Deputy Bruton has asked for and received permission to raise on the Adjournment the subject matter of Question No. 40 of 30 May 1979 to ask the Minister for Social Welfare if UK pensioners being paid by him under reciprocal arrangements with the UK Government are receiving full sterling value pensions or the equivalent figure in Irish pounds. The Deputy has not more than 20 minutes.
Private Members' Business. - Adjournment Debate: UK Pensions Value.
I am raising a matter which in my view is of very considerable importance because the net effect of it has been that 30,000 old age pensioners resident in this country have lost approximately £1 million in pensions which they should have been receiving under normal rates and on the basis of contributions they made during their working life in the UK. They have lost £1 million in effective value of these pensions since we broke the link with sterling and the Irish pound sank in value vis-à-vis sterling to approximately 95 per cent or 95p for the Irish pound for every 100p for the British pound.
To set this matter in context I will quote from the Minister for Social Welfare himself. He said in the Official Report of 30 May 1979, column 1781, Volume 314:
On the entry of this country into the European Monetary System in March last it was agreed with the British postal authorities that, as a temporary measure, British pensioners in this country and Irish pensioners in Britain would continue to be paid their pensions at post offices at the rates shown on their pension books.
At that time there was only a slight difference in the exchange rates and this arrangement was regarded as the most equitable method of payment for pensioners in both countries.
There are approximately 30,000 British pensioners living in Ireland who are being paid on this basis and approximately 5,000 Irish pensioners living in England who are being paid their pensions. The British pensioners living in Ireland, almost all of whom are Irish people who have returned having spent a large part of their working life in Britain, are receiving pensions in Irish pounds. In other words, if they were living in Britain they would be getting their pensions in British pounds and would be getting 100p for every pound. Because they are living here in Ireland they are getting only 95 British pence for every pound. They are being paid in Irish money which is worth 5 per cent less than they would be getting—and are entitled to—if they were living either across the Border or in Britain, in other words if they had not come home to live in this country.
The fact that they are being paid in Irish pounds and not in the proper currency, which is the currency in which the pension is set, has incurred for them this loss of about £1 million since this country entered the EMS. There is a net loss to pensioners overall as a result of these arrangements and the pensioners living here are losing out, whereas the Irish pensioners living in Britain and being paid the British currency value of their Irish pensions would if they were living here be receiving that money in Irish pounds which are worth less. Therefore, 30,000 people are losing 5 per cent on the value of their pensions and 5,000 people are gaining 5 per cent. Approximately six times as many pensioners are losing as are gaining under the present arrangements.
The Exchequer—whether it be the British Exchequer or the Irish Exchequer I cannot say at this stage until we hear what the Minister for Social Welfare has to say—one Exchequer or the other, is gaining a significant amount of money at the expense of pensioners as a result of these patched-up arrangements which were made when this country departed from its pound-for-pound link with sterling. The Minister told me in his reply of 30 May—which it must be remembered was three months after this country entered the EMS and about two months after the link had been broken—that this matter, whereby the pensioners are losing so much money, as I have indicated and will continue to lose it unless something is done
... is, however, under active discussion between officials of my Department and the Department of Posts and Telegraphs and officials of the corresponding British Ministries with a view to finding a solution which will be equitable and convenient to the pensioners.
He gave no indication whatever as to any time within which these arrangements would be completed. He did not even indicate that there would ever be a solution to the problem. He merely said that discussions were continuing. He gave no evidence that any final solution would be achieved. I am surprised that he did not do so because he could see, as can any sensible person, that 30,000 Irish people are losing a substantial amount of money every week as a result of these arrangements. All he could say was that the matter was under active discussion. These pensioners have already lost £1 million of money to which they are entitled.
I asked if the Minister would give an assurance that a retrospective refund would be made to these pensioners. They have already lost money since the link was broken and they are continuing to be paid in a currency which is worth less than the currency in which their pensions are set. The Minister said quite emphatically as reported at column 1782 of the same volume:
No, I will not.
He was quite clear that he would not give any assurance that a refund to these pensioners of money to which they are manifestly, morally and legally entitled would be given. He gave no undertaking that a refund would be made, or that he would even seek in the discussions which he told us were taking place actively that such a refund would be made. This is very disappointing indeed, particularly when one bears in mind that the people who are losing this money and have lost approximately £1 million already by arrangements which have not changed are as a general rule amongst the poorest people living in this country. We all agree on all sides of the House that the old, those on pensions, are, if not the least well-off section of our community or any community in the western world at least amongst that section.
I have no doubt that if money of this sort were being lost by businessmen or by people organised in a trade union, the Minister would long ago have brought the so-called active discussions to a termination and would have achieved a result and given a refund. Neither businessmen nor trade unionists would be prepared to accept a situation where they go on losing approximately £1 every week on their incomes by virtue of these arrangements. If it were business people or trade unionists who were involved, people organised as a group, they would have demanded and obtained action from the Minister to rectify this situation. However, pensioners, be they UK pensioners living in Ireland or Irish pensioners living in the UK, are not organised in a manner to obtain this sort of action. Their only resort, therefore, is to have the matter raised here in the Dáil, as I have done today and on 30 May. I hope that by doing so we will have a definite commitment from the Minister to (a) have this anomaly put right and (b) have a refund made to the pensioners who have lost money already by virtue of these arrangements.
When replying will the Minister also indicate the financial arrangements between his Department and the British Department? If the Minister is paying UK pensioners living in Ireland in Irish £s are the Irish authorities being paid the equivalent amount in British £s by way of refund from the British authorities? Is the Irish Exchequer getting the 5 per cent difference between what they are paying out and what they are being paid by the UK authorities, or are the UK authorities only paying the Irish authorities 95p for every £ in British pension values commensurate with the fact that pensioners living here are only being paid in Irish £s? Who is getting the money? Clearly the pensioners are not getting it. Which exchange is reaping the benefit? I am seeking a solution to this problem and a refund to