out of order in referring to different sections. The drill down of figures the Deputy is talking about is envisaged and encompassed there. The Deputy will note from section 40(4)(c) that the cost of membership of persons or any class of persons and the contributions paid by those persons and the contribution made by the State in respect of those persons can be some of those matters that are reviewed at that stage.
If a review was taking place, that might be the occasion when that information could be extracted. Is that the point the Minister was making?
We will be looking at that.
We will have a final word on this.
It also something that is periodically done in any event by the Comptroller and Auditor General. I do not know whether the Deputy is a member of the Committee of Public Accounts but it is a matter he might examine. I understand that the last set piece evaluation of pensions and costs was done by the Comptroller and Auditor General in the 2009 special study on pensions. It might be worth having a look at that.
I thank the Minister for that.
On a final note, I guess part of the role of this committee in scrutinising this legislation is to determine whether these pensions are good value for money for public sector workers.
That would be more the work of the Committee of Public Accounts, the idea here is to examine the robustness of the legislation.
We are setting up a scheme.
Okay. In considering the scheme-----
It is fair.
-----it would be useful to know how comparable it is to, say, private sector contributions of 5%, 10% or 15%. If it turns out that the nominal employer contribution is 2% or 3%, it would seem this is not a good deal for public sector workers. If, on the other hand, it is at 25%, it would seem this is not a good deal for the State. It is a pretty important ratio for us to understand.
The Deputy is right to that extent but what we are doing is setting the framework and no doubt there will be evaluations and tweakings on this. I accept that within section 40 there is the possibility of a fundamental review. It will be reviewed no doubt by the Committee of Public Accounts on foot of reports that are brought to it from the Comptroller and Auditor General on costs, variations and so on. Like any legislation, certainly any pensions legislation, I have no doubt that sections of this will be revisited.
This legislation is not just a framework for pensions, the mathematics, numbers and percentages are in this.
This is the scheme.
This is the scheme. On the basis that the mathematics is in this legislation which is before the committee, it seems relevant to this committee.
I have no doubt that it is relevant, I think it is highly relevant but we are dealing with Committee Stage, Second Stage have been taken in the Dáil. I agree with the Deputy that members have to inform themselves as best they can in order that they can be in a position to agree or not agree with what is proposed, but this would need to have been done in advance in some way. I am not going to press the Minister on the spot for that information when the section comes up for debate.
I understand that.
Certainly if it had been signalled-----
I accept that is the disadvantage of giving prior notice of this.
-----in advance, I would probably feel I could help the Deputy more on it.
I understand that.
What the Deputy is asking for is relevant and I wish I could put my hand up myself, but even I got a team of actuaries in here to do it, how would they know pay rates, inflation rates, numbers employed and numbers not employed into the future for the next 40 years?
They do it all the time. That is exactly what they do.
It would be a snapshot. We are putting a framework in place and once it is robustly put in place to the best of our ability it will be actuarially analysed with great frequency into the future.
Given that the mathematics, benefits and contributions are set into the legislation, we can figure out afterwards what it will cost the State but my concern is that at that point it is too late.
I have set out what it will cost and what the savings will be.
No. I mean in nominal terms to understand whether it is good or bad value for the State relative to what other employers put in. We can find out, but it will be after we have already agreed the scheme.
The Deputy wants to go beyond the role of Committee Stage debate on the setting of the scheme. On behalf of the Government, I am proposing a new scheme. The Deputy has to check the legislation, the robustness of it and make any commentary he wishes on it. If he has an alternative amendment, he can puts it forward and we will evaluate it, but we will not have an abstract discussion about the right of the Government to propose an alternative scheme.
No. I am not. That is not remotely what I am saying. All I am saying is that it would be very useful to know what the nominal employer contributions are because this is the scheme we are debating. It is relevant information.
The point is that the Bill was published in September 2011. I am not criticising the Deputy because he is asking some relevant questions-----
It is hard on an Independent Deputy.
-----but in terms of the management of business, it would have to have been signalled in advance-----
A fund is available for such research.
It is a fraction of what other members have.
-----and even if the Minister is a bit pessimistic about whether the information could have been achieved, it certainly could not have been achieved without questions being posed.
I appreciate that. I will stop now.
Is section 16, as amended, agreed to?
Do we not get to comment on the section?
I thought that is what we have been doing for the last while.
I indicated that I wanted to speak on it.
Okay, Deputy.
The Minister might be able to clarify that when we consider this section, as he has outlined it, with people making a monetarised contribution of one 80th-----
The Deputy is confusing the two schemes. Under the old scheme-----
Yes. The old scheme.
-----a fixed percentage of income was determined annually as one's pension contribution and the benefit that accrued to one was one eightieth of one's pay up to a maximum of 40, 80ths in the course of 40 years of service. The new scheme is not time related, it is a whole-of-career based monetary value annualised on a notional basis to determine one's end of service pension rate which is then linked to the consumer price index, CPI.
That is my point. Could the Minister clarify that the contribution level remains effectively the same but that it is no longer linked to what one gets at the end, which creates the possibility at least that it will be based on career average?
No. One has a much clearer notion of what one will get under the new scheme.
No, because, for example, one does not know how fast one will move up the scale.
The point is that one does not have to move up at all because one will get a career average. If one were to enter the Civil Service now as an administrative officer, one would have no idea of what one's pension would be in 40 years' time because one would not know where one would end up and instead of it being related to one's career average, it is related to the position in which one ends up. If one ends up as Secretary General, one will have a much more handsome pension under the current regime than one would if one ends up as a higher executive officer because one's pension is related to one's final salary. Whereas, under the current scheme it is much flatter. In other words, one's career average is determined from one's position, the number of years one has contributed and the monetary value of one's contribution as an administrative officer, higher executive officer or principal officer. They are all averaged out and the top element of it is only determined by the number of years one received the pay of a Secretary General. One will receive a flatter and fairer pension in the future. It is a preferable system than for someone's pension rate being determined by the fact that he or she spent six or seven years as Secretary General, and for the pension rate to be based on that.
I wish to tease out the issue so that we are absolutely clear.
We did all of this on Second Stage.
We did.
We made general comments.
We are dealing with section 16.
I seek clarification on contributions by the Minister. If, for example, one enters the public service with higher qualifications and goes in at a more senior level, that means one could enter at a high pay rate and then it would plateau quickly at a fairly high level but someone coming in at clerical officer level might have to work for many years to get to a similar level. When the latter's career earnings are averaged out the pension rate will be dragged down by the fact that he or she started at a low level and was at a low level for a long time. It strikes me that the opposite to what the Minister said is true; that the majority of public and civil servants who enter at fairly low levels will have their pension entitlement dragged down, whereas people who enter nearer the top of the scale will not suffer as badly from the switch to end-of-career figure to the career average. That strikes me as a fairly obvious consequence. Could the Minister explain why that is not the case?
I will.
The Minister might correct me if I am wrong, but an important aspect of how the system works is that the amount one put in and the amount one gets out have a relationship to one another.
The Minister said that in the current scheme one put in one 80th.
No, that is the accrual value of it. It has nothing to do with the amount one contributed.
What does the Minister say to the charge made by some of those representing public sector workers that it is theoretically possible under the new scheme for one to put in more than one gets out?
That is not right. I met the teaching unions who made that case. Will I deal with that issue first?
Yes.
They were counting the pay-related pension deduction, which is the financial emergency measures in the public interest, FEMPI, exceptional pension levy. I counselled the trade unions that it is a dangerous thing for them to argue that it is part of their fundamental pension contribution. It is an exceptional measure. I am required to bring a report to the House, which I will do shortly, on an annual basis to justify its maintenance under financial emergency measures in the public interest. I do not see that emergency levy as a permanent feature of their contribution. It is dangerous for them to argue that it should be calculated as a permanent feature because there are those who would say that is fine. It is only on that basis, and even on that basis in exceptional circumstances, where one could work out a contribution rate that might not be of benefit in terms of one not living long enough to get back the full volume of one's contributions.
Is it not an understandable mistake given that it is called the pension levy?
I am sure people's fears in that regard would be allayed if the Minister were to inform us of when the pension levy would be removed.
I do not know when we will be finished with this emergency. I wish I could abolish the measure now. One cannot have it both ways. It is wrong for one to say it is a pension contribution, as lawfully it is not. I would counsel against people talking it up as such because it will be absorbed into pension contributions, which many would like to see.
There are many arguing that public service pensions are far too generous. I hear those arguments every day of the week.
In the Cabinet?
Certainly not in Cabinet. The first issue Deputy Boyd Barrett raised has gone out of my head. What was the first point he made?
The Deputy said that people at the lower end of the scale-----
No, I understood the point. Deputy Boyd Barrett is incorrect in that respect. By definition, the new scheme is flatter. It is not related to one's end-of-career payment. Therefore, the pension of people who do not progress, who go in and spend the bulk of their career at a relatively stable level - those who are not high flyers - is determined by their career average but the person who goes in and ends up at the top of the tree, who can now get a Rolls Royce pension because - to borrow a phrase from Deputy McDonald - it is determined by their end-of-career salary, will now have that moderated by a full 40 year perspective on what their contributions were. I can provide the Deputy with some examples because they are easier to understand. By definition, this is a much flatter and fairer scheme.
I do not want to labour the point but if somebody enters the public service at a senior level, for example, a county manager-----
Nobody goes in as a county manager and spends 40 years as one.
Yes, but they do not start as a clerical officer either. The point is that they start on a fairly high salary and they finish on an even higher one.
They only have a short period.
Yes, but the pension is based on a career average.
It is applied to seven years.
It is a seven-year career.
They enter at a high level, which most of those who are senior in the public service do. They do not start at the bottom.
Virtually everyone who is a senior civil servant enters at administrative officer level. They work their way up and some get to Secretary General level. Administrative officer level is the graduate entry point at which the vast bulk of senior civil servants enter. There are exceptions. I am trying to encourage people to come into the public service at a later stage in their career. If I opened up the Secretary General's position to external offerings, which I would like to do, and someone were to get such a position, they would only be in the job for seven years. Their pension would be determined by the monetary value of seven years' contributions. It will not be calculated over 40 years.
My last point is a separate one. The amendment has been ruled out of order but I wish to discuss it in terms of the section.
I am sorry, but if it has been ruled out of order it cannot be discussed.
I wish to speak on the section as a whole.
If it has been ruled out of order then it is out of order.
I wish to comment on the section.
Deputy Boyd Barrett should please allow me to make the point. I am trying to conduct the meeting. I am giving him every opportunity. He may speak on the section but he may not make a contribution on the basis of promoting or otherwise dealing with an amendment that has been ruled out of order.
I oppose this section because it includes the increase in the contribution rate for the people on these fast accrual schemes, namely, firefighters, prison officers, gardaí and members of the Army.
And TDs.
I am not worried about the TDs. They should have their pay cut anyway. I am talking about people who do serious, front line-----
This is a very important point. Occasionally, I do get voluntary pay reductions from across the public service, and I will arrange for a voluntary contribution form to be sent to the Deputy if he is minded to make a contribution.
No. I pay the excess of my salary over the average industrial wage to People Before Profit, the United Left Alliance, the Socialist Workers Party and various campaigns.
No. The State pays. The Deputy does not.
It is my salary-----
In that case he cannot talk about disposal of it.
-----and it is our party policy not to give that to the individual to benefit the individual but to pay it into campaigns and organisations that campaign on behalf of working people against the Minister's austerity measures.
And no doubt the Deputy makes a full disclosure of those contributions to the Standards in Public Office, SIPO. I must check.
I call Deputy Mitchell.
I have not finished making my point. The Chairman allowed the Minister to go off on a tangent.
Finish the point on section 16.
The SIPO has nothing to do with the salaries.
All donations to political parties should be declared.
Yes, of course, and they are within the limits. However, the issue I raise is that because of the nature of the job done by these categories of public sector workers who have the right to retire early - firefighters, prison officers, gardaí and so on - they are already paying a higher contribution rate for the pensions they receive and, therefore, this is further penalising them with a higher contribution rate. Is it not correct that they will be paying more to get less because they will also be subject to the career average provisions of the new scheme? That is what they think anyway.
To deal with the Deputy's first point that all his contributions are within SIPO guidelines, I am very interested to know that. A TD is paid approximately €93,000 a year and the average industrial wage is approximately €35,000, therefore, it is a personal contribution of about €58,000.
After tax.
That is half the-----
The limit of personal donations is considerably-----
It is about €6,000.
After tax.
It is £5,000, or whatever that is in euro.
Yes, it is about €6,000.
Is that all the Deputy contributes to his party?
It is €6,000 to People Before Profit, €6,000 to the Socialist Workers Party, money to the United Left Alliance, money to the campaign against household and water charges, and money to local community organisations. That is all perfectly legitimate.
If those are all declared it is perfectly legal. I am sorry. I-----
If the Minister wants to have a closer examination he can look at my website which has accounts of where the salary goes.
Excellent. It is very transparent of the Deputy.
Very transparent. I wish the rest of the Members would do the same.
I am anxious to move on to Deputy Mitchell who indicated some time ago, and Deputy McDonald. Is there anything else to be said in regard to Deputy Boyd Barrett's contribution?
No. I am sorry to-----
To be honest, Chairman-----
The Minister did not reply to the point.
We are now designing a scheme that will relate the contribution more closely to the benefit. It is self-evident that if one reaches a pension through fast accrual, as a member of the Defence Forces, a member of the Garda Síochána or a Member of this House, one's contribution should be more significant because one is paying over a shorter period to get a benefit quicker.
They were doing that already.
I wanted to clarify something about which Deputy Boyd Barrett spoke. The benefit of having a career average is that it stops the practice of promoting people in the last three months of their employment, which in my experience was widespread in the local authorities, which is the area I would know best. Far from having seven years in a job, as the Minister suggested, some of them did not even have seven months yet they retired on a retirement pension based on their salary in the last three months in some cases. There would be rapid promotion in the last few years of their employment whereas there was no such benefit for those on the lower scales. It was a dreadful practice. It meant also that promotion was for the wrong reason and the wrong people were coming to the top.
The merit of career averaging is that it stops the Rolls Royce pensions at the very high level. That is a strong argument in favour of that method. However, it is fair to say that everybody across the board will lose something because the scale will be flatter. I assume the Minister has run the figures and that, relatively speaking, he figured out what is the loss for the person who spends their entire career at a clerical officer grade as against those who might move further up the system. Has the Minister run those figures and does he have-----
By definition, the Deputy is right. People who are on flat career averages, for example, a nurse who does not want to be a matron or a staff nurse, someone who spends their life as a nurse, will be relatively unaffected by this new scheme. Similarly, the career average for someone who goes in as a garda and who does not become a sergeant or an inspector but retires as a garda would be very flat and would be relatively unaffected by that. Similarly, a clerical officer is relatively unaffected. The people who will be affected most will be the high flier who goes from administrative officer to Secretary General or from garda, and apparently one must be a garda to enter the Garda Síochána, which is a little odd in itself, to Commissioner. Instead of that person's Commissioner salary determining his or her pension forever, it will be based on his or her career average, namely, the period of time one is a garda, a sergeant and right through.
We have done some profiling of it. It is immeasurably more advantageous for those on a flat career as the ones I have mentioned. They are relatively unaffected by this whereas there is a very significant reduction for those who have a high trajectory.
I appreciate and acknowledge that. That stands to reason but what does the Minister mean when he says that those on the flat career trajectory are relatively unaffected?
It goes back to the point I made in my answer to Deputy Donnelly. It is very hard to be prescriptive. One can only do a notional estimate, as actuaries would do, of what the profile would be over time, adding in a notional inflation aspect on that but if the Deputy is interested we can run some numbers for her.
Yes. It would be of interest to me and obviously of interest to people who would choose to enter the service in the future and who are-----
We will select a few career paths and send that information to the secretariat but they would only be indicative
That is very useful.
That would be very useful.
It would be the mirror of what the Deputy is talking about. It is probably easier to achieve.
Question put and agreed to.
SECTION 17
I move amendment No. 56:
In page 23, subsection (2), line 7, to delete "the Scheme contributions" and substitute "his or her contributions".
It is simply a drafting amendment to delete "the Scheme contributions" and substitute "his or her contributions".
Amendment agreed to.
Section 17, as amended, agreed to.
SECTION 18
At the outset I mentioned that there were some typographical errors on the amendments list members were given. This is an example of where it arises. Amendment No. 57 should state "to insert 23* before the existing 23 in the Bill and not after. Does that make sense? It is on page 9 of the list where it states "Section 18". Where it states: "In page 23, line 35" the word "after" should be changed to "before". The same applies in amendment No. 58. Instead of reading "after 23, to insert 23,*" it should read that it be inserted before 23,*. The word "after" is being changed to "before" in both of those cases. Is that understood?
SECTION 18
I move amendment No. 57:
In page 23, line 35, after "23," to insert "23,".
Amendment agreed to.
Section 18, as amended, agreed to.
SECTION 19
I move amendment No. 58:
In page 23, subsection (1), line 47, after "23," to insert "23,".
Amendment agreed to.
Amendments Nos. 59, 65, 69, 73 and 78 are related and may be discussed together by agreement.
I move amendment No. 59:
In page 24, subsection (1), line 1, after "subject to section 51" to insert the following:
"and upon application being made to the relevant authority"
Amendments Nos. 59, 60, 73 and 78 are all technical amendments. The scheme provides for a pension to be payable upon application, as is the case at present for public service pensions. I am advised that formal provision should be made to require individuals to apply for their pensions.
That is perhaps understandable.
I note the line "and upon application being made to the relevant authority".
That is the current practice.
Is there provision for refusing the application?
Only if the applicant is not entitled to it.
The legislation requires individuals to formally apply for their pensions. Is it a requirement that the pension be granted?
No. The current situation is that an individual must apply for a pension if he or she believes she or she is entitled to one. This saves us from monitoring and chasing down those who might be entitled to a pension.
The onus has been put on the individual to chase his or her own pension.
He or she must apply for it. The corollary is that applying for a pension does not convey a pension. One must be entitled to the pension to receive it.
The onus is being removed from the employer to provide a pension to staff who reach retirement age and the applicant will be required to apply to the relevant authority.
It is exactly the same as the requirement that currently obtains.
Be that as it may, we are discussing a new scheme. What if an individual forgets to apply for medical or whatever reasons and subsequently realises that he or she was not paid a pension for the preceding 12 months? It is similar to social welfare benefits in that some people do not know they are entitled to payments. I could envisage a situation whereby an individual assumed he or she would get the pension and because he or she was in receipt of a gratuity or additional holiday pay, only realises at the end of the year that he or she never received a pension. Is the money lost if individuals do not apply for it?
No. I cannot imagine many public servants who have worked 40 years forgetting to apply for their pensions when they retire. This provision avoids a situation in which the State must be mindful of everybody who might be entitled to a pension.
Should the State not know?
The State does its calculations on the basis of those who apply. There are complicating factors, however. We discovered when I introduced the increased levy on top pensions that pensions were not aggregated. For example, the Department of Education and Skills might not be aware that one of its staff is also entitled to a pension from the Department of Defence. The requirement on individuals to apply for their pensions has always been in place but if somebody is late for health or other reasons, his or her full entitlement would accrue when he or she finally applies. In the event of death, spouses, children and civil partners can also apply.
I could envisage a situation in the case of a death that one spouse thinks the other had applied. Will the pension be backdated in such circumstances?
That is what the Minister said.
I presume in the normal course of good management practice, individuals do not simply walk away from their desks one day. Their retirement would be preceded by a period in which they are informed of these matters. Deputy Fleming raised an interesting issue but it is probably more relevant in the event that the primary pension claimant is either incapacitated or deceased. I am sure that would be catered for in the normal course of events.
Absolutely. The vast majority of people profile their entitlements well in advance of retirement.
Amendment agreed to.
Amendment No. 60 has been tabled by the Minister. If members agree to amendment No. 60, amendments Nos. 61 to 63, inclusive, cannot be moved because they are alternative amendments to amendment No. 60.
We can discuss them together, however.
We can do so but I have to indicate to members that it will be not be possible to move amendments Nos. 61 to 63, inclusive, if they agree to amendment No. 60.
As I noted, amendments Nos. 61 to 63 are alternatives to amendment No. 60. Amendments Nos. 66, 70, 72, 74 and 79 are related to amendment No. 61. Amendment No. 80 is related to amendment No. 60. Amendment No. 81 is an alternative amendment to amendment No. 80. Amendments Nos. 81a, 81b, 82a and 82b are consequential on amendment No. 80. Amendments Nos. 60 to 63, inclusive, 66, 70, 72, 74, 79, 80 81, 81a, 81b, 82a and 82b will, therefore, be discussed together by agreement.
I move amendment No. 60:
In page 24, subsection (1), lines 3 to 14, to delete paragraphs (a) and (b) and substitute the following:
"(a) an annual pension equivalent to the sum of the referable amounts in respect of each calendar year or part of a calendar year for the pension,
and
(b) a lump sum payment equivalent to the sum of the referable amounts in respect of each calendar year or part of a calendar year for the lump sum.”.
The intention of this amendment is to remove the benefits cap set out in the Bill as published, which would impose a special ceiling on pensions and lump sums of half pay on net final pay and of 1.5 times final pay on ordinary non-fast accrual on members of the single scheme. I engaged in detailed discussions on this matter with public service unions and they made a strong case for removing the cap in light of exceptional circumstances where individuals who made contributions might find their final pensions unnecessarily abated. I do not think the cost to the State is such that I need to persevere with the cap and I am minded to accept the arguments made by the trade unions.
Due in particular to its career average design, benefit accrual in the new single scheme will not usually approach the half pay limit. This means that a true half pay ceiling is unlikely to be breached by ordinary scheme members and, therefore, the cap can be set aside without imposing an overly large burden on the State. A cap could on occasion impose an unwarranted stalling of accrual or even a reduction of already accrued referrable amounts in cases where public servants made job switches to lower paid positions late in their careers. This sometimes happens where an individual wants to step down to a lower position with less responsibility but does not want to retire. That should not be discouraged and I listened to the case made by the trade unions that it is desirable in terms of fairness and labour market flexibility to provide for that option. Where feasible, I want to allow people to step down in late career if they so wish. I believe this is a sensible decision if we are going to push the age of retirement upwards. By contrast with current public service schemes, pension accrual in the new single scheme will not stop after 40 years. As long as one works in the public service one is accruing benefits and adding to one's pension. On that basis, the retention of a half pay based pension limit, as featured in the scheme, is not appropriate.
The Bill as published provided that a career average pension will not exceed 50% of final salary. The proposal was made in the context of this figure being the existing limit and because the Bill also introduces for all existing public servants a clear public service wide cap of 40 years of service that can be pensionable. However a final salary link of the type proposed could be unfair to those who in late career step down in terms of grade or job responsibilities. Accordingly, I am proposing to remove cap in this amendment without creating the risk of accruing significant additional costs to the State. The cap will be retained for certain categories, including office-holders, politicians and judicial fast accrual classes because, given the longer expected service implicit in the higher pension ages provided for the Bill and the higher accrual rates for these groups, a long serving office-holder could conceivably otherwise breach the half pay limit.
The argument made earlier that I am providing more generously for office-holders then for the average public servant is reversed in this proposal but I think it is a fair amendment. The removal of the ceiling on pay is explained by a number of key factors, including in particular the absence of the historical 40 year limit on accrual and the reality that ordinary non-fast accrual members of the single scheme are unlikely to breach pension and lump sum accrual ceilings based on the traditional 1.5 times lump sum and half pension. The amendment simply removes the proposal in the Bill to limit the pension that could accrue based on half pay. There will be exceptional circumstances in which people will have worked long enough to breach that cap and I will allow that to happen except in cases of fast accrual.
I support the Minister's proposal, which is similar to my amendment No. 62. My amendment proposes to remove from consideration the final post occupied by the individual concerned. If amendment No. 60 is passed I have no problem with my amendment not being moved because it would have the same effect.
Two questions arise in respect of the Minister's proposed amendment. Will there be a reduction in the contributions paid by those who stepped down a grade? The new paragraphs in the amendment appear to say the same thing.
Paragraph (a) refers to pension and (b) refers to the lump sum.
I ask the Minister to explain the reference to "calendar year". The outcome of the previous debate was that we should no longer be thinking about years because it is now a question of the amount of money contributed rather than 40 years of service. Why has the calendar year re-emerged?
That is the time period within which we calculate the referrable amount.
I ask the Minister to explain that. The reference to the calendar year is confusing me.
For every year an individual works he or she will make a notional contribution to the pension pool. We have to book-end the reference period.
I understand.
I see the merit in accommodating the scenario described by the Minister, particularly given that people will be working longer. However, in setting a clear cap on pensions my amendment would not discount this scenario. The amendment would set a maximum of €60,000 for pensions. This is a generous ceiling even if it falls far short of the Rolls Royce arrangements that currently exist. The Minister removed the cap for reasons that are fair but it will no longer be limited to the specific circumstances to which he referred. It will take account of those circumstances but it is not limited to them. I am concerned not only that my proposal to set a cap of €60,000 will be unacceptable to him but that the arrangement has been loosened in a way that could be taken advantage of by workers who do not step down a grade.
The Deputy raised a number of important questions. In regard to the proposal to introduce a cap of €60,000, it is not appropriate to pick a figure to be included in primary legislation governing pensions which will only begin to be paid in 40 years' time. I do not know what €60,000 will look like 40 years from now. The principle of the Deputy's proposal is to reduce pensions. The programme for Government introduced what I regard as a better formula in this regard by limiting tax supported pension contributions in either the public or private sector to €60,000. We have not yet found a mechanism for putting that into effect but we continue to consider it in the context of finance Bills. Such a formula would not be appropriate in this legislation because we are devising a new scheme which provides that net benefits in 40 years' time will depend on contributions. I do know what currency we will be using in 40 years' time.
It will not be the euro anyway.
I do not know what the value of money will be at that time. One cannot include a notional figure based on what seems like a reasonable pension today. Who knows what €60,000 will be in 40 years' time? I accept the principle of putting a ceiling on public pensions but we have to find contemporaneous ways of achieving the objective rather than lodging it into this Bill.
In regard to whether the removal of the ceiling on half pay will allow certain categories to receive generous or Rolls Royce pensions, I am excluding fast-accrual pensions from the amendment. Those who can accrue a pension more quickly, such as politicians, gardaí and members of the Defence Forces, will not be subject to the exemption.
Where is that exemption made?
They are not referenced in the amendment. The caps will remain for those categories. Amendment No. 60 removes the cap for the categories set out in section 19, namely, non-fast accrual public servants.
I have just been advised that gardaí are not subject to the cap. I may have misled the committee. The fast accrual categories for which the cap continues to apply are Members of the Oireachtas and the Judiciary.
Just the politicians and the judiciary.
There are other office holders who are linked to these categories. I can provide the exact reference.
Are Secretaries General included?
The relevant office holders include the Director of Public Prosecutions, the Ombudsman, the Master of the High Court, a county registrar, a member of the Labour Court, a member of An Bord Pleanála, a member of the Competition Authority, a director of the Environment Protection Agency, a Revenue appeals officer or a person holding any other office or position in a public service body who the Minister, having consulted such person, considers appropriate in analogous circumstances.
Is the Minister referring to section 24?
The Minister argues that we cannot arbitrarily include a figure in this legislation but he sees merit in defining a pension ceiling, whether in the Bill or elsewhere. My frustration comes from his response to my repeated efforts to raise the issue of excessive pensions for those who are currently employed in the upper echelons of the public service. He has indicated that he is legally precluded from dealing with the issue because the individuals concerned have an expectation and a legal entitlement. However, when I make a suggestion on a ceiling in the context of this new scheme he offers another argument for why it cannot be done. Not only can it not be done but the capping mechanism is being removed other than a list of exceptions that is not exhaustive and does not deal with all the senior categories. When, where and how do we deal with the question of setting a reasonable cap on pensions in the public service? Notwithstanding career averaging the new scheme could still allow for a scenario in which individuals receive overly generous pensions. I want that issue to be addressed and I am frustrated that road blocks are thrown up regardless of whether our proposals pertain to current incumbents or future entrants.
I accept what the Minister has to say in regard to those who decide to take a step back. There is merit in addressing that scenario but in doing so the exemption is opened to others. I urge the Minister to reconsider because it would have a negative outcome.
I have an open mind but I want to get the principle right. Deputy McDonald has not acknowledged the changes that have already been made. Secretaries General are not entitled to fast accrual, the added years that used to available under TLAC terms have been abolished this year and the severance arrangements to which they were formerly entitled have been discontinued. We have fundamentally altered their pension arrangements.
The Deputy is correct to note that we have taken careful advice. The Chairman, as a competent barrister, will know better than I that pensions are a preserved property right. We cannot arbitrarily change those constitutional rights. We are instead putting in place a new regime that all sides of the House acknowledge as fairer. It is a flatter regime and it will not allow for Rolls Royce pensions. I originally provided for a ceiling but I acceded to the arguments from public service unions by tabling this amendment. If the amendment throws up anomalies I will happily consider them but I think it is fair. I do not see many people breaching the half pay limit. It is somewhat anachronistic at a time when we are replacing references to pay with a contribution based model. Should individuals be debarred from making significant contributions in order to build up a more generous pension? I do not think so on balance.
I ask the Minister to repeat his question.
If a person wants to contribute more over a 45 or 50 year working lifetime in order to provide more generously for his or her retirement, should we cap the final pension? That would run against the structure of the new scheme, which is based on the monetary value of one's annual contributions over the lifetime of work rather than on final salary.
In other words one invests to make one's pension.
Should one be debarred from doing so?
It is not a question of debarring somebody.
Allow me to finish. Deputy McDonald spoke about the €60,000 cap on pensions but she would impose a lower limit of €37,500 on pensions payable to Members of the Oireachtas. I do not know why she believes Members of the Oireachtas should be singled out. There are obviously cheerleaders for doing anything that disadvantages Members but why should their pensions be capped at €37,500 if the people determine that they should be in office for 40 years?
To return to the point at hand, this is not a question of debarring people from making additional contributions to their pensions. The Minister already indicated that he will be drawing up similar guidelines to those which apply in respect of teachers.
The Deputy is referring to the past regime.
The Minister indicated that future regimes will be along these lines. I am not referring to that.
I am not referring to that. I am simply pointing out that the single scheme was intended to perform several functions, including flattening the range of payments, providing greater cost effectiveness and being more equitable and fair.
All of that is true.
My concern is that in the absence of a cap - I have suggested €60,000 because I think it is a generous amount - the system will not achieve the goals set for it, whether through the absence of the 50% rule or the ability to invest additional money into one's pension provision. I am not arguing against the Minister's rationale of accommodating those who step back a grade towards the end of their working life. My problem is that the flexibility will apply to everyone except the categories outlined in section 24. I am sure the Minister recognises the problem.
No, I do not. I invite the Deputy to think about the purpose of the new scheme. This is a single pension scheme.
I know that.
It does not allow TLAC terms for some and not for others. This is a flat scheme. There is no fast accrual or severance pay for senior civil servants. Those who are subject to fast accrual are subject to the cap.
On a point of clarification, is that all of them?
The Garda and Army, as I indicated, are not subject to the cap.
They are not?
They are not subject to the cap.
Are firefighters subject to the cap?
Nor are firefighters. If Deputy Boyd Barrett wants to include them-----
No, I do not.
I am sorry.
I just want to clarify who they are.
The Minister has told the Deputy who is excluded from the cap.
I am proposing that they be excluded, but I am open to listening if there are others the Deputy wishes to include in the cap. My interaction with the trade union movement was fair. The trade unions said this is a new scheme, which moves away from relating end of career pay to level of pension, yet one is arbitrarily picking end of career pay as a ceiling on one's pension despite the move to a different method of calculation and a different timeline in terms of 40 years not being the average length of service any more. That is a fair point. I kept the cap because I want to be fair and I did not want people who are in some categories of fast accrual getting pensions that are more generous than is reasonable. All in all, this is a very fair and balanced set of proposals.
Before I call Deputy Donnelly, may I point out to members that we are discussing amendments Nos. 60 to 63, inclusive? I remind members, in case they feel they are taken short later, that this is also the time for members to speak if they wish to comment on amendments Nos. 66, 70, 72, 74, 79 to 81, inclusive, 81a, 81b, 82a and 82b. There will be no opportunity later to speak on those amendments.
I agree with the Minister's logic in amendment No. 60 on removing the caps. Has he costed the change?
Yes. I asked my officials to go away when we had the proposition to see what would be the impact, and I am told that our best shot at it is that the financial impact is very modest, as I said earlier.
Is the figure a few million, tens of millions or hundreds of millions?
It is a notional figure in 40 years time. It will be a tiny fraction. I think it is best expressed as a fraction of the total liability. It will be a tiny fraction.
Before I call Deputy Boyd Barrett, does anybody else wish to comment on this group of amendments? As nobody is offering, I call Deputy Boyd Barrett.
As with Deputy McDonald, I see the rationale behind removing the cap in so far as it does not penalise ordinary public or civil servants from making some extra contributions, particularly given the fact that they may be working longer. They should be allowed to do that and not be penalised for doing so. That seems entirely reasonable, but I question the way in which the Minister is doing it. First, particular categories are not included and there is nothing in the legislation to prevent those categories getting large pensions. I have mentioned two - Secretaries General and county managers, who are high earners in the public service. In the case of Secretaries General, a group about whom there is a great deal of anger regarding large pension entitlements, if my understanding is correct, there is nothing in the legislation, as a result of removing the cap, that stops them walking away with enormous pensions. I would appreciate if the Minister would return to me later on that point.
I do not have a problem with the vast majority of public or civil servants having a decent pension. I do not have a problem with somebody who is on a fairly low salary throughout most of their career getting a pension of more than 50% of their average pay if they were earning an average of €30,000 to €40,000 per annum. Why should they not have more than that, based on their contributions?
That is my intention.
That is reasonable. On the other hand, it opens it for people who are on very high salaries to make large contributions towards the end and get tax breaks on them. If I am correct, and the Minister can clarify the position, people who make large pension contributions are entitled to tax breaks. It would be a way for people who are high earners essentially to avoid paying a certain amount of tax and walking away with a nice substantial pension.
The Deputy is quite right in that the intention of the amendment is to do that on foot of the request from the trade union movement to address the situation where people who have been in a prolonged career want to step back to lower paid work, but want to have the full value of the contributions made over the total time of their career. I think that is reasonable. I propose to maintain the ceiling, which is fairly arbitrary because why would one have half final salary in the context of this new scheme? However, I wanted to create a ceiling for fairness. The 50% ceiling on final salary will apply, if this Bill is enacted, to the President, all officeholders, including the Attorney General, the Taoiseach, the Tánaiste, members of the Government, the Ceann Comhairle, and Leas-Cheann Comhairle, the people covered in section 24 which are the designated officeholders, including the Ombudsman and so on, the Judiciary and all Oireachtas Members. Who else should be subject to the ceiling? Deputy Boyd Barrett mentioned Secretaries General.
And county managers.
Under this new scheme, the final pension of Secretaries General will not be related to their final salary. Most will be a Secretary General for seven years, but it is their career average salary over 40 year to 45 years that will determine their pension. There is no fast accrual for them. They should not be uniquely penalised because they are in the ordinary accrual category like everybody else.
Let me clarify this point with the Minister. Is he saying that, based on the fact that Secretaries General and similar high paid civil and public servants are not in a category that has fast accrual, they will not retire on a pension above 50% of final salary? If that is the case, I begin to wonder at the possible arbitrariness of some of the grades that have been designated - for example, a person who is a member of the Labour Court. Is that because the person is a judge?
It is analogous to a judge.
A member of An Bord Pleanála is similarly analogous. That is a reasonable point.
Is the Minister saying that he does not think that those groups of highly paid people at the highest level in the public and Civil Service, or others that we may not have thought of, are not going to walk away with more than 50% of final salary as a pension?
No, that will not happen under this scheme.
In respect of the Minister's main objection to Deputy McDonald's cap of €60,000 on pension, I take the Minister's point that we do not know what that figure may mean in 20 years or 30 years time. The advantage of setting a figure of €60,000 - in fact, I would go a bit lower, because who needs more than €50,000 when they retire - or whatever figure we choose, is that it has the advantage of being easily understood and not obscure from the public's point of view. They may have difficulty with an obscure formula because it may be difficult to understand what it means. The public is concerned about people, such as politicians and top level public or civil servants, walking away with massive pensions. What is so difficult about naming a figure that is meaningful now, such as €50,000 or €60,000 and updating it periodically at budget time? It could be based on inflation or just general appreciation of salaries and so on. Would that not be easier for people to understand and more transparent in terms of setting a cap on the amount with which people could walk away?
I come from a different generation than that of Deputy Boyd Barrett, that is, the generation of 1970s inflation. If pensions became subject to even 4% or 5% inflation one would be very fast running out of money and unable to put bread and butter on the table. I ask him to remember that. Inflation is the great killer of pensions because unless they are inflation proofed one is left literally stranded when the tide goes out and one will not put bread and butter on the table. That is what happened pensioners in the 1970s. It was a very real experience.
I agree with Deputy Mathews. I will not plonk a figure in the Bill for tokenistic reasons. We can address the issue of dealing with pensions, and we should not deal with it in the public pensions area alone. We should cap the public contribution to all pensions through tax, but that is to be done separately.
Amendment put and declared carried.
Amendments Nos. 61 to 63, inclusive, have already been discussed with amendment No. 60 but cannot be moved as they are alternatives to amendment No. 60 for the reasons I explained earlier.
Amendments Nos. 61 to 63, inclusive, not moved.
I move amendment No. 64:
In page 24, between lines 46 and 47, to insert the following subsection:
"(3) Where a formula is being used for the calculation of retirement benefits, the Minister shall publish the basis for such formula, prior to the enactment of this Bill.".
This is one of the most important elements in the legislation because a great deal hinges on a figure of €44,944 implicit in this section. The calculation of retirement benefits will be based on a formula, and the formula hinges around a figure in the main section 19, which deals with contributions, but there are different levels of contributions up to 3.74 times the contributory State pension. The contributory State pension is approximately €230 per week, which is €5,000 a month, and 3.74 times that brings it up to a figure of €44,944. The essence of that figure is very important in that it is a figure on which the Minister wanted to put some equalisation or floor in the pension contributions for public servants. My understanding is that 3.74 times the contributory State pension is €44,944, above which the level of contribution changes. There is one level of contribution below that figure and above it there is a higher level of contribution. I understand the Minister's Department went to the Labour Court on this issue.
The Labour Relations Commission.
Yes, the Labour Relations Commission. I know we love to do everything by agreement but as a general principle the Minister's Department, as the employer, came up with a figure. It went to the Labour Relations Commission. We are talking about a financial measure for pensions for years to come and the outcome of this has been decided not on financial grounds but on industrial relations grounds through the Labour Relations Commission. When the Minister's Department was at the Labour Relations Commission as an employer, and the public sector unions were there representing their employees or possible future employees, who was there representing the taxpayer? It is not always the same to wear the employer's hat because an employer's job in those circumstances is to get an agreement. We may not like the agreement but we got an agreement and therefore we can go along with it.
In terms of the purpose of my amendment, if the formula for the calculation of retirement benefits is 3.74 times the value of the contributory State pension, the Minister should publish the basis for such a formula. In this amendment I am asking the Minister to supply to the public, not just to me, how that figure was reached. I am not talking about it being the outcome of a Labour Relations Commission adjudication. That is not adequate. We know that. I want to know the Minister's view, the case he made and, ultimately, the reason he is accepting this particular decision. This is a financial issue, not just a labour relations issue. I am not saying the figure is right or wrong but I do not know the discussions that took place to arrive at it. We should know that because I would call this a fulcrum figure on which a great deal hinges in terms of the calculation of contributions and benefits that will emerge out of this process. The Minister might give us some information on that following which I will pursue the matter with him.
I do not believe the Deputy's amendment is necessary but he did not argue for the amendment. He argued a different case which was to explain the basis for the calculation figures in the Bill. The Bill sets out in section 19 how the calculation is done. To be blunt, I am proposing a figure. The Deputy can agree or disagree with it. I do not have to give the rationale for the way Government arrived at that figure. It was a figure we worked out that is reasonable. It was a figure that went to the Labour Relations Commission. My Department was represented there as employer and as a representative of the taxpayer. We listened to the case. We made our own case, and this is the figure I am now proposing on behalf of the Government that I brought to Government and on which the Government settled. I can give the Deputy a briefing note on it that might lay it out for him but it is only the technical impact of it.
On the reason we picked that 0.58% of the scheme's pensionable remuneration for that year and the actual numeric value of each one, I cannot justify every single figure and say it should have been a percentage point one way or the other. This is what I am proposing, and I believe it is fair and reasonable. It is what the Government has agreed and is what I am proposing to enshrine in the Bill.
I am genuinely amazed that the Minister, Deputy Howlin, is telling this committee, which is discussing the future pension rates for public servants, and where this figure of €44,944 has been extracted as 3.74 times the contributory State pension, that he does not have to give its members the rationale for what he is doing. I am surprised by that response. The Minister sounded arrogant, although that may not have been his intention. He just said, "Here is the figure". He is telling us he does not have to explain the rationale for how it was arrived at.
No. It is not-----
What are we doing here if the Minister believes there is no-----
Perhaps I did-----
The Minister sounded arrogant.
I did not intend to be that but I was taken aback by the tone of the Deputy's original contribution in which he suggested that my Department trotted down to the Labour Relations Commission and disregarded the views of the taxpayer. I do not accept that.
I asked who represents the taxpayer.
My Department represents the taxpayer. I am the Minister with responsibility for public expenditure and my Department and the officers of my Department represent the taxpayer in these negotiations and we were involved in negotiations through the Labour Relations Commission and the Labour Court with the public service unions all the time. I can give the Deputy the basis for the calculation and will give him a technical note on it. However, if he suggests it should be a percentage point more or less, that is a matter for debate. We believe the calculation is fair and will achieve the target of reduced pension contributions of 35% over the time we have set. It will provide a fair basis for people in the public service in the future and is a different and flatter and fairer system of accrual. That is the principled argument I need to give. However, I can give the Deputy a technical note on the actual sums if that is of benefit to him and, having read it, we can report on it on Report Stage.
I would welcome the receipt of that note. However, my understanding is that the Department, representing the taxpayer, had a view on this issue and went to the Labour Relations Commission and that what we have here is as a result of the decision in the Labour Relations Commission, but perhaps I am wrong about that. If that is the case, I would be happier if the Minister said that this was the figure the Department had arrived at as fair, reasonable and correct, taking all things into account. I would accept that. However, I have difficulty with the fact that the figure here is not the figure the Minister felt was the right one, but one decided by the Labour Relations Commission, which is an industrial relations body not concerned with looking after the taxpayer's interest.
The point the Deputy appears to be making is that in advance of preparing a fundamental changed basis for the pension entitlements of public servants we should not have engaged with the unions and with the structure of industrial relations interaction that has served the State well. The principle we brought to the trade union movement, the one the Government wanted to achieve, is to have a career averaged pension scheme accepted. With regard to the argument put forward in terms of the numbers, we had to listen to a case, there had to be a fair base level and we had to ensure those on the lowest pay were protected. A robust presentation was made by both sides and a recommendation was made by the Labour Relations Commission. With regard to the principles we have achieved in this Bill, the trade union side is not happy by and large because it is not as good a pension scheme for many people as exists now. However it is fairer. The principles of career average, a later pension age and future pensions not being tied to final salary but linked to the consumer price index, CPI, are important principled changes into which we have bought. We nudged figures here and there to get agreement on them and, by and large, the recommendations of the Labour Relations Commission were the ones we have accepted.
The reason I ask this question is that page 15 of the Bills digest produced here in the Houses of the Oireachtas charts figures for the single scheme as a percentage of the current scheme, based on various salary scales in the public service, ranging from €20,000 up to €170,000. This chart shows that there is no real or very little reduction in the pension figures for those on salaries up to approximately €45,000.
The scheme is designed to protect the lower paid.
I have not said whether I consider the scheme good or bad. My concern is that I may be asked, as a Member of the Oireachtas, to explain how the figures were arrived at. All I am asking of the Minister is to publish the basis for the formula. I am not saying it is a good or bad formula, but we should have the facts so that we can explain it to the public. Some will think it good, while others will not. All I ask for is information. I am neither criticising nor praising the proposal.
I promised the Deputy a technical note and will provide it.
I mentioned salaries up to €45,000. The chart demonstrates the figures for pensions for those on salaries up to €170,000 and we referred to it during Second Stage debate. In essence, it shows there are no savings from salaries up to €45,000. That is fine, because we all agree with the principle that the pension of someone on a salary of €45,000 should not be reduced as a result of this new scheme. Most of us would agree with that. However, the figures for those on salaries up to €170,000 show the saving will only be approximately 10%, even from someone on €170,000. The difference between the old scheme and the new scheme would only be a reduction of approximately 10%. However, the Minister has said the scheme will achieve a saving of, possibly, 35%. I have not met anybody who can reconcile that with the charts produced in the digest. They show the maximum saving at the highest salary of only 10%.
We will have a look at the chart produced, but it does not take account of the fact that first of all the pension will be paid later. Also, it will be linked to CPI in the future, as opposed to being linked to the incumbent in the position. Those two factors are not represented in the chart. I do not have the chart in front of me, but from what the Deputy has said, those factors are not replicated in it.
It refers to a 1% real wage growth each year, so it has built in some projections. I understand the Minister does not have the chart in front of him.
That is a notional calculation for increases of pay during service, but is not a calculation of augmentation of pension post service, which will be linked to the CPI.
We are talking about the pension of those highest paid persons retiring having a pension that is 90% of that they would get on the current scheme.
We are talking about the average savings. Not only will the full volume of pension payments be less across the board, except for the lowest paid, but they will be payable later because people will work for longer and they will only increase by the CPI as opposed to being linked to the incumbent in position.
That is fine. The Minister has said the scheme can give a saving of up to 35%. Will he explain how he arrived at that figure, because it is hard to reconcile it with what we as Oireachtas Members are hearing.
If I recall, it was all set out in my Second Stage speech. However, I will provide the Deputy with a technical note on it.
I have the Minister's Second Stage speech here and I have been glancing through it. We have spoken to the public sector unions on this as part of our considerations on the Bill. We had ICTU in some time ago and they saw the savings mentioned, but they concurred with what the Oireachtas has produced. They came to a similar conclusion to what is in the Oireachtas digest and could not understand how those figures gelled with those of the Minister. We want to be able to marry the two. There is no point in us going out and saying this will bring a saving of 35% when other people are saying it will only be a saving of 10%. We just want information so that we know what we are talking about.
The Minister has undertaken to work on the figures and to provide a technical note on the calculation.
I will give the Deputy a technical note.
I will not press the amendment now, but I will reintroduce an amendment on Report Stage.
I ask that the technical note be provided to all members of the committee.
It will come to the clerk and be sent to everybody. Does Deputy Donnelly wish to add a comment?
That was an amendment in my name. It was not from me.
Amendment, by leave, withdrawn.
Section 19, as amended, agreed to.
I propose we take a ten minute break.
Sitting suspended at 4.40 p.m. and resumed at 4.50 p.m.
SECTION 20
I move amendment No. 65:
In page 24, subsection (1), line 49, after "subject to section 51” to insert the following:
"and upon application being made to the relevant authority".
Amendment agreed to.
Amendment No. 66 not moved.
I move amendment No. 67:
In page 25, subsection (4), line 12, to delete "for the Scheme" and substitute "of the Scheme".
Amendment agreed to.
Section 20, as amended, agreed to.
SECTION 21
Amendments Nos. 68 and 77 are related and may be discussed together.
I move amendment No. 68:
In page 25, subsection (1), lines 15 to 17, to delete all words from and including "Where" in line 15 down to and including "shall" in line 17 and substitute the following:
"A person having completed the vesting period and been the holder of a qualifying office who has attained normal pension age, shall".
These amendments clarify, in particular, that the two year vesting period may be achieved by qualifying officeholders or Oireachtas Members in any single scheme pensionable post, including as a public servant, in some other capacity before appointment as a qualifying officeholder or Oireachtas Member.
Amendment agreed to.
I move amendment No. 69:
In page 25, subsection (1), line 17, after "subject to section 51” to insert the following:
"and upon application being made to the relevant authority".
Amendment agreed to.
Amendment No. 70 not moved.
I move amendment No. 71:
In page 25, subsection (3), line 45, to delete "any".
It is a minor drafting amendment to harmonise the wording with other similar sections. There is no change to the meaning.
Amendment agreed to.
I move amendment No. 72:
In page 26, subsection (6), line 10, after "servant" to insert the following:
", however the combined pensions earned may not exceed an annualised pension payment rate of €60,000".
Amendment put and declared lost.
Section 21, as amended, agreed to.
SECTION 22
I move amendment No. 73:
In page 26, subsection (2), line 28, after "shall" to insert the following:
", upon application being made to the relevant authority,".
Amendment agreed to.
Amendment No. 74 not moved.
I move amendment No. 75:
In page 26, subsection (3)(a), line 48, to delete “for the Scheme” and substitute “of the Scheme”.
Amendment agreed to.
Section 22, as amended, agreed to.
NEW SECTION
I move amendment No. 76:
In page 27, before section 23, to insert the following new section:
23.—(1) A person having completed the vesting period and having been a holder of the office of Comptroller and Auditor General shall, subject to section 51, be
eligible to receive a pension and a lump sum as provided for by this section if he or she either—
(a) has attained the normal pension age and has ceased to be a holder of that office before reaching the retirement age for such a holder prescribed by law, or
(b) has attained the retirement age for such a holder as so prescribed.
(2) A person who is a Scheme member or former Scheme member to whom subsection (1) relates shall, upon application being made to the relevant authority,
be eligible to receive upon his or her retirement—
(a) an annual pension equivalent to the sum of the referable amounts in respect of each calendar year or part of a calendar year as a holder of the office of Comptroller and Auditor General, subject to a maximum equivalent to one-half of the annualised rate at that time of the pensionable remuneration that stands provided for the person concerned at the time he or she ceased to be a holder of that office, and
(b) a lump sum payment equivalent to the sum of the referable amounts in respect of each calendar year or part of a calendar year as a holder of the office of Comptroller and Auditor General, subject to a maximum equivalent to one and a half times the annualised rate at that time of the pensionable remuneration that stands provided for the person concerned at the time he or she ceased to be a holder of that office.
(3) In this section "referable amounts in respect of each calendar year or part of a calendar year", in relation to a calendar year or part of a calendar year of service,
(a) where the office of Comptroller and Auditor General is held on a basis which is not fully insured for social welfare purposes, means—
(i) in the case of an annual pension an amount calculated at a rate of 2.5 per cent of the Scheme member's pensionable remuneration for that year or part of a year as a holder of the office of Comptroller and Auditor General, and
(ii) in the case of a lump sum payment an amount calculated at a rate of 7.5 per cent of the Scheme member's pensionable remuneration for that year or part of a year as a holder of the office of Comptroller and Auditor General, as adjusted thereafter, until payment of the pension and lump sum arises
in accordance with this Part, by reference to such adjustments as may arise as provided for in section 39,
(b) where the office of Comptroller and Auditor General is held on a basis which is fully insured for social welfare purposes, means–
(i) in the case of an annual pension, an amount calculated at a rate of—
(I) 0.58 per cent of the Scheme member's pensionable remuneration for that year or part of a year as a holder of the office of Comptroller and Auditor General that is or equal to 3.74 times the value of the contributory State Pension at that time, and
(II) 2.5 per cent of the Scheme member's pensionable remuneration for that year or part of a year as a holder of the office of Comptroller and Auditor General that is greater than 3.74 times the value of the contributory State Pension at that time,
and
(ii) in the case of a lump sum payment an amount calculated at a rate of 7.5 per cent of the Scheme member's pensionable remuneration for that year or part of a year as a holder of the office of Comptroller and Auditor General,
as adjusted thereafter, until payment of the pension and lump sum arises in accordance with this Part, by reference to such adjustments as may arise as provided for in section 39.”.
Amendment agreed to.
SECTION 23
I move amendment No. 77:
In page 27, to delete lines 8 to 11 and substitute the following:
"23.—(1) A person having completed the vesting period and having been a member of either House of the Oireachtas shall, subject to section 51, be eligible to receive a pension and a lump sum as provided for by this section if he or she either —”.
Amendment agreed to.
I move amendment No. 78:
In page 27, subsection (2), line 21, after "shall" to insert the following:
", upon application being made to the relevant authority,".
Amendment agreed to.
Amendment No. 79 not moved.
Section 23, as amended, agreed to.
SECTION 24
Members should note that if amendment No. 80 is agreed to, amendment No. 81 cannot be moved.
I move amendment No. 80:
In page 28, lines 1 to 26, to delete subsection (1) and substitute the following:
"24.—(1) A person having completed the vesting period and having been a designated office holder shall, subject to section 51 and upon application being
made to the relevant authority, be eligible to receive a pension and a lump sum as provided for by this section if he or she either—
(a) has attained normal pension age and is no longer a designated office holder, or
(b) after attaining normal pension age ceases, other than by death, to be a designated office holder.
(2) A person who is a Scheme member or former Scheme member to whom subsection (1) relates shall be eligible to receive—
(a) an annual pension equivalent to the sum of the referable amounts in respect of each calendar year or part of a calendar year as a designated office holder, subject to a maximum of one-half of the annualised rate at that time of the pensionable remuneration that stands provided for the person concerned at the time of his or her retirement, and
(b) a lump sum payment equivalent to the sum of the referable amounts in respect of each calendar year or part of a calendar year but—
(i) in the case of a designated office holder who last held one of the designated offices set out in paragraphs (e), (f), (g) or (h) of the definition of “designated office holder” in subsection (2), subject to a maximum equivalent to three-quarters of the annualised rate at that time of the pensionable remuneration that stands provided for the designated office holder at the time of his or her retirement, and
(ii) in the case of any other designated office holder, subject to a maximum equivalent to one and a half times the annualised rate at that time of the pensionable remuneration that stands provided for that designated office holder at the time of his or her retirement.".
Amendment agreed to.
Amendment No. 81 not moved.
I move amendment No. 81a:
In page 29, subsection (2)(a)(ii)(I), line 17, to delete “subsection (1)(b)(i)” and substitute “subsection (2)(b)(i)”.
Amendment agreed to.
I move amendment No. 81b:
In page 29, subsection (2)(a)(ii)(II), line 20, to delete “subsection (1)(b)(ii)” and substitute “subsection (2)(b)(ii)”.
Amendment agreed to.
I move amendment No. 82:
In page 29, subsection (2)(b), to delete lines 33 to 50 and substitute the following:
"(i) for the purpose of the calculation of an annual pension, an amount calculated at a rate of—
(I) 0.58 per cent of the Scheme member's pensionable remuneration for that year or part of a year as a designated office holder that is less than or equal to 3.74 times the value of the contributory State Pension at that time, adjusted, when not working on a full-time basis, by reference to the proportion that the number of hours worked bears to the number of hours that would have been worked if working on a full-time basis, and
(II) 1.67 per cent of the Scheme member's pensionable remuneration for that year or part of a year as a designated office holder that is greater than 3.74 times the value of the contributory State Pension at that time, adjusted, when not working on a full-time basis, by reference to the proportion that the number of hours worked bears to the number of hours that would have been worked if working on a full-time basis,".
It is a technical amendment which makes clear, by way of the revised paragraph (b)(i)(II), that the 1.67% pension accrual rate for those particular designated officeholders would, as is intended and as applies to others, apply to that part of the affected officeholder’s salary above the 3.74 times the State pension and not to all of the salary.
Amendment agreed to.
I move amendment No. 82a:
In page 30, subsection (2)(b)(ii)(I), line 4, to delete “subsection (1)(b)(i)” and substitute “subsection (2)(b)(i)”.
Amendment agreed to.
I move amendment No. 82b:
In page 30, subsection (2)(b)(ii)(II), line 7, to delete “subsection (1)(b)(ii)” and substitute “subsection (2)(b)(ii)”.
Amendment agreed to.
Section 24, as amended, agreed to.
SECTION 25
Amendments Nos. 83 to 85, inclusive, 89 and 90 are related and may be discussed together.
I move amendment No. 83
In page 30, subsection (1)(b)(i), line 26, to delete “for immediate payment” and substitute “to immediate payment”.
It is a minor drafting amendment to delete the words "for immediate payment" and to substitute "to immediate payment". Amendments Nos. 84, 85, 89 and 90 relate to certain members of the Permanent Defence Forces who are required to retire - in other words, who are discharged - on completion of a specified period of service. They provide for retirement benefit to be calculated under the fast accrual terms and for payment to preserve pension benefits to commence at the age of 60.
Will the Minister explain in layman's speak what that is about?
It allow for people - some members of the Defence Forces - who are required after, say, 21 years' service to retire because we want-----
Aged people like me.
It has nothing to do with age but, I suppose, with alacrity. Of course, that would not apply to Deputy Mathews who, as we all know, is very dextrous. As we do that we allow them to get pension accrual more quickly, but it is preserved until they are aged 60.
So, there is no backward adverse effect on these people?
No. This is a benefit for them, as opposed to the normal accrual rate.
Amendment agreed to.
I move amendment No. 84:
In page 30, to delete lines 38 to 44 and substitute the following:
"(2) A person who is a Scheme member or former Scheme member to whom paragraph (a), (b)(i), (c) or (d) of subsection (1) relates and who—
(a) has completed the vesting period, and
(b) attains the age to which that paragraph relates,
shall, subject to section 51 and upon application being made to the relevant authority, be eligible to receive upon commencement of retirement or discharge—".
Amendment agreed to.
I move amendment No. 85:
In page 31, lines 9 to 11, to delete subsection (3) and substitute the following:
"(3)(a) A person who is a Scheme member of former Scheme member to whom paragraph (b)(ii) of subsection (1) relates and who has completed the vesting period shall, subject to paragraph (b) and upon application being made to the relevant authority, be eligible to receive—
(i) an annual pension equivalent to the sum of the referable amounts in respect of each calendar year or part of a calendar year as a Scheme member to whom subsection (1) applies, and
(ii) a lump sum payment equivalent to the sum of the referable amounts in respect of each calendar year or part of a calendar year as a Scheme member to whom subsection (1) applies.
(b) For the purposes of paragraph (a)—
(i) where the person concerned is retired or discharged from the Permanent Defence Force on completion of a specified period of service or on age grounds or in accordance with subsection (1)(b)(ii), then, without prejudice to section 27(5) or 28, the commencement of payment of retirement benefits shall not be earlier than the age at which a person is entitled to the pension and lump sum payment under section 27(1)(a),
(ii) where the person concerned retires, resigns or is dismissed or discharged from the Permanent Defence Force—
(I) as a consequence of any fault, omission or action of that person, or
(II) otherwise than in accordance with subsection (1)(b)(ii),
then, without prejudice to section 27(5) or 28, the commencement of payment of retirement benefits shall not be earlier than the age at which a person is entitled to the pension and lump sum payment under section 27(1)(b).
(4) Section 13 shall be read subject to this section.".
Amendment agreed to.
I move amendment No. 86:
In page 31, lines 28 to 30, to delete all words from and including "adjusted" in line 28 down to and including "basis" in line 30 and substitute the following:
"as adjusted, when not working on a full-time basis, by reference to the proportion that the number of hours worked bears to the number of hours that would have been worked if working on a full-time basis".
Amendment agreed to.
I move amendment No. 87:
In page 31, lines 35 to 37, to delete all words from and including "adjusted" in line 35 down to and including "basis" in line 37 and substitute the following:
"as adjusted, when not working on a full-time basis, by reference to the proportion that the number of hours worked bears to the number of hours that would have been worked if working on a full-time basis".
Amendment agreed to.
Question proposed: "That section 25, as amended, stand part of the Bill."
We oppose this section, which relates to gardaí, firefighters, members of the Permanent Defence Force and prison officers and increases the contribution they are required to make, or the basis on which it is calculated.
It relates to the calculation of benefit and not the actual contribution. Contribution comes later.
They are linked. The objection the groups affected have articulated is that they are already, under the current scheme, paying a higher contribution.
They will continue to do so. That is what is intended.
This section will require them to make an even higher contribution. Is that not correct?
This section does not deal with that issue but, with your permission, Chairman, I will address it.
By definition, if one is in a fast accrual, if one has the benefit of getting to one's pension more quickly, one makes a bigger contribution for the period of payment to the pension. That is only fair. That is the existing scheme which will be replicated in the new scheme.
The people who are affected currently make a higher contribution because they retire earlier. Their point is that under the new scheme their contributions will be even greater with no extra benefit. They are, in fact, losing out because they are also affected by the new career average provision and will have to work for longer.
Everyone is affected by the career average provision. That is the basis of the new scheme. Everyone is also affected by the later retirement provision. That is a characteristic of the new scheme. It is fair that people, whether members of the Defence Forces, gardaí or Members of the Houses of the Oireachtas, who get their pensions more quickly should pay more for them. That is all that is expected.
That provision is not covered by section 25. This section relates to the enhanced benefit gained from fast accrual. It is odd that Deputy Boyd Barrett should object to this section.
I will not say much more. I ask the Minister not to mix up gardaí, firefighters, prison officers and soldiers with politicians.
They are all in fast accrual pension schemes. That is all I meant.
Yes, they are all in fast accrual schemes. The critical difference is that there is a very good reason the people I refer to have to retire early. It is because of the nature of their jobs.
Some politicians have to retire early, because of the nature of their job. They are retired by the people.
It is not by choice.
It is of a different order.
It is like the Graham Norton lever.
Politicians should take their chances, but these ordinary workers who do difficult jobs are being required to make a bigger contribution and get less for it. It is on that basis that we oppose the section.
The Deputy is talking about senior officers in the Army or the Garda Síochána, many of whom are better paid than Members of this House.
Our concern is for the ordinary rank and file and for low and middle income earners in these categories and across the public service. We want to protect their pension entitlements and not overburden them. We have no difficulty with legislation that reduces the pension entitlements of people at the top of the Army, the Garda or anywhere else in the public or Civil Service. We are concerned about the rank and file
If there was an amendment to that effect we could debate it. Section 25, however, relates to the benefits these categories of employees are getting. I presume the Deputy does not object to that.
I have a problem with what is proposed in the section with regard to the benefits that will accrue to gardaí, members of the Defence Forces, prison officers, members of fire brigades and retained firefighters. The Chairman might advise what section will deal with contributions, because we will want to connect these.
We have dealt with that already.
What section was that?
Section 19.
I was ruled out of order.
I am sorry. It was section 18.
With regard to section 25, I have met representatives of the Prison Officers Association who expressed serious concern about this section. The multiplier being used for fast accrual groups under the proposed new single scheme does not bring their future pensions up to a similar percentage as the future pensions of grades not operating fast accrual. I am talking about their pension scales, future pension scales and benefits. For example, under the proposed new single scheme a higher executive officer will get a pension somewhere between 85% and 91% of the present pension.
How could one know that? It would depend on one's career path.
I am relaying what prison officers said to me. I am sure they have taken account of the factors mentioned by the Minister, so that the new pension entitlement of a higher executive officer will be somewhere between 85% and 91% of the current pension. However, the multiplier for fast accrual grades under the proposed new single scheme will bring the pension of a prison officer to only 80% of the present pension. Prison officers acknowledge, as we all do, that the purpose of the new scheme is to reduce the pensions of future entrants into the public service. They are saying, however, that the pensions of higher executive officers will be reduced to somewhere between 85% and 91% of the current pension while those in a fast accrual scheme will see their pensions reduced to 80% of the current pension. It was their understanding that future entrants would be worse off, but not worse off relative to other grades. They believe this will be the case, because the fast accrual issue is seriously affecting them.
I asked the prison officers about the position of gardaí, soldiers and firefighters because I had not heard from those groups directly to the same extent. That may be because two of the biggest prisons in the country are in my constituency. The prison officers felt the other groups may not be aware of this effect of the new scheme and were not pursuing the matter. Prison officers are satisfied that new entrants will be significantly worse off, relative to other public servants.
I am not happy with the section, in light of what I am being told by people in my constituency who have looked at the new scheme from their own perspective. I will be submitting an amendment on Report Stage on this issue. I did not get an opportunity to do so in time for Committee Stage.
There is no group out there that does not want better treatment. Deputy Fleming is asking that those who are on fast accrual have faster fast accrual. They have made the point to us. The presentation they made to Deputy Fleming they made to us in terms of picking the most advantageous comparator they can. We have looked at it and they are getting a very good deal.
The most important aspect of the deal they are getting is that they will get their pension at a much earlier age than anybody else, which was really an extraordinarily good deal. For example, members of the Garda Síochána will get their pension entitlement at 55 years.
Soldiers at 50.
The Permanent Defence Forces will get theirs at the age of 50. That is an extraordinary actuarial advantage to them. They are doing very well indeed. Prison officers will get theirs at 55.
The Minister probably has analysed their submission and probably has a response somewhere. Will he give it to us so that we can feed it back? I am still saying I will probably be back on Report Stage having analysed that response.
I guess this exact conversation comes back to the employer nominal contribution. I interpret the Minister's statement in terms of them getting a good deal as saying that were this a defined contribution pension, the employer contribution to it for the fast accrual for these staff would be significantly more than for those who do not fall under this stipulation. Is that reasonable?
I agree with the Minister's point that they are getting a better deal and, therefore, they contribute more.
In terms of the additional contribution versus the additional benefit, does the Minister have a ball-park figure for what percentage of the additional contribution from the staff is of the additional benefit?
I do not have that in front of me, but let me say this to Deputy Donnelly. First, we are talking about select groups of public servants, for example, the gardaí. We ask them, to use the Americanism, to go in harm's way and the State recognises that. We want to contribute more to their support because, by definition, they must retire earlier. They need to be physically fit. It is a strenuous job. They are out there on the street.
Actuarially, no doubt they are more advantaged. I cannot give Deputy Donnelly a figure in terms of the net benefit. We have an in-house actuary who works on all of these matters, but we are working on the basis of what is there already as well and the acknowledgement of public service duty. In terms of persons in this category, it is not simply a matter of crude numbers.
On this issue of fast accruals, I assume the Minister had some contact with the unions as well. For all of the reasons the Minister outlined, there are those specific categories of staff who must accrue more quickly because they work shorter service because of the nature of the function that they carry out. In the current regime, those fast accrual groups can get 40 years benefit for 30 years service.
I have figures for the changes to this scheme because I am familiar with the categories of workers that fall into the fast accrual system who have examined these measures carefully. As I understand it, they will be disadvantaged under the new regime. Those workers understand that under the new scheme change will affect them just as it affects every other worker but it is only fair for those workers, fire fighters, gardaí, etc., that some kind of parity be maintained and that they not be disadvantaged. Would the Minister respond because I am sure he and his Department have run the figures? Is it true to say that fast accrual categories are disadvantaged under the new scheme or am I wrong? Can the Minister assure us, and give us the basis for that assurance, that it still remains a 40 year contribution although 30 years service given?
The scheme impacts on everybody. If Deputy McDonald is asking me to compare the old scheme and the new scheme, across the board staff would be disadvantaged because we are trying to save money. In terms of the integrity of the scheme relative to other accrual rates, however, these categories of workers are very significantly advantaged.
First, they have fast accrual from their first day of service. Under the existing scheme they get double accrual after 20 years service to give them the cushion towards the end but now they will have the fast accrual rate applying to their public service pension from the first year.
Added to that, they have the really plum addition of getting their pension from a much earlier age than everybody else. It depends on the category. If one is in the Permanent Defence Forces, one does well as he or she gets the pension from 50. The gardaí and prison officers will get it from 55. Actuarially, that is a significant advantage to them. Within the integrity of the new scheme, I can assure Deputy McDonald they are not disadvantaged relative to their position vis-à-vis other workers under the old scheme.
If the net take-out is lower, it is a technicality to get fast accrual from year one as against at year 20 at a more accelerated rate.
If one does not make it in one's career and one has dependants to claim a pension entitlement, it is obviously a very significant advantage to one's spouse and children.
The nub of this is the level of consultation in which the Minister has engaged specifically with the representatives of these categories of workers. I am looking at figures that suggest a relative disadvantage for some of nearly 23%. These are the figures available to me. I presume the Minister has figures.
People make a case, as I stated to Deputy Fleming in Deputy McDonald's absence. These are fast accrual groups which would like faster accrual and their unions make that case. Deputy Donnelly, on the other side, makes the case of asking what is the actuarial cost of this to the taxpayer, and it is significant. There is a balance to be drawn between acknowledging staff, such as prison officers, members of the Defence Forces or members of An Garda Síochána, whom we put in harms way in the interests of the State and the people to give them a good deal relative to all other workers but not, as Deputy McDonald would say, a Rolls Royce deal. It is a fair deal. They get fast accrual. They are advantaged in the ways of which I spoke - fast accrual from day one, a fair career average in a much shorter time and their pension paid in full from a much earlier age.
How much consultation has the Minister had?
We met everybody repeatedly.
The Minister stated they are not disproportionately disadvantaged. What is the extent of the disadvantage that these groups of workers-----
They are not disadvantaged relative to anybody else in this new scheme.
There is clearly a change. What is the magnitude of it?
Everybody is disadvantaged.
I am asking about these.
To the same extent. Every individual will be different, depending on how long he or she works and whether he or she has other public service entitlements. It is impossible to answer that question because one is talking about a category of person.
By and large, the aim is to save in the order of 35%. We had the discussion about that. Those on the highest rate of pension in the old regime will be most adversely affected. Those on the flattest rate of accrual in the old regime will be least affected. That is what we have explained in some detail.
I understand that individuals have different contributions and different work histories but it is difficult to believe that the Minister would introduce this new scheme not having worked up various scenarios. I accept that the Minister, as he said earlier, will work up scenarios relating to clerical officers with a flat career projection and administrative officers all the way up to Secretary General. I assumed he would do the same for the fast accrual groups.
We have.
Why can the Minister not tell us-----
I promised I would provide a table with all the categories, including the fast accruals.
The Minister has given an undertaking and I am sure it will be done.
Question put.
The Committee divided: Tá, 7; Níl, 3.
Tá
- Howlin, Brendan.
- Humphreys, Heather.
- Humphreys, Kevin.
- Mathews, Peter.
- Mitchell, Olivia.
- Spring, Arthur.
- White, Alex.
Níl
- Donnelly, Stephen S.
- Fleming, Sean.
- McDonald, Mary Lou.
Question declared carried.
SECTION 26
I move amendment No. 88:
In page 32, subsection (2)(b), line 16, to delete “preserved pension and lump sum benefits” and substitute “pension and lump sum benefits”.
The section deals with cost neutral early retirement. Since the definition of "preserved pension" in the next section specifically excludes CNER cases, it is not appropriate to use the word "preserved" to describe the pension payment in such cases, hence the amendment. We will deal with the issue in the next section but this is a technical amendment.
Amendment agreed to.
Section 26, as amended, agreed to.
SECTION 27
I move amendment No. 89:
In page 33, subsection (1), lines 1 and 2, to delete paragraph (a) and substitute the following:
"(a) in the case of a person to whom section 25(1)(b)(ii) applies other than where section 25(3)(b)(ii) also applies, upon attaining the age of 60 years, and”.
Amendment agreed to.
I move amendment No. 90:
In page 33, subsection (1), to delete line 3 and substitute the following:
"(b) in any other case (including a case to which section 25(3)(b)(ii) applies)”.
Amendment agreed to.
I move amendment No. 91:
In page 33, subsection (3), line 20, to delete "adjustment" and substitute "adjustments".
This is a minor drafting amendment.
Amendment agreed to.
Question proposed
"That section 27, as amended, stand part of the Bill."
We are opposing this section on the basis of the increase to 66 years of age regarding the entitlement to the preserved pension and preserved lump sum, as set out in subsection (1)(b)(i).
Question put and declared carried.
SECTION 28
I move amendment No. 92:
In page 35, subsection (7), lines 15 and 16, to delete "shall not exceed 7 times the value" and substitute "shall not exceed 10 times the value".
This amendment, which deals with pension enhancements, coincides with the amendment tabled by Deputy McDonald. The increase from seven to ten in regard to the referable amount multiplier is considered appropriate on the basis that the threshold of seven is less than the ten years that can currently be added in certain cases. The fact that the referable amounts are calculated in the most recent year means they are more valuable than the average of the career average scheme. It is also the case that the new scheme is not counting service and, therefore, the added years comparison is not valid and ten years will remain a cap or outside limit on the norm. Trade union representatives made the case for this amendment and Deputy McDonald and I seem both to be minded to agree to their position.
Amendment agreed to.
Amendment No. 93 in the name of Deputy Mary Lou McDonald is out of order.
I am getting used to this.
Amendment No. 93 not moved.
I move amendment No. 94:
In page 35, subsection (7), line 17, to delete "member" and substitute the following:
"member—
(a) so long as the scheme member does not retire, is retired or discharged on medical grounds within 7 years of last promotion,
(b) where a scheme member retires within 7 years of promotion, the gross amount of an enhancement to any pension and lump sum that may be made by virtue of regulations under subsection (6) shall be calculated based on—
(i) a career average, or
(ii) salary rate paid prior to promotion,
whichever is greater".
This amendment relates to pension enhancements. The wording, which was proposed to me by way of a representation from an interested party, is exceptionally generous, which is good. However, it is worth noting that the references to seven years may be anomalous given that we are moving away from the length of service model.
As I said in respect of amendment No. 92, I have accepted the position proposed by Deputy McDonald in regard to pension enhancements. Deputy Fleming is seeking to reverse that in this amendment. I am satisfied that what I have proposed is an appropriate means by which to calibrate ill-health enhancement of pensions under the new single scheme. As I said, the ten-year figure is an outside cap on enhancements, which may be made but will not be the norm. Under the scheme as provided for in the Bill, a pensioner who retired for medical reasons will simply receive his or her pension without actuarial reduction at the point of retirement on medical grounds. My Department will draw up regulations to provide similar enhanced benefits to those currently applying.
Amendment, by leave, withdrawn.
I move amendment No. 95:
In page 35, subsection (8)(iii), line 35, to delete "retirement on medical grounds," and substitute "retirement or discharge on medical grounds.".
Amendment agreed to.
I move amendment No. 96:
In page 35, subsection (8), to delete lines 36 and 37.
Amendment agreed to.
Section 28, as amended, agreed to.
SECTION 29
I move amendment No. 97:
In page 36, subsection (1), line 11, to delete "member's actual pensionable remuneration" and substitute "member's pensionable remuneration".
I am on the same track as Deputy Fleming on this occasion, with a coincidence in our proposals on this point. Although his amendment cannot be moved, I hope he will accept mine. The use of the term "actual" in this context could have adverse consequences on those cases where, for example, an employer had elected to work-share or was otherwise on reduced pay immediately before death. It would not be unusual for persons in poor health to have reduced remuneration in the period immediately preceding their death if, for instance, they were on half pay or pension-related pay. What is intended here is that the normal pensionable remuneration attaching to the job should determine the value of the lump sum payable on death. It is an issue Deputy Fleming has articulated very well on previous occasions. His argument was convincing enough for me to support him.
Amendment agreed to.
Amendments Nos. 98 and 99 are out of order.
Amendments Nos. 98 and 99 not moved.
Section 29, as amended, agreed to.
Section 30 agreed to.
SECTION 31
Amendments Nos. 100, 146 and 147 are related and may be discussed together.
I move amendment No. 100:
In page 36, subsection (1), lines 37 and 38, to delete "a preserved benefit" and substitute "a preserved pension or a preserved lump sum".
These are minor amendments intended to harmonise references within the respective sections.
Amendment agreed to.
Section 31, as amended, agreed to.
SECTION 32
I move amendment No. 101:
In page 37, subsection (2), line 47, after "retired" to insert "or been retired or discharged".
Amendment agreed to.
Section 32, as amended, agreed to.
SECTION 33
I move amendment No. 102:
In page 39, lines 10 to 16, to delete subsection (6).
This amendment is related to amendment No. 148. The provisions in this section are now included in the new section covering survivors' entitlement to pension, as set out in amendment No. 148. The new section provides that one survivor's pension may be payable, save in cases where a deceased person had an entitlement to more than one public service pension. For example, someone whose public service spouse has died would receive a pension, but this would cease if he or she remarries. If the second spouse is a single scheme pensioner and also dies, the person would not be entitled to a pension in respect of the first former spouse and a pension in respect of the second former spouse. Is that clear?
Not at all.
We are talking about a twice bereaved survivor. In essence, if one's public servant spouse dies, one will receive his or pension. If one subsequently remarries, one will no longer receive the spouse's benefit. If one's second spouse dies, one will receive the second spouse's pension entitlement but not the two.
To clarify, the Minister said this amendment was related to amendment No. 148, and undoubtedly it is. However, it is not grouped with that amendment.
I accept the point about avoiding a double payment. I wonder, however, whether it would make more sense to have this the other way around, that is, where one is the spouse of a deceased public sector worker, one will receive the latter's pension. If one subsequently marries a second public servant, one would not be entitled to the latter's pension on his or death, save any differential if the second pension is larger than the first. If I understand correctly, where a first spouse dies, one is entitled to his or her pension in perpetuity unless one remarries, in which case one loses it. That seems bizarre. Why would it make any difference whether the person remarries?
These provisions are related to those attaching to the social welfare pension, where exactly the same principles apply. We discussed this with the Department of Social Protection. In essence, one does not receive a widow's pension if one is not a widow.
The only affect this will have is to stop people remarrying. It seems a bizarre provision to include in law.
The Deputy will not be pleased to hear that it will also apply to cohabiting relationships.
Does the Department have a problem with that?
It is a matter of common sense. A widow's pension-----
I called Deputy Donnelly on the Minister's amendment.
We are talking about amendment No. 148, which we will deal with later. For clarity, however, I have rehearsed this with the Department of Social Protection because I wanted to be clear on it myself. One does not get a widow's pension if one is not a widow.
It is simply that.
If one remarries, one is not entitled to a widow's pension.
Hang on, let us play this through.
It is an occupational pension.
Let us say that a widow or widower is getting a pension of €40,000 from their late spouse who was a public sector worker. Let us say that he or she falls in love with somebody who is unemployed, or on the minimum wage or is bringing in far less than that pension, if he or she ends up just living with that person is the Minister saying that he or she will lose the €40,000 per year?
If he or she is married, he or she is not a widow or widower.
That is nuts. It is crazy.
All social welfare pensions are paid on the same basis. One does not get a widow's pension if one is not a widow.
That is absolutely nuts. It says to a widow or widower of a public sector worker that basically, for the rest of their lives, there is a massive financial disincentive.
There may be incentives that come with the other proposition.
Yes, sure, there might be but there is a massive financial disincentive.
Does the Deputy think that people who are not widows should get a widow's pension?
To answer the question, let us take an example of the widow or widower of a public sector worker who has died and who is getting a pension of €40,000 a year. They may fall in love and decide to cohabit with or marry somebody whose income is significantly less than that. Do I think that they should still get the pension based on what their late husband or wife did? Absolutely, because otherwise it would create a bizarre disincentive for widows or widowers.
That is the status quo and all social welfare operates on this basis. The Deputy should think it through. He is saying that we provide a generous package for the survivor of a public servant. Their contribution, to use the Deputy’s own focused actuarial terms, would never justify a pension for life. However, the notion that somebody would get a widow’s pension and then go off and marry somebody else-----
Or live with somebody else.
Or live with somebody else, and then continue to get a survivor's pension - the whole idea is to sustain somebody who has lost a breadwinner and a supporter. That is the idea of it.
In terms of social welfare provision, it would be extraordinarily expensive to provide for a situation where once one had an entitlement like that, one could not lose it by remarrying. One could not start parsing and analysing it, by saying that if one married somebody poor one could get it, but if one married somebody a little bit better off, one would not get it.
That is just a means test which is done all the time in social welfare.
One cannot means test a survivor's pension in the same way.
Why not?
It is not a social welfare benefit. I am making the analogy to it, but it is not a social welfare benefit. It is a pension entitlement.
But one can.
I will take Deputy McDonald and will then come to you.
I would like an extra minute, if I can.
I think I have made the case that, by definition, it is something that would be too costly to try to do.
How much would it cost?
I do not know.
Then how can the Minister say it is too costly?
It would link into social welfare pensions and would be a principle that I am not prepared to concede.
The Minister is saying he cannot means test it because it is linked to social welfare, but he can. The State means tests all the time, so the capability to means test-----
This is not an occupational benefit. We do not means test pensions.
My point is that the capacity to means test is available to the State. It is done all the time so if we wished to means test in this case we have the capacity to do that. For the record, if someone on a €40,000 widow's or widower's pension is marrying somebody who is earning €100,000 I understand that the State will say "We're taking the €40,000 back off you". I get that and would support it. However, I absolutely would not support what, in fairness, seems like a perverse disincentive, which says "If that person is earning significantly less, we're taking your money off you for the rest of your life." That just seems bizarre.
We are saying that one is not entitled to a widow's or widower's pension if one is not a widow or a widower. If one remarries, one does not hold onto that status.
I understand the principle but applying that principle blindly will create perverse incentives.
It is not creating anything. It is the status quo.
I call Deputy McDonald.
The distinction between the widow's or widower's pension and this is that one is a social welfare pension in recognition of somebody's family status and circumstances. This is an occupational pension. Can the Minister tell the committee what is the standard practice in the private sector? This is not a question of a pension for a widow or widower; it is a survivor's benefit that has been paid for by the deceased worker over a period of time.
The Minister will note that the report of the Commission on Public Service Pensions recognises this as being as perverse as Deputy Donnelly has said it is. The report recommended that it should be changed, not least because the traditional view of how one treats dependants had a working assumption that the remaining spouse was female with children, and that should that person remarry or cohabit it would replace the lamented departed with another provider. It is based on an outmoded view of things.
This is contained in section 33. There is a distinction between a social welfare payment and an occupational payment. I understand that in the private sector where somebody is bereaved and is entitled to an occupational benefit, it is not confiscated from that person in the event that they cohabit or remarry. I have an associated question. In circumstances where there is an issue in the family law courts, such as a divorce or separation, orders are placed on pensions and a deal is reached whereby the divorce or separation agreement may be granted. Let us imagine that one fasts forward and the primary pension-holder dies, but the person has moved into a new relationship, has the Minister tested this legislation in terms of its adequacy? Is it fit for purpose and is it in line with the body of family law?
The Deputy has raised a number of questions. In terms of how this compares to a private pension, I can say from all the representations I have received from the private sector that they regard the public sector pension scheme, which I am putting in place, as extraordinarily generous. Very few in the private sector would have pensions comparable to this.
I am advised that the European norm is that a survivor's pension ends on remarriage. Are there pensions whereby they can preserve pensions after remarriage? I am sure such pensions exist, if there was a robust enough pension fund to pay for it and if the trustees write the rules accordingly, but I would say there are very few.
On that issue, in terms of legislation-----
The Office of the Attorney General proofreads all legislation and it has to be compatible with existing law and the Constitution. The State's law officers ensure that everything we present fits into that category.
Amendment agreed to.
Question proposed: "That section 33, as amended, stand part of the Bill."
I am opposing the section on the grounds that we have been discussing it as part of the amendment. The Minister can see the disquiet involved. I know that on the one hand, wearing his ministerial hat, the Minister is always keen to point out this generous pension scheme for public servants. Public servants have contributed to this scheme, however. This is not like a means-tested social welfare pension. I know the Minister is trying to integrate apples and oranges here. One is something where people have made a contribution, while the other is a means-tested payment which is not dependent on any contribution.
One does not get a contributory widow's pension either if one remarries, and has paid for it.
Yes, but they have contributed.
The Deputy was talking about one big means test. That is the point. A person pays PRSI during all his or her working life in respect of social welfare benefit. A person whose spouse dies, following which he or she receives a survivor's pension, will lose that pension if he or she remarries.
We are speaking about the widow or widower's pension, which is specifically awarded-----
It is called the survivor's pension now.
-----on the basis of one's family status.
It is the same thing.
Is this a new requirement?
No, it is the status quo.
How many survivors' pensions have been ceased as a result of a person having remarried and so on?
I will get that information for the Deputy.
I do not wish to tie the Minister to specific numbers. I am just interested in hearing if that actually happens.
I am informed that it does happen.
The unfortunate case of two surviving spouses of two deceased public servants who later cohabit and lose both pensions comes to mind. This is an extraordinary measure. The Minister is trying to legislate for between the sheets.
I am not. I am trying to legislate for some level of reality. The purpose of this is to save money and ensure fairness for the taxpayer. It is normally Deputy Donnelly who gets agitated by these provisions. The notion that two surviving public servants would each retain their former spouses' pension would be a very generous provision. I have made my case. There is no point going over it again.
The Minister also stated that a person cannot be in receipt of more than two pensions. However, both pensions could be quite small and might not even add up to the amount of a full pension. The person might have been married for only a few years in both cases thus the amount involved would be quite minimal. What is the Minister trying to save from this? The previous section makes generous provision for the person on sick leave while this section makes life difficult for widows and widowers.
I am trying to discourage serial widows.
The Minister is reading too many crime books.
A person accruing too many pensions would arouse suspicion. I will reflect between now and Report Stage on the final point made by the Deputy.
Which point?
I need a little more time to think about the point which the Deputy made.
The legislation is generous in terms of the person on sick leave but not in respect of the widow-widower of a public servant.
I will come back to the Deputy on the issue of a double accrual where both pensions would be quite small.
Provision is also made in this section for payment on compassionate grounds. However, that does not cover the particular issue I have raised. Is there a mechanism in place to police this? Is the onus on the two people cohabiting to notify the Department? What happens if they do not do so? Is there a mechanism in place to claw back money?
The person receives a form annually on which he or she makes a declaration in terms of eligibility. I can provide the Deputy with a copy of it.
I have never seen that form. I would welcome if the Minister could forward me a copy of it so I could see what he is talking about.
I will do that. The Deputy rightly points to the saver clause provision, which I am advised has been used generously enough in the past. For example, where the spouse of a public servant who dies remarries and his or her new partner is violent or a barring order is taken out against him or her and so on the saver clause can be used to reactivate the pension which had been stopped upon his or her marriage.
This is interesting. The Minister is saying that a person who is in receipt of the survivor's pension is no longer entitled to that pension if he or she remarries or cohabits but if that relationship breaks up the pension can be reactivated.
No. There is no automatic entitlement to reactivation of the pension. However, there is the potential for a case to be made. Where a sustainable case can be made the Minister can reactivate the pension on compassionate grounds.
Is it reactivated where the second relationship breaks up and the surviving spouse of the public servant who died has no other means?
That would be a stateable case too.
So the person is caught by this clause when in the relationship.
No. The person is in that case a sole trader again. However, if his or her personal income is such that it could well maintain him or her then it would not be possible to make a compelling case.
It is based on financial means.
I do not believe a person could make a compelling case on that basis.
The Minister is correct that I am generally concerned about public expenditure and additional costs on the State. However, there is a principle at stake here. Traditionally, these provisions were structured to address the situation where the man worked and the woman stayed at home.
There are more female than male public servants.
Traditionally, women had to retire when they got married. This smacks of the same type of measure. While I understand the principle to which the Minister refers there is a different principle here, namely, where one person is working in paid employment and the other is at home raising children. For example, a TD the husband or wife of whom is doing a huge amount of work supporting him or her, raising the children and so on, which work is unpaid and non-pensionable. The principle would be that both of those people have essentially contributed to the pensionable earnings and, therefore, the widow or widower is paid half the pension, which is reasonable. However, that is not a handout. There is a whole different principle that says that that person has contributed in a wide variety of non-paid ways to the wage. We all know as TDs that our partners do a huge amount of work in the background. There is a different principle here which says both partners are contributing. What this does is say we are giving the person a hand-out because we feel sorry for him or her.
As stated by Deputy Fleming, a widow or widower of a deceased public servant who lives with a second person for a year loses entitlement to the pension and may or may not get it back for the next 20 years. I am asking the Minister to reconsider that provision. I would argue that the partner has earned his or her half of the pension. However, traditionally in our society we do not recognise that. Perhaps the Minister would reflect on that.
Question put.
The Committee divided: Tá, 7; Níl, 3.
Tá
- Creed, Michael.
- Howlin, Brendan.
- Humphreys, Heather.
- Mathews, Peter.
- Mitchell, Olivia.
- Spring, Arthur.
- White, Alex.
Níl
- Donnelly, Stephen S.
- Fleming, Sean.
- McDonald, Mary Lou.
Question declared carried.
Section 34 agreed to.
SECTION 35
Amendments Nos. 103 to 109, inclusive, are related and will be discussed together.
I move amendment No. 103:
In page 39, subsection (1), line 28, to delete "Subject to subsections (2) to (5)” and substitute “Subject to subsections (2) to (7)”.
This is a set of technical amendments. With regard to this amendment, subsections (2) to (7) serve to qualify subsection (1).
Amendment agreed to.
I move amendment No. 104:
In page 40, subsection (3), lines 3 and 4, to delete all words from and including "any children" in line 3 down to and including "members" in line 4 and substitute the following:
"any children of deceased members or of a class or classes of deceased members".
Amendment agreed to.
Section 35, as amended, agreed to.
Section 36 agreed to.
SECTION 37
I move amendment No. 105:
In page 41, subsection (2), line 14, to delete "or subparagraphs (i) to (iii) of subsection (2)(a)” and substitute the following:
"in respect of subparagraphs (i) to (iii) of paragraph (a)”.
Amendment agreed to.
I move amendment No. 106:
In page 41, subsection (4), line 25, after "Minister or" to insert the following:
", subject to subsections (5) and (6),”.
Amendment agreed to.
I move amendment No. 107:
In page 41, subsection (4), lines 28 and 29, to delete all words from and including "where" in line 28 down to and including "equitable" in line 29 and substitute the following:
"where such a direction is made, the Minister or the relevant authority (as the case may be) may, if considered just and equitable".
Amendment agreed to.
I move amendment No. 108:
In page 41, subsection (5), lines 34 and 35, to delete all words from and including "regarding" in line 34 down to and including "paid" in line 35 and substitute the following:
"regarding or relating to the conditions under which a children's pension may be paid".
Amendment agreed to.
I move amendment No. 109:
In page 41, subsection (6), line 38, to delete "In making a determination" and substitute "In exercising or not exercising a discretion".
Amendment agreed to.
Section 37, as amended, agreed to.
Section 38 agreed to.
SECTION 39
Amendments Nos. 110 to 112, inclusive, have been ruled out of order as they involve a potential charge on the Exchequer.
Amendments Nos. 110 to 112, inclusive, not moved.
Question proposed: "That section 39 stand part of the Bill."
I will not go through the issue again but the same point with regard to the consumer price index stands.
I know our amendments have been ruled out of order. Amendment No. 110 proposed that annual lodgements or referable amounts accrued under the scheme would be increased or uprated in line with salary increases or inflation, whichever is greater. Will the Minister consider the point we made on Second Stage on this issue? He should respond to it on this section. There could be negative inflation during retirement. We have had negative inflation here in recent years. Normally legislation is drafted on the basis that inflation will always increase. However, it could be negative or it could be marginally above 0% with salary increases somewhat higher. We know the idea is to break the link between pensions and current salaries but we need to consider inflation, particularly where it is negative.
The amendment is out of order.
We are discussing the section.
I outlined the principles behind the new scheme. One of them is to break the link with final salary and introduce a CPI-based indexation of pensions for new pensioners. It is an essential part of the savings we intend to accrue. As I stated earlier with regard to the table referenced by Deputy Fleming, I do not think CPI indexation was part of the calculation but it is part of our calculation with regard to what we need to save for the State.
To ensure we have affordable pensions the idea is that when people enter the public service we want to be as clear as we can that at the end of their careers they will have pensions. This is part of the reason we are making the adjustments we are, namely, to ensure a robust and fair system is in place. The CPI is a valve; it cannot be reduced if there is deflation in any year. It can only move forward where inflation is added to the current moiety. I think it is a fair system.
The Minister will decide on the timing of any pension increase under this section that results from changes in the consumer price index. That is arbitrary. Those who contribute to pensions in the knowledge that consumer price index adjustments may be made when they retire want a guarantee that such adjustments will happen. This section will give the Minister discretion over the timing and payment of increases.
That is not the intention of this section and it will not be the net effect of the section. The Minister will not have the power to decide not to increase the pension from the date on which the increase is due. The Minister is merely being given the power to have the administrative space in which to do it retrospectively.
The explanatory memorandum produced by the Department of Public Expenditure and Reform states that section 39(4) of the Bill "gives the Minister discretion over the timing of paying pension increases due under the Scheme".
Perhaps the explanatory memorandum is not sufficiently expansive. The Minister is being given that discretion for the purposes of good administration. If the consumer price index specifies a certain figure, obviously that cannot be forced into the pension. It would apply for the reference period of the consumer price index.
I think the wording is too broad. While the intention is to allow the administrative-----
I am advised by the parliamentary draftsman that this will be the effect of the section we are considering.
The point I am trying to make is that this section, which will give the Minister the power to have discretion over the timing and thereby allow for certain administrative functions to be executed, could have an unintended effect if a Minister uses the facility to delay an increase in the payment for a period of time, perhaps for some other reason. If this provision is being included for administrative reasons only, as suggested by the Minister, that should be made clear in the section.
The Deputy is right.
I am worried about what a future Minister might do. I am not talking about the Minister, Deputy Howlin, but about one of his successors, perhaps in 50 years' time.
It will not be me.
None of us will be here.
I assure the Deputy that I will not be here in 50 years' time. Deputy Spring might be around. He is quite young.
I would say I will need to be around for another 50 years in order to get my pension.
It will take that long under the new scheme.
Just about.
I wish to clarify that there is a power. We need to ensure that the power not to pay, or to delay payment, is available in the event of extraordinarily adverse budgetary circumstances.
That is precisely what I am concerned about. People have paid into a new scheme that has been established in legislation on the basis that when they retire, they will get pensions that are inflation-proofed but not linked to salary increases. I am concerned that a future Minister might decide that the pensions in question cannot be afforded. The Minister has just confirmed my worst fears.
The Deputy is aware that public service pensions are paid from current Exchequer funds. If the day arrives when the money is not there - it should not, and please God it never will - it is obvious that decisions will have to be made on that basis. The idea is that pensions will increase periodically with reference to the consumer price index. The power to do that is being made available. Saver clauses are always included in everything ar eagla na heagla, to borrow a phrase from my colleague, the Minister for Finance.
Essentially, the name of this Bill - the Public Service Pensions (Single Scheme) and Remuneration Bill 2011 - should include the phrase "if the Minister feels like it".
The Minister has just given a future Minister a way of getting out of the requirement to comply with the entire Bill.
Wait a second now.
It can be withdrawn if a Minister says it should be withdrawn. That is what I am hearing.
Not only is that daft, but it is also fanciful. Perhaps the time of the evening has caused the Deputy to get a rush of blood. We are talking about the timing of an increase, rather than the basis of the pension itself. Each person will have his or her pension. The net issue is when the person will get his or her 3%, if inflation is 3%.
Not whether.
The issue is not whether the person will get his or her pension at all. That is the structure of this section.
The United Left Alliance is opposed to this section for a number of reasons. The Minister has indicated that this whole scheme will save approximately 35% of the current-----
It will not save me anything because I will not be around. The saving will be to the State.
It will save the State approximately 35%. As we said earlier when we discussed the career average, it is difficult to see precisely where these savings will come from. The switch to the consumer price index is one of the three main new elements of the pensions regime. Obviously, the Minister thinks the State will have to pay less when a pension is linked to the consumer price index than it would have to if the pension was linked to the final salary of the recipient. We oppose this approach for that reason alone. The impact of the use of this system will not distinguish between higher paid civil servants and low and middle-income civil servants. We would not subscribe to a reduction in the pension entitlements of low and middle-income civil servants. As I see it, this is a mechanism that can be used to cut their pension entitlements. In addition to that issue, the issue of the power that is being given to the Minister also arises. Under the current scheme, if somebody in the relevant grade gets a pay increase, the pensioner automatically gets a proportionate increase in his or her pension. There is no ministerial discretion - the pensioner gets the increase - and there is no time lag.
The Deputy is incorrect on both counts. There is discretion and there is a time lag.
Is it not linked to the pay increases that public sector workers get?
Administratively, it is. The legal power not to do it rests with the Minister.
It is paid once a year in arrears.
Yes, but that is a regular time interval. This section of the Bill provides for something quite different. Section 39(4) provides that "the Minister shall decide when any increase in pensions under this section is to be paid having regard to movements in the consumer price index, including the timing and the means by which any increase is paid". That will give the Minister of the day enormous discretion to delay the payment of increases or, as the Minister has just indicated, not to pay them at all in what might be construed as exceptional circumstances. Given that such circumstances are the norm rather than the exception in the current economic climate-----
Has the Deputy noticed-----
-----that will give a future Minister a huge amount of flexibility to decide not to pay the increases to which pensioners will be entitled. I find that very objectionable and problematic.
I would like to clarify something. We are in legislative mode. I will allow the Minister to respond in a moment. I would like to clarify the position on behalf of the committee. As I understand it, the Minister has said this is a timing issue rather than a substantive issue. In other words, it is "when" rather than "whether". I would be concerned if the impression was given that the committee was overseeing some set of exceptional circumstances in which the making of payments under this scheme could be avoided. That does not appear to be the case. I am not intervening in the discussion. Like everyone else, I am operating on the basis of my reading of the Bill and the amendments. I am speaking for the purposes of clarification when I say I cannot see any reference to exceptional circumstances in which a Minister could determine of his or her own volition that payments due under the scheme we are legislating for should not be paid. We are engaging in an important legislative function. I want this matter to be clarified.
The Chairman is exactly right. What is referenced here is the "when", not the "what". The power concerns when it is paid. I do not know whether Deputy Boyd Barrett is in a void or a cocoon when he states "in exceptional circumstances some time in the future" people might-----
That is the phrase the Minister used.
-----not get pension increases. Does the Deputy realise there have not been pension increases in the public service for some time because of the awful situation we face? This would be an advantage. The old idea was that a person got pension rises linked to pay rises. There have not been pay rises so pensions have been flat just as pay in the public service has been - in fact it has gone backwards. In addition, there has been a levy on pensions which is linked to the consumer price index. Right now, therefore, if it was in operation this scheme would be much more advantageous than the existing one because pensioners would be entitled to the consumer price index increase, as opposed to being linked to a wage increase.
Yes, but-----
The Deputy made a number of points, of which this was the last. The first related to lower paid workers being better off under the old scheme. He is wrong.
There was more certainty.
Under the old scheme, if a retired Secretary General or a general in the Army got a wage rise the worker got the same proportionate wage rise. Now, under this scheme, the wage rise will be CPI-linked so the worker will get the same in percentage terms, whether he or she is a clerical officer or a Secretary General, a retired private or a general of the Army, as opposed to the big moiety of money a Secretary General, a general of the Army, or a Garda Commissioner might get. The Deputy is wrong, in that context.
In the section under discussion, section 39(4) , paragraphs (a) and (b), it is stated:
The Minister shall decide when any increase in pensions under this section is to be paid having regard to movements in the consumer price index, including the timing and the means by which any increase is paid—
(a) to all or any class of pensions payable under this Part,
The Minister might determine it would be advantageous in public policy terms to be more generous to certain people below a threshold, for example, in terms of timing, than to others if there was pressure on the public purse.
Is that okay?
In the first place, the Minister seems to be asserting, on the one hand, that he will make these savings and that the switch to the CPI will allow him to do so and on the other, and in response to the point I made, he is trying to claim payment will be more generous.
It would be now, at this minute. It is a simple point.
Those two propositions do not add up, do they? On the one hand, we will make this massive saving, on the other, the outcome will be more generous, according to the Minister.
It would be in the current circumstances.
Presumably, the Minister did not introduce the measure in order to be more generous. He is not seriously suggesting that.
Correct.
In the medium to long term, therefore, the Minister believes this will mean the pension entitlements of public and civil servants will be less than they are under the current scheme. Is that not the reality? He would not be doing this otherwise, or certainly not on the basis that he would make 35% savings which would contribute substantially to it. The Minister is engaging in politicking in this regard, and is not telling the truth about his intention or about the likely impact on civil servants.
I take great exception to the Deputy's comment.
It is not appropriate for Deputy Boyd Barrett to suggest that a person was not telling the truth.
Can I say "spin"?
The Minister was making a comparison between the changes being based on the CPI and the current situation, which relates to salary.
My point is that the two imperatives, the claim made by the Minister on the one hand, and the imperative to make 35% savings, which would be made by these measures, do not add up. It would be less advantageous to the pensioner.
The Minister stated that the Minister for Finance could decide to be more generous to a particular class of pensioner. Presumably, he means the Minister could distinguish between those who might need an increase more, and those who might be deemed to need it less, for whom it would be delayed. That paints a picture of a very benign Minister. However, the actual wording of the legislation gives the Minister total flexibility. "Timing" can potentially equate to not paying the increase at all. A Minister could say he or she was not paying the increase for five, ten, or fifteen years. The wording in question allows total flexibility for the Minister to make the decision as to whether he or she will award the increase. The Minister will decide when is the appropriate time or if it is appropriate. That is the reality. The excuse of an emergency or exceptional circumstances could be used at any point in order not to give people their entitlements in terms of pension increases. That is as against the current system whereby they would have had some certainty about getting those increases.
We have ventilated the issue.
I believe we have.
I raised my hand.
I did not spot that. I call the Deputy.
I have no difficulty with the use of the consumer price index at payment phase of the benefit but what I was getting at in my amendment was that there was an issue in terms of the indexation during the accrual phase. As I am sure the Minister is aware, the Hutton report recommended that the appropriate indexation method to protect the value of pensions in a fair way was to link at that phase and make the linkage with average earnings. The Chairman ruled me out of order and there has been a long discussion but I wish to put on the record that this was the intention of my amendment.
Very good.
Question put and agreed to.
SECTION 40
I draw the attention of members to the amendment list on page 19 where the same typographical error recurs. In amendment No. 114, in page 43 subsection 4(c), line 36, the next word should be "before", not "after".
I have to attend to a short commitment now. Is it agreeable, by leave of the committee, that Deputy Arthur Spring should take the Chair for a short period? Agreed.
Deputy Arthur Spring took the Chair.
I move amendment 113:
In page 43, subsection (1), line 6, to delete "may, from time to time" and substitute "shall, at intervals of six years or less".
The new scheme will operate on a pay-as-you-go basis and consequently will not have a fund. Statutory and other requirements that provide specific actuarial reviews will not apply. The actuarial review envisaged in the Bill - I refer to section 40, on page 43 - relates to the overall cost of the scheme and the cost of contributions paid by both employer and employee. I am satisfied that the provisions, as drafted, afford appropriate flexibility to enable reviews to be carried out when and where required.
I asked that instead of "from time to time" the wording should refer to "intervals of six years or less". This is important in the public interest. There is a social insurance fund in respect of jobseeker's and other benefits. Sometimes this runs into deficit - I believe it is currently in deficit - but at good times for the economy there will be a surplus. It is good to have that idea. That is an actual fund, however; this is not. It would be helpful even it was only to show the current value of pension liabilities.
I would say we get parliamentary questions about that every year.
The Minister is satisfied there are other mechanisms to deal with this.
I answer questions about the amount of pension liability very regularly.
I will withdraw my amendment.
Amendment, by leave, withdrawn.
I move amendment No. 114:
In page 43, subsection (4)(c), line 36, after “23,” to insert “23,*”.
Amendment agreed to.
Section 40, as amended, agreed to.
SECTION 41
I move amendment No. 115:
In page 44, subsection (1), line 17, to delete "section 40” and substitute “section 40(4)”.
This is a minor drafting amendment to identify with full precision a prior element of the Bill.
Amendment agreed to.
Question proposed: "That section 41, as amended, stand part of the Bill."
The Minister can change the contributory rates, which seems reasonable, but is bound by the higher or lower rate in the review stipulated in section 40.
The idea is that once the review determines liability and what is appropriate, one cannot have a grab at pension contributions to augment something else. Therefore, the Minister is bound by the analysis done and the figures that throws up.
That seems sensible. Will it be possible for a Minister in setting the terms of reference of the review to effect the potential bands? In other words, the actuary could come back and say-----
I think there would be an enormous push back from the public service unions and everybody else if one did not deal with this with a straight bat. This is to determine what is an appropriate rate of contribution analogous to what might be provided for at the end in terms of pension.
I thank the Minister for that.
For completeness, I advise that it must be carried out by a qualified actuary in accordance with section 40.
My concern is that a future Minister could set the terms of reference of a review, say this is the burden we are dealing with and the State can no longer do whatever.
I do not think so. The bottom line is that Members of the Oireachtas, public sector unions and everybody will be watching with beady eyes. I do not think people would get away with that.
I thank the Minister for that.
Question put and agreed to.
SECTION 42
Amendments Nos. 116 to 119, inclusive, are related and may be discussed together.
I move amendment No. 116:
In page 45, subsection (1), lines 5 to 8, to delete paragraphs (a) and (b) and substitute the following:
"(a) the contributions paid by the Scheme member concerned in each pay period, and
(b) the referable amounts accrued by the Scheme member in each pay period.”.
These are drafting amendments to ensure consistent language is used throughout the Bill.
Amendment agreed to.
I move amendment No. 117:
In page 45, subsection (2), line 13, to delete "concerned".
Amendment agreed to.
I move amendment No. 118:
In page 45, subsection (2)(b), line 18, to delete “during such tax year” and substitute “in such tax year”.
Amendment agreed to.
I move amendment No. 119:
In page 45, subsection (3)(a), line 30, to delete “pension”.
Amendment agreed to.
Question proposed: "That section 42, as amended, stand part of the Bill."
This section deals with the duty of the relevant authority to keep and supply records. Some other public body could have the record on behalf of an organisation. The section provides the calculation and payment of benefit shall be the function of a relevant authority for the public service body-----
What section is the Deputy referencing?
Section 42.
Which subsection?
I am reading from the explanatory memorandum. I operate from that.
That is fine.
The last line on the section in the explanatory memorandum states: "Nothing in this section prevents the relevant authority making arrangements for the payment as its agent of any retirement benefit through another relevant authority or a third party." Does that facilitate the privatisation of the administration of the public service pensions? I think it does. I can understand the reference in it to the relevant authority. I could understand if the Minister for the Environment, Community and Local Government were to handle the job on behalf of all local authorities or if one body in the public service were to deal with all pensions, as I have suggested, rather than having 100 different organisations doing it and the level of duplication of administration that involves. There could be a relevant authority but the provision allows for a third party. It might be organised on a contract basis but it could facilitate the private sector in terms of the outsourcing of the process.
No. That is not what is intended. The Deputy is correct in that pensions administration is one of the issues on our checklist for shared services. We are doing this in respect of human resource management and payroll and we will migrate into pensions to have a common public service pension provider within the public service. That is what the intention is but I need to capture within it the reality of the position now. We have migrated new bodies into the public service pension scheme because of their vulnerability, as in the case, for example, of Trinity College, which has a scheme operated by Mercer, which is a private operator. There are numerous other schemes like that which are captured in the public sector scheme but would be operated by private individuals in the interim and that might continue.
That point was an observation more than anything else.
Question put and agreed to.
SECTION 43
I move amendment No. 120:
In page 46, subsection (1), lines 4 to 9, to delete paragraph (a) and substitute the following:
"(a) in respect of any Scheme member to whom section 20, 21, 22 or 23* applies, be paid out of the Central Fund or the growing produce of that fund by or on behalf of the Minister, and”.
Amendment agreed to.
Question proposed: "That section 43, as amended, stand part of the Bill."
Why is an exception made in respect of the Central Fund? It is a continuation of current practice but what is the point of it?
There are things that are paid directly from the Central Fund that are not part of the Estimates, Voted money. This is an entitlement that is understood and that is the way it is done. Is there a reason it should not be done this way? If there is, I would be happy to hear it.
No. It just seems odd to pick out a few people and pay them in a different way.
I am advised the reasoning behind it, traditionally, was to underscore independence. Under the Constitution, judges, for example, are constitutionally independent and the notion that we would have to Vote their pension entitlements would be seen as infringing that constitutional independence.
I thank the Minister for that.
Question put and agreed to.
SECTION 44
Question proposed: "That section 44 stand part of the Bill."
I am not going to oppose the section but I want to speak on it. I have an issue with it as my understanding of it is that it puts all the liability for overpayment on the payee and none of the liability on the payor. We had a situation recently where people on various pensions were paid too much. Many of them did not know they were being paid too much. They were taking the money and spending it in good faith. This sort of correction caused an awful lot of problems for people. My concern with this section is that over a long period of years the pensioners or their survivors could get €200, €500, €1,000 or €2,000 more through no fault of their own - having completed all the paperwork, they are receiving in good faith exactly what they think they should be getting - and ten years down the line someone sees an error and tells them they owe back €20,000. This puts all the liability for that on the person who received the money in good faith. It does not seem balanced.
I am afraid that is the way the system normally works, that if one is paid too much the system takes it back, whether this is a social welfare overpayment or any other overpayment. I refer the Deputy to subsection (2) which states that it may be agreed between the parties concerned, with the consent of the Minister, that an overpayment may be repaid in a form including a reduction of any benefit payable under the scheme or it can be repaid in accordance with the payment schedule so that it could be averaged out over time.
It provides flexibility for the liability but it still gives all liability. It does not seem right to me that this should be the case. I have not tabled an amendment but I ask the Minister to consider adding something on Report Stage that might at least give the Minister discretion in cases to decide-----
I suggest if Deputy Donnelly tables an amendment on Report Stage I will consider it between now and then.
I thank the Minister.
Other considerations apply besides the flexibility. If a person has been paid an overpayment for 20 years and it is then discovered, the Statute of Limitations will apply. I will consider an appropriate amendment from the Deputy.
I will also table an amendment on this issue.
Question put and agreed to.
SECTION 45
I move amendment No. 121:
In page 46, subsection (2), line 41, to delete "employment" and substitute "employments".
This is a drafting amendment.
Amendment agreed to.
Section 45, as amended, agreed to.
NEW SECTION
I move amendment No. 122:
In page 47, before section 46, but in Chapter 3, to insert the following new section:
"46.—The Minister, notwithstanding that contained in section 8 in relation to pre-existing public service pension schemes, shall, before any changes are made to pre-existing public service pension schemes, provide for a period of consultation with all interested stakeholders.".
Section 39 dealt with the CPI, the consumer price index. I understand that section 39 provides that the consumer price index may now be applied to pre-existing public service pension schemes. This is intended to be a new system for new employees but in section 46 the Minister seems to be giving himself the power to make this change applicable to the current system. I thought we were dealing solely with new entrants but the Minister seems to wish to be able to extend this provision to pre-existing public service pension schemes, namely, the current scheme. The wording of my amendment is designed to discuss the issue so that a period of consultation with all interested stakeholders would apply before the Minister makes changes. I chose that wording because if I put in what I wanted it to do, it would probably be ruled out of order. Why is section 46 included in the Bill?
I commend the Deputy's ingenuity in getting a discussion on the matter. I reflected on the matter and it will be a useful device to consider for the future. If we believe in the fairness of consumer price indexing, then we need to reflect on why it would not be applied to current pensioners in the future. The Deputy's amendment proposes consultation. There have been detailed consultations on all the elements of this Bill. This provision will not be possible to be activated in the lifetime of the Croke Park agreement so it will not be an immediate prospect. I am minded to leave the authority with the Minister for Public Expenditure and Reform to change from linking to the consumer price index future pay increases to incumbents in the job they last held for the same reason I am moving it in the new scheme that we might do it in the future. There is no firm intent to do it; it is simply giving the authority to the Minister to do this in the future. From my perspective, before I would activate this measure, I would certainly involve myself in discussions with the relevant trade unions in this regard.
I will certainly oppose this section. I was under the impression that these changes would apply to new entrants only. The entire discussion up to now has been about new entrants-----
Except for this issue, which I made crystal clear in my Second Stage contribution.
There are only a limited number of people who know what any of us said in our Second Stage contributions.
I am shocked to hear that the world is not listening.
That is the reality. Also, I think very few people know we are having this discussion this evening. They are probably watching a soccer match between Spain and Portugal or some event of that sort.
I wish to bring balance to the record. The Minister has stated on several occasions that he has undertaken consultations. The Irish Congress of Trade Unions attended this committee and the delegates said that they do not support this legislation.
I have never said they did.
The Minister has said he has had several consultations but the delegates from ICTU are making it clear that they oppose this legislation. They entered into consultation on the basis that they wished to ameliorate some of the worst aspects but they are still opposed to the Bill in its entirety. Talk of consultation does not mean there was ever agreement on this issue between the Minister and the public sector trade unions. They are not in favour of it. I am surprised, therefore, that this new power is being introduced by the Minister. Will it apply to those who are already members of a pension scheme and also to those who are current pensioners? Will it include both?
No. If it is changed, it then becomes the norm. I re-read the Bill because I wanted to see if the provision could be reversed and the advice from the Attorney General is that the provision cannot be reversed once it is included. It is a power which the Minister exercises and it would require new legislation to have the calculation changed. If this section is enacted, if I or a future Minister take that power, it will require a formal vote of the House because a regulation would need to be given formal approval by both Houses.
Most regulations do not require formal approval by the Oireachtas.
I am putting it in as a voted regulation. There are two forms of regulation: those which become operable after a period of time if they are not annulled and others which require a formal vote in order to become operable. This case is the latter.
I am quite sure that of the 300,000 public servants, only 300 are aware that this legislation is an enabling mechanism to permit the Minister to change their current pension entitlements when they retire. If the Minister or his successor were to invoke it, the pensions of these public servants would not be linked to future salary increases but rather they would be linked to the consumer price index, as is intended to be the case for new entrants. Most people will be shocked that he is applying that power to the current system.
The trade union movement had lengthy discussions with me and my officials on that point.
I do not think they agree with it.
I am not saying they agree with it but they will not be surprised by it.
I accept that of the 300,000 public servants there are probably 300, including the people who had consultations with the Minister, who are aware of it but I am quite sure that 99% are unaware. My constituency is a public sector constituency and I have not heard any concern being expressed about current public servants yet this opens the door once the Croke Park agreement is finished to the making of a dramatic change. I oppose this provision and I will submit amendments on Report Stage.
I support the link to the consumer price index. I never understood why the pensions were linked to other people's work. If I was a public sector worker or pensioner, I would want this provision because now that all of the pay increases have stopped, my pension will continue to tick up rather than go down. I have a related question. The salaries to which current pensions are tied have been falling. For example, Secretaries General have taken a big cut in their salaries. Does this mean the linked pensions have also decreased?
There was no formal across the board reduction in pension, that is, adjustments to incumbents; that level of adjustment did not happen. However, there was a general reduction in pensions of on average of 4%, and I introduced a graduated amount under the Financial Emergency Measures in the Public Interest legislation for those who were on very high pensions. There was a reduction of up to 20% for anybody on a pension of over €100,000. I would have gone further, as I have said previously, but the advice I received was that any more would have put the Financial Emergency Measures in the Public Interest legislation in constitutional peril. The grace period ended at the end of February, so every public servant who has retired since then has his or her pension calculated on the reduced income.
I have a second question. I am sure I heard the Minister state a few times, and during his debate with Deputy McDonald earlier in this meeting, that he could not make changes to the existing scheme under contract law, private property law or whatever the relevant law was. Is that not what this legislation is doing?
I mean this section.
No. We are talking about increases as opposed to touching what people have. All these things are judgments, and I am not inviting people to challenge these constitutionally. However, the strong advice is that pensions is a delicate area, because pensions are a preserved property right under the Constitution. That is already well legislated for, so one cannot damage it. What we have done with the 20% top-slicing is couch it in the context of the Financial Emergency Measures in the Public Interest legislation and the financial emergency in the State. We have had the forbearance of the courts because that has been tested. It would be more difficult to try to do that in peace time.
I thank the Minister.
For all the reasons that Deputy Boyd Barrett put forward about section 39 and the link to the CPI, we are opposing this. It is concerned with pre-existing public sector workers. Heretofore, if there was inflation in the economy, the unions would negotiate with the Minister for pay increases. Those pay increases would be reflected in the pensions of pensioners in those grades. To break that link is a wrong move, from that point of view, in the context of section 39, which gives the Minister of the day that flexibility. That is one of the reasons we oppose it. Bord na Móna workers are out on strike today demanding pay increases that they were guaranteed. There are sections of workers who in the future may seek pay increases on the basis of inflation and so forth. That is the reason we are opposing the section, particularly given that people have had pre-existing arrangements which they have worked with for the last 50 or 60 years.
I have answered the point about the CPI.
Deputy Donnelly has pointed to the fundamental problem I have with this. The Minister keeps telling us that he cannot touch the existing pensions scheme, particularly those at the higher levels. However, not only section 46 but also section 47 articulate a power whereby the Minister, where he or she "considers it appropriate in the circumstances, the Minister may, at his or her discretion, by order set a date or dates beyond which the provisions ... shall not apply...".
The Deputy should speak on section 46.
It is thematic. I am saying this with an eye to time management also.
We will stick with the section.
Okay. The point has been made.
I have answered this a dozen times, but I will do so again. I am restricted from interfering with existing pension entitlements. That is the constitutional advice I have. However, I have never said that I cannot touch them. What we are talking about here is the basis of calculation of future increases, and there is scope to deal with that.
Amendment, by leave, withdrawn.
Question, "That section 46 stand part of the Bill", put and declared carried.
Section 47 agreed to.
SECTION 48
Amendments Nos. 123 to 130, inclusive, are related and may be discussed together by agreement.
I move amendment No. 123:
In page 47, subsection (2), line 39, after "deceased member" to insert the following:
"or a deceased member of a pre-existing public service pension scheme, as the case may be,".
These amendments are minor drafting changes and technical amendments to include cases where there would be classes of deceased members.
Amendment agreed to.
I move amendment No. 124:
In page 48, subsection (2), line 4, to delete "that deceased member" and substitute "any such deceased member".
Amendment agreed to.
I move amendment No. 125:
In page 48, subsection (3), line 7, after "deceased member" to insert the following:
"or a deceased member of a pre-existing public service pension scheme, as the case may be,".
Amendment agreed to.
I move amendment No. 126:
In page 48, subsection (4), line 15, after "deceased member" to insert the following:
"or a deceased member of a pre-existing public service pension scheme, as the case may be,".
Amendment agreed to.
I move amendment No. 127:
In page 48, subsection (5)(a), lines 22 and 23, to delete all words from and including “a relevant” in line 22 down to and including “operation” in line 23 and substitute the following:
"a relevant authority or other body concerned (being the authority or body that would be responsible for, or would authorise, the payment of the pension concerned) such information as is necessary for the proper operation of the Scheme or the pre-existing public service pension scheme".
Amendment agreed to.
I move amendment No. 128:
In page 48, subsection (5)(b), line 28, before “such” to insert the following:
"or other body concerned (being the authority or body that is responsible for, or authorises, the payment of the pension concerned)".
Amendment agreed to.
I move amendment No. 129:
In page 48, between lines 30 and 31, to insert the following subsection:
"(6) Any person who—
(a) applies for or is in receipt of more than one pension under either or both the Scheme and a pre-existing public service pension scheme (whether in respect of himself or herself or otherwise),
or
(b) applies for one or more than one such pension while in receipt of one or more than one such pension,
shall give to the relevant authority or other body concerned (being the authority or body that is or would be responsible for, or authorises or would authorise, the payment of any of the pensions concerned) such information as is necessary to identify, in relation to him or her or any other person in respect of whom the pension is payable or applied for, all such pensions and applications for pensions.".
Amendment agreed to.
I move amendment No. 130:
In page 48, subsection (6), line 42, to delete "subsection (1), (2), (3) or (4)” and substitute “subsection (1), (2), (3), (4), (5) or (6)”.
Amendment agreed to.
Question proposed: "That section 48, as amended, stand part of the Bill."
On the previous point about liability, this section backs up the point. There are reasonable and onerous rules for anybody in the pension scheme to provide a certain amount of the correct information. This is strong legislation that says one must do all of these things. This further supports the point that if the person has done all these things and an error is made by the State-----
The Deputy should table an amendment and we will look at it.
I thank the Minister.
Question put and agreed to.
SECTION 49
I move amendment No. 131:
In page 49, subsection (1)(a), lines 3 and 4, to delete “the payment of the pension to the person” and substitute the following:
"the payment to the person of the pension or of any lump sum that relates to that pension entitlement".
This amendment enables the provision of necessary information in connection with the administration of pensions. The information may cover lump sums and other gratuity type payments as well as pensions.
Amendment agreed to.
I move amendment No. 132:
In page 49, subsection (1)(b)(i), line 9, after “Scheme” to insert “or a pre-existing public service pension scheme”.
This amendment enables the provision of necessary information in connection with the administration of pensions.
Amendment agreed to.
Amendments Nos. 133 and 134 are related and may be discussed together.
I move amendment No. 133:
In page 49, subsection (1)(b)(ii), line 10, after “transfer” to insert “or exchange”.
Again, these amendments enable the provision of necessary information in connection with the administration of pensions.
Amendment agreed to.
I move amendment No. 134:
In page 49, subsection (1), line 14, after "transferred" to insert "or exchanged".
Amendment agreed to.
Section 49, as amended, agreed to.
SECTION 50
Amendments Nos. 135 to 139, inclusive, are related and may be discussed together by agreement.
I move amendment No. 135:
In page 49, subsection (1)(b)(i), lines 24 and 25, to delete all words from and including “retirement” in line 24 down to and including “benefits” in line 25 and substitute the following: “any preserved pension or any preserved lump sum or any other retirement benefit”.
On the advice of the Parliamentary Counsel this amendment, consistent with the separate definitions of preserved pension, clarifies the benefits can include preserved pension and lump sum or other retirement gratuity.
Amendment agreed to.
I move amendment No. 136:
In page 49, subsection (2), line 31, after "declaration" to insert "to the relevant authority concerned".
Amendment agreed to.
I move amendment No. 137:
In page 49, subsection (2), lines 31 and 32, to delete "any other benefits or preserved benefits" and substitute the following:
"any preserved pension or any preserved lump sum or any other retirement benefit".
Amendment agreed to.
I move amendment No. 138:
In page 49, subsection (3), line 36, after "declaration" to insert "to the relevant authority concerned".
Amendment agreed to.
I move amendment No. 139:
In page 49, subsection (3), line 37, to delete "they are" and substitute "he or she is".
This amendment consists of a minor grammatical change.
Amendment agreed to.
Section 50, as amended, agreed to.
SECTION 51
Amendments Nos. 140 and 141 are related and may be discussed together.
I move amendment No. 140:
In page 50, lines 1 and 2, to delete paragraph (b) and substitute the following:
"(b) the pensioner is appointed to a position in respect of which remuneration is paid by a public service body,”.
Section 51, as published, provides that where a pension is payable by a public service body to a public service pensioner, and the pensioner receives any remuneration from any public service body, then during this time no more than the pension shall be paid that such, with the remuneration, equals the pensionable remuneration that the pensioner would have received if he or she was once again working in the position in which he or she served in the public service.
I may remove any doubt or question arising from the section. The section provides that I may waive the abatement provision if persons with a particular training or experience are required for particular work in the public service body concerned and it is not practical to meet that requirement otherwise than through the employing of a pensioner. This is an important matter because there has been a good deal of debate on rehiring people. There is an abatement rule and I am making it clear that the abatement rule should apply but there will be exceptional circumstances. On advice that I have received from the Army, in particular, and the Garda, if there is a particular job that must be filled in the public service and I cannot get anybody to do it other than the Department of Defence or the Garda Síochána, then I have the flexibility to allow a more generous situation to apply on a temporary basis.
I understand that people can return to work on a second salary. Is that correct?
The Minister has substantially reiterated current practice. There must be a lot of cases, especially with the requirement that people work until 68 years of age. Let us take the example of a garda who retires in his 50s on possibly half of his salary but he could get another job in the public service, even one that is unconnected with his previous post. His salary could be higher than half of his previous salary. How does the provision apply to nurses who retire on a pension, receive a gratuity lump sum and return to work on the following Monday through an agency?
I know what the Minister will say but I am worried about the scenario. I shall not go into detail about a particular case. I have received a response from the Minister for Health, Deputy James Reilly, about agency staff operating in several hospitals and the large number of agency staff used. I know some of them personally and I know that they retired on a Friday yet they were told just beforehand that they were needed on the following Monday, they took their lump sum-----
Who were they?
They were nurses and they were needed in a critical area. They were advised by their superior before they left that they should register with a particular agency and they would be back to work on the following Monday. I have often pursued such issues. How does the provision capture the person who returns for agency work? I do not think that it does. Does it? Is there any way that the Minister can deal with such a scenario?
I will have to think about that. Obviously this is a public service pension.
Yes.
If one is a private sector employee-----
Agency workers.
-----then one is not captured.
I am worried that there is a way around it.
I would welcome any suggestion from the Deputy but I do not see a way around it. The provision is intended to ensure that a pensioner's total income from salary and pension does not exceed the salary that he or she would have had if he or she had not retired from the public service. In order to get a pension the bulk of your working career, presumably, would have been spent in a particular career path. If you come back then you should not be able to get your retirement pension plus another public service payment. It seems to me that such a move is unfair. Most of the people to whom the provision applies would be fast accrual people-----
Like gardaí.
-----who like the Deputy's example of the Army or Garda would come back. They have been treated very generously but this is a fairer system.
There were anomalies in the system and the Bill will rectify them. If one rejoined the public service and worked in the same sphere as previously then a person's pension was abated but often if one went into a different sphere the pension was not abated. It will all be abated under these provisions but prospectively and going forward rather than for incumbents.
The Deputy mentioned people who return as private employees on a contract basis. I do not know how such a scenario can be captured but I shall reflect on it further. I would be happy to hear any suggestion from the Deputy on the issue.
I ask the Minister to talk to me about teachers. We all know that everyone gives out about them. What about a teacher who has retired having received a lump sum yet receives six months work to cover maternity leave?
The abatement rule would apply.
It does apply. I think that they lose their pensions for the days in which they are back in employment.
That is correct. There is a bigger issue. I have spoken to the Minister for Education and Skills on the matter. I do not think that it is right for retired people to come back when we have young unemployed teachers. It is often a matter of convenience - I should not say laziness. People know somebody convenient-----
Just up the road, yes.
-----and they can pick up the telephone when somebody rings in sick. Whatever about covering for a day, the notion of providing maternity leave cover or something like it is unacceptable. I have spoken directly to the Minister for Education and Skills on the matter. There was, if I recall correctly, a provision in the teacher registration Bill that would legally prohibit such cases but it was taken out of the Bill.
Yes.
It was removed because there was a lot of pressure placed on people and, for practical reasons, sometimes one needs to hire a retired teacher. I do not mind it being done in extreme cases but it should not be the rule.
Amendment agreed to.
Deputy Alex White resumed the Chair.
I move amendment No. 141:
In page 50, subsection (1), line 16, to delete "as may be specified" and substitute the following:
"since that day as may be specified by the Minister".
Amendment agreed to.
I move amendment No. 142:
In page 50, between lines 38 and 39, to insert the following subsection:
"(5) Nothing in section 3 or subsection (4) affects any discretion exercised by the Minister under section 1(2) of the Pensions (Abatement) Act 1965 in respect of a person where the person continues to hold the position to which the discretion relates.”.
The amendment protects the discretion exercisable by the Minister under the Pensions (Abatement) Act 1965 in the case of a person who continues to hold a position to which the discretion relates. This means that existing abatement continues, in effect.
Amendment agreed to.
I move amendment No. 143:
In page 51, between lines 9 and 10, to insert the following subsection:
"(7) Nothing in this section affects the provisions of the Oireachtas (Allowances to Members) Act 1938, in particular in respect of any person to whom either or both subsection (2) of section 4 and subsection (2) of section 16 of that Act (as amended by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices Act 2009) applies or apply, as the case may be, and those subsections shall apply to Scheme members to whom the Oireachtas (Allowances to Members) Act 1938 relates.".
The amendment ensures that the application of public service wide abatement only applies to those who take up public service employment after the passing of the Act and that it does not run contrary to the provisions of the Oireachtas (Allowances to Members) Act where ministerial pensions are paid to Members of the Houses and the European Parliament cease to be paid to sitting Members of the Houses of the Oireachtas.
Amendment agreed to.
Section 51, as amended, agreed to.
SECTION 52
I move amendment No. 144:
In page 51, subsection (1)(a), line 12, to delete “is dismissed or resigns” and substitute the following:
"is dismissed, retired or discharged, or resigns or retires,".
Amendment agreed to.
I move amendment No. 145:
In page 51, subsection (2)(b), line 33, to delete “relates” and substitute “relate”.
My amendment contains a minor grammatical adjustment.
Amendment agreed to.
I move amendment No. 146:
In page 51, subsection (2)(b), line 34, to delete “any benefit or preserved benefit” and substitute the following:
"any preserved pension, any preserved lump sum or any other benefit".
Amendment agreed to.
I move amendment No. 147:
In page 51, subsection (2)(b), line 36, to delete “(including, in either case, any lump sum)”.
Amendment agreed to.
I have a quick technical question on amendment No. 148. In the book of amendments the amendment has been listed under section 53.
We have not got to that yet.
I know. Please let me read it as I want to check this. On page 52 it states: "In page 52, before section 53, but in Chapter 4," but that is in section 52.
It is after section 52.
If it is a new section then that is the way it is done. The amendment has been listed before section 53. That is the normal way these amendments are noted. It is not part of section 52.
I thank the Chairman.
Question proposed: "That section 52, as amended, stand part of the Bill."
I wish to comment on the section. I agree with the Minister's change in wording to "is dismissed, retired or discharged, or resigns or resigns," and it is as a consequence of misconduct and there is a loss to the State. It is a mechanism for the State, the organisation or relevant body to recoup losses.
Can he describe the type of misconduct? Is it a legal term? I can think of many people who have been negligent in their duties to the State and to their employer and they may have done both. Does not doing one's job constitute misconduct?
The Minister might tell the committee more. I believe the provision should be broadened and it should be negligence. What if a chief executive of an organisation is paid a handsome salary to do a job on behalf of the State but he does not do it? Misconduct implies he did something improperly. What about the person who just sits there, who did not do his or her job at all but is guilty of maleficence and has allowed losses to occur? There should be a mechanism in place to penalise that type of person.
I would be wary of entering that territory. My provision replicates, in a slightly tidier way, the existing pattern. There must be a finding.
Yes, a court finding.
A court or tribunal finding. Who could objectively say whether someone was lazy or if he or she had been more alert that we could have saved money? Who will make such a determination? It is a very dangerous area to be treading.
There are bodies that make adjudications on unfair dismissals. I know that the Labour Court is not a court of law. What if the court found that a dismissal was reasonable for stated reasons, part of which might be that a person had not fulfilled their contract of employment? What happens in those situations? I am not talking subjectively, I am talking about an objective body confirming that.
Confirming what exactly?
Let us take the example of a person who is discharged from his or her duties but takes a case of unfair dismissal. The objective body, the court that examined the case, then decides, due to a case put forward by the employer, that the person has breached their contract, and that the employer, either the State, body or board, was right to dismiss. It could either be the State, a State body or board, dismissing a chief executive for not doing his or her job. There is a point to be made if the court ruled that the dismissal was fair, based on those circumstances, and the organisation experienced a loss or the Irish taxpayer. I know that it is a narrow point but it is a way, as part of public sector reform, to make people accountable for their well paid jobs. The upside is that a person in a senior position earns a good salary but there should be a downside when a person does not do the job.
It is a different net point from the one that is captured by the section.
Yes, it is.
The section provides a mechanism by which the State can recoup a loss.
Yes, I understand and I agree with it. I seek to extend the provision.
On a point of clarification, it is a lot less easy to compute a loss in the case of poor performance whereas misconduct, presumably the reason for the provision, is hard to be quantified.
Okay.
Question put and agreed to.
NEW SECTIONS
I move amendment No. 148:
In page 52, before section 53, but in Chapter 4, to insert the following new section:
53.—(1) Where a person would, but for this subsection, be eligible to receive—
(a) more than one survivor’s pension to which section 32 relates, or
(b) more than one survivor’s pension (by whatever name called) paid under a pre-existing public service pension scheme, or
(c) one or more than one pension to which paragraph (a) relates and one or more than one pension to which paragraph (b) relates,
then, subject to subsection (2), that person shall be eligible to receive only one of those pensions.
(2) Where–
(a) a deceased member,
(b) a deceased member of any pre-existing public service pension scheme, or
(c) a deceased person to whom both paragraphs (a) and (b) relate,
was duly in receipt of, or eligible to receive, more than one pension in respect of his or her public service, then the person eligible to receive in respect of such service a survivor's pension to which subsection (1) relates shall be eligible to receive each such pension as relates to the public service of any one such deceased member.”.
I want to defend the provision. Is it worth specifying that the survivor gets to keep the higher pension? It seems slightly unclear if two of them are of very different values. Who gets to decide which one will be kept?
I presume that it is the most recent one. I will have a look at it again.
I thank the Minister.
Amendment agreed to.
Acceptance of amendment No. 149 involves the deletion of section 53 as it currently stands.
I move amendment No. 149:
In page 52, before section 53, but in Chapter 5, to insert the following new section:
54.—The Public Service Superannuation (Miscellaneous Provisions) Act 2004 is amended—
(a) in section 3 by substituting the following for subsection (1):
"(1) A person who is a new entrant to the public service shall not be obliged to retire on age grounds unless—
(a) otherwise provided for by this Act, or
(b) he or she is a member of the Single Public Service Pension Scheme other than a member of that Scheme who is the President, a member of either House of the Oireachtas or a qualifying office holder for the purposes of the Public Service Pensions (Single Scheme and Other Provisions) Act 2012.”,
and
(b) in section 5 by substituting the following for subsection (2):
"(2) The Superannuation Acts 1834 to 1963 shall have effect in respect of—
(a) with effect from 16 February 1988, the class of officers who are prison governors, and
(b) with effect from 1 March 2012, the class of officers, who are appointed to the position of Prison Campus Governor by the Minister for Justice and Equality,
subject to the Superannuation (Prison Officers) Act 1919 as if each class of officers concerned had been prescribed under and for the purposes of section 1(1) (as adapted by the Superannuation (Prison Officers) Act 1919, Adaptation Order 1933 (S.R. & O. No. 71 of 1933)) of the Superannuation (Prison Officers) Act 1919.".".
Section 53, as published, amended the 2004 Act to ensure certain existing superannuation provisions do not apply to members of the single scheme. That amendment is combined here with the inclusion of prison campus governors in the definition of that Act. I am advised that the notion of prison campus governors is a new concept.
Will the Minister explain it again?
Up to now we had prison governors.
Correct.
The Deputy will be familiar with certain parts of the midlands-----
Yes. Portlaoise, Wheatfield and Cloverhill prisons now have campus governors.
That is it. We want to capture the new term of "prison campus governors" as well as "prison governors."
Amendment agreed to.
On a point of clarification, a question in these proceedings must always be put in the positive. It is parliamentary practice to put the question in the positive. Members have already inserted new sections and, therefore, the parliamentary practice is that one cannot put a question that the section should not stand part of the Bill. The question must be "That section X stand part of the Bill." The actual proposal is that it should not but the parliamentary practice is to put it in the positive sense and, therefore, I have declared it lost. The effect of what has been proposed is clear and the new sections, proposed by the Minister, have been thereby inserted.
That is excellent.
It sounds like something from Flann O'Brien.
I pity the poor person reading this.
Please explain it for the public.
If I had explained it at the venue from where I have just come I would not have lasted very long.
The Chairman has done enough explaining.
Section 53 deleted.
Sections 54 to 59, inclusive, agreed to.
NEW SECTIONS
I move amendment No. 150:
In page 55, before section 60, but in Part 3, to insert the following new section:
60.—In this Part—
"Act of 1961" means the Courts of Justice and Court Officers (Superannuation) Act 1961;
"Act of 1991" means the Courts (Supplemental Provisions) (Amendment) Act 1991.".
Amendment agreed to.
I move amendment No. 151:
In page 55, before section 60, but in Part 3, to insert the following new section:
61.—Section 2 of the Act of 1961 is amended—
(a) in subsection (2), by substituting “Subject to subsection (2A) of this section, upon the grant of a pension” for “Upon the grant of a pension”, and
(b) by inserting the following subsection after subsection (2):
"(2A) Upon the grant of a pension, to any person to whom this section applies, pursuant to regulations under section 5 of the Courts (Supplemental Provisions) (Amendment) Act 1991 where the amount of the pension payable is actuarially reduced by reason of that person not having reached the appropriate age within the meaning of section 6 of that Act, the amount of a gratuity granted to that person under subsection (2) of this section shall be actuarially reduced by reference to—
(a) the age of that person on the date on which he or she ceases to hold office as a judge of the Supreme Court, the High Court, the Circuit Court or the District Court, as the case may be, and
(b) the appropriate age as aforesaid of that person,
in accordance with actuarial tables approved and issued from time to time by the Minister.".".
Does the Minister wish to comment?
He does but it is not possible for him to do so because it has already been discussed with amendment No. 3.
Amendment agreed to.
I move amendment No. 152:
In page 55, before section 60, but in Part 3, to insert the following new section:
62.—Section 4 of the Act of 1961 is amended—
(a) in subsection (2), by substituting “Subject to subsection (2A) of this section, upon the grant of a pension” for “Upon the grant of a pension”, and
(b) by inserting the following subsection after subsection (2):
"(2A) Upon the grant of a pension, to any person to whom this section applies, pursuant to regulations under section 5 of the Courts (Supplemental Provisions)(Amendment) Act 1991 where the amount of the pension payable is actuarially reduced by reason of that person not having reached the appropriate age within the meaning of section 6 of that Act, the amount of a gratuity granted to that person under subsection (2) of this section shall be actuarially reduced by reference to—
(a) the age of that person on the date on which he or she ceases to hold office as the Master of the High Court or Taxing Master, as the case may be, and
(b) the appropriate age as aforesaid of that person,
in accordance with actuarial tables approved and issued from time to time by the Minister.".".
Amendment agreed to.
I move amendment No. 153:
In page 55, before section 60, but in Part 3, to insert the following new section:
63.—Section 5(1) of the Act of 1991 is amended—
(a) in paragraph (a), by substituting “2 or more years of service” for “five years’ service or upwards”, and
(b) in paragraph (b), by substituting “2 or more years of service” for “five or more years of service”.”.
Amendment agreed to.
I move amendment No. 154:
In page 55, before section 60, but in Part 3, to insert the following new section:
64.—Section 6 of the Act of 1991 is amended—
(a) in subsection (1), by substituting the following paragraphs for paragraphs (a) and (b):
"(a) to or in respect of a judge, including a judge of the District Court, otherwise than on his or her having reached the appropriate age or upon his or her death, and
(b) to or in respect of a person holding the office of Master of the High Court, Taxing Master or county registrar otherwise than on his or her having reached the appropriate age or upon his or her death.”,
(b) by inserting the following subsection after subsection (1):
"(1A) Notwithstanding the provisions of subsection (1) of this section as to age or lapse of time, regulations under section 5 of this Act providing for the grant of a pension mentioned in subsection (1)(a) or (1) (b) of that section to or in respect of a judge, including a judge of the District Court, or the Master of the High Court or Taxing Master may provide for the grant of such a pension to or in respect of such a judge or such officer who vacates or ceases to hold office having reached the specified age but before reaching the appropriate age, provided that the pension payable in such circumstances is actuarially reduced by reference to—
(a) the age of such a judge or such officer on the date of such vacation of office or ceasing to hold office, as the case may be, and
(b) the appropriate age of such a judge or such officer, as the case may be,
in accordance with actuarial tables approved and issued from time to time by the Minister.",
and
(c) by adding the following subsection after subsection (5):
"(6) In this section—
‘appropriate age' means—
(a) in relation to a judge of the Supreme Court, the High Court or the Circuit Court—
(i) 70 years of age, or
(ii) the earliest age (being not less than 65 years of age) at which 15 years have elapsed since—
(I) the date of his or her appointment to the office which he or she vacated, or
(II) the date of his or her appointment to the first office in which he or she served (where his or her service consists of service in more than one office),
whichever age is reached first,
(b) in relation to a judge of the District Court, 65 years of age, and
(c) in relation to a holder of the office of Master of the High Court, Taxing Master or county registrar, 65 years of age;
‘pension' includes gratuity upon death;
‘specified age' means—
(a) in relation to a judge, including a judge of the District Court, 60 years of age, and
(b) in relation to a holder of the office of Master of the High Court or Taxing Master, 60 years of age.”.”.
Amendment agreed to.
Section 60 deleted.
SECTION 61
Question proposed: "That section 61 be deleted."
Section 60 to 64, inclusive, dealt with judicial pay issues that we took out and put into the Financial Emergency Measures in the Public Interest (Amendment) Bill 2012. We have already addressed that.
Question put and agreed to.
Sections 62 to 64, inclusive, deleted.
NEW SECTIONS
Amendments Nos. 155 and 156 are related and may be discussed together by agreement.
I move amendment No. 155:
In page 57, before section 65, but in Part 4, to insert the following new section:
65.- In this Part "Act of 2010" means the Financial Emergency Measures in the Public Interest Act 2010.".
This is a technical amendment which clarifies the subsequent references to the Act of 2010 as references to the Financial Emergency Measures in the Public Interest Act 2010.
Amendment agreed to.
I move amendment No. 156:
In page 58, before section 65, but in Part 4, to insert the following new section:
66.- Section 1 of the Act of 2010 is amended -
(a ) by inserting the following definitions:
" ‘aggregation of public service pensions' means the aggregation under subsection (1A) of section 2 of two or more public service pensions payable to a pensioner for the purposes of the application of subsection (1) of that section in relation to the pensioner;
‘pension adjustment order' means an order under -
(a ) section 12 of the Family Law Act 1995,
(b ) section 17 of the Family Law (Divorce) Act 1996,
(c ) section 121 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, or
(d ) section 187 of that Act,”,
and
(b ) in the definition of “public service pension scheme”, by substituting “but, other than a scheme made in respect of the Central Bank of Ireland, does not include” for “but does not include”.”.
Amendment agreed to.
Sections 65 to 67, inclusive, deleted.
NEW SECTIONS
Amendments Nos. 157 to 162, inclusive, are related and may be discussed together by agreement.
I move amendment No. 157:
In page 58, after line 34, to insert the following new section:
68.- Section 2 of the Act of 2010 is amended by inserting the following subsections after subsection (1):
"(1A) If two or more public service pensions are payable to a pensioner, all such pensions shall be aggregated for the purposes of applying subsection (1) in relation to the pensioner.
(1B) Where a pension adjustment order has been made in relation to a public service pension, the annualised amount of the public service pension shall be reduced under this section before it is paid in accordance with the provisions of the pension adjustment order.".".
The purpose of this amendment is to provide for aggregation of public service pensions for the purpose of applying the public service pension reduction under the Financial Emergency Measures in the Public Interest legislation. The public service reduction currently applies separately to each individual public service pension which was in payment before 1 March 2012. For those who retired after that date their pensions were reduced by reference to the pay cut. Going forward, this aggregation will apply to all public service pensioners who receive two or more public service pensions.
Members will recall that I indicated previously that I wanted to have a 20% reduction on pensions above €100,000 and I discovered that for some categories of people, pensions were not aggregated. If a Secretary General retired on a pension greater than €100,000, the entire pension could be abated but a former Taoiseach's two pensions - a Deputy's pension and a ministerial pension - were not aggregated. I propose to aggregate those and all pensions in order that everybody will be treated in like manner.
Is that from now on or for new entrants?
It will be from now on.
Without giving names, will the Minister give a practical example?
It will be for Bertie Ahern or anybody else.
Former taoisigh. Will the Minister please explain the practical implications in respect of former taoisigh and former Ministers?
It is only for people who have separate pensions that are not aggregated. This is a far-reaching provision. There are many people who will be affected by this provision - we have got to treat it in this way - who have more than one pension that is not necessarily known to the authorities. I will have to find a formula to write to people and ask them to declare to the paying authority in each case if they are in receipt of a public pension in order that they can be aggregated for pension reduction purposes.
When the legislation is in place, public service pension scheme administrators will be required to forward details, for example, PPS numbers and annual pension payments of all active pension cases, at the end of the grace period. An administrative system to facilitate aggregation will be put in place in my Department. In essence, I want to ensure everybody is treated in the same way. It addresses the notion that if one's pension came from one paying authority it was subject to a greater reduction than if one had two pensions payable by two separate public service paying authorities.
Will the provision have general application to the old and the new schemes?
Sorry, it is not the new scheme. It is existing pensioners.
Yes.
Which amendment is being debated?
We are on amendment No. 157. Essentially it is a new section.
The Minister said that it refers to former Ministers. Are there other categories to whom it will apply? Is the Minister talking about dozens of people or hundreds of people?
I expect there will be quite a number of people affected by it. For example, many Army officers who will have gone back to work in a different capacity who may have more than one pension. There are not all that many people who would be able to accrue two pensions. It is simply a provision to ensure everybody is treated in like manner. If one has a public pension or multiple public pensions they are all added together to determine what pension reduction should apply.
It will also apply to persons who, in the future, enter the new scheme and may have multiple pensions.
No, this relates to the Financial Emergency Measures in the Public Interest Act 2010 and the public service pension reduction.
The 2010 Act.
The emergency reduction top slicing of pensions paid
What is the percentage reduction?
At the top it was 20%. I introduced that in the most recent Act.
Yes.
It ratchets up 6%, 9%, 12% and the top 20%.
It will not affect the majority of people. There are many people on two pensions but the reduction will not be at the higher rates
The advice is - I want to be clear about this - that it will affect many people who have two pensions because they have been getting away without the impact of the reductions that applied to any person with a single pension with the same quantum of money being paid to him or her.
It will probably be next year before it takes effect.
I will take this as it is. I will need clarification on the issue. I do not want to have anybody accruing back money.
Will it apply retrospectively or from the commencement of the Act?
It will apply from the commencement.
I understand there is a €12,000 exemption on pensions before the pension levy kicks in. Therefore, if one is the holder of multiple pensions one enjoys that exemption on each on each of them.
Does the provision address that issue?
The aggregation is very welcome.
One will get the benefit once.
It is an equitable and welcome move.
Amendment agreed to.
I move amendment No. 158:
In page 58, after line 34, to insert the following new section:
69.-Section 4 of the Act of 2010 is amended by substituting the following subsection for subsection (1):
"(1) Without prejudice to subsection (2), reductions of public service pensions under section 2 shall be paid or disposed of as the Minister may direct and, in particular, the Minister may, for the purposes of the aggregation of public service pensions, direct a paying authority-
(a ) to reduce the annualised amount of a public service pension payable by the paying authority to a pensioner by the total amount of the reduction that applies in relation to the pensioner under section 2 in respect of all public service pensions payable to him or her, or
(b ) not to reduce the annualised amount of a public service pension payable by the paying authority to a pensioner in accordance with section 2.”.”.
Amendment agreed to.
I move amendment No. 159:
In page 58, after line 34, to insert the following new section:
70.- Section 5 of the Act of 2010 is amended-
(a ) in subsection (1)(b ), by inserting “subject to a direction given by the Minister under section 4(1) for the purposes of the aggregation of public service pensions,” before “no paying authority is entitled to pay”, and
(b ) in subsection (2), by substituting “Subject to a direction given by the Minister under section 4(1) for the purposes of the aggregation of public service pensions, if a paying authority pays to a pensioner” for “If a paying authority pays to a pensioner”.
Amendment agreed to.
I move amendment No. 160:
In page 58, after line 34, to insert the following new section:
71.- The Act of 2010 is amended by inserting the following section after section 6:
"6A.-(1) A pensioner shall, in relation to himself or herself, provide to a paying authority such information as is necessary for the purposes of the aggregation of public service pensions in relation to that pensioner.
(2) Any person, other than a pensioner, who is in receipt (whether in respect of himself, herself or otherwise) of a public service pension, or a pert thereof, payable to the pensioner shall provide to a paying authority such information as is necessary for the purposes of the aggregational public service pensions in relation to that pensioner.
(3) A paying authority may transfer to the Minister or any other paying authority such information that is provided to the paying authority under subsection (1) or (2)-
(a ) as the paying authority considers necessary,
(b ) as may be requested by the Minster, or
(c ) as may be requested by that other paying authority,
for the purposes of the aggregation of public service pensions in relation to the pensioner concerned.".".
Amendment agreed to.
I move amendment No. 161:
In page 58, after line 34, to insert the following new section:
72.-The Act of 2010 is amended by inserting the following section after 6A:
"6B.-(1) A pensioner shall, in relation to a public service pension, supply his or her personal public service number to the paying authority concerned.
(2) a person, other than a pensioner, who is in receipt (whether in respect of himself, herself or otherwise) of a public service pension, or a part thereof, payable to the pensioner shall, in relation to the public service pension, supply the personal public service number of the pensioner to the paying authority concerned.
(3) A paying authority may use the personal public service number of a pensioner as a unique identifier to record information in respect of a public service pension payable to the pensioner and, whenever it transfers information in relation to that pensioner to the Minister or another paying authority, it may use that number which shall, where appropriate, be deemed to have been supplied under subsection (1) or (2), as the case may be.
(4) In this section ‘personal public service number', in relation to a pensioner, has the meaning it has in section 262 of the Social Welfare Consolidation Act 2005.".".
Amendment agreed to.
I move amendment No. 162:
In page 58, after line 34, to insert the following new section:
73.- The Act of 2010 is amended by substituting the following section for section 12:
"12.-(1) Subsection (2) applies where a doubt, question or dispute arises in the operation of this Act in respect of-
(a ) whether a person is or is not a person whose public service pension is subject to section 2, or
(b ) a case in which section 2 applies to a public service pension, the manner in which it so applies, including in circumstances where a pension adjustment order has been made in relation to the public service pension.
(2) The doubt, question or dispute concerned shall-
(a ) be submitted to the Minister by the paying authority in relation to the public service pension concerned, and
(b ) be determined by the Minister after consulting such persons (if any) as the Minister considers appropriate in the circumstances,
and the determination of the doubt, question or dispute by the Minister shall be final.".".
Amendment agreed to.
I must rule amendment No. 163 to be out of order as it is in the nature of a tax.
Amendment No. 163 not moved.
SCHEDULE
Question proposed: "That the Schedule be the Schedule to the Bill."
Essentially we are excluding most of the commercial semi-State bodies. When a new body, for example, Irish Water, comes on board, will the Schedule apply to it? I note Anglo Irish Bank Corporation Limited is included. Should that not read Irish Bank Resolution Corporation? If that bank is included why exclude Allied Irish Banks and Irish Nationwide? Are AIB or Irish Nationwide in there as well?
It is wholly owned ones. Neither of those is wholly owned. I will look again at the Bill because when it was published, it was the Anglo Irish Bank Corporation as opposed to the Irish Bank Resolution Corporation that existed. I will check that again before Report Stage.
The Minister is saying that it is only those that are 100% owned by the State, whereas AIB is only 99% owned.
Well, it is not even 99%. It is some modicum short of that.
What of Irish Nationwide? Do we not own that?
Yes. IBRC is 100% State-owned.
Yes, IBRC is 100%.
IBRC incorporates Anglo Irish Bank and Irish Nationwide.
The title also incorporates them on that basis.
The Minister is saying that Irish Nationwide is included under Anglo Irish Bank.
It would be if it is the Irish Bank Resolution Corporation but I will check the title.
We will move on.
Question put and declared carried.
TITLE
I move amendment No. 164.
In page 7, lines 23 to 34, to delete all words from and including "TO" in line 23 down to and including "RECITALS);" in line 34 and substitute the following:
"TO PROVIDE FOR THE AMENDMENT OF THE PUBLIC SERVICE SUPERANNUATION (MISCELLANEOUS PROVISIONS) ACT 2004; TO PROVIDE FOR CERTAIN OTHER CONSEQUENTIAL AMENDMENTS; TO MAKE PROVISION FOR COST NEUTRAL EARLY RETIREMENT FOR JUDGES AND CERTAIN COURT OFFICERS; TO AMEND THE FINANCIAL EMERGENCY MEASURES IN THE PUBLIC INTEREST ACT 2010;".
I move this technical amendment to reflect the new Long Title.
Amendment agreed to.
There have been Acts of the Oireachtas that are shorter than the Title.
Would it be possible to make a comment on the Bill?
I am afraid not. This is a very strict legislative forum.
At what point does one have the opportunity to comment?
On Report Stage in the Dáil. I thank the Minister and his officials for their assiduous attention to our deliberations here.
Title, as amended, agreed to.
Bill reported with amendments.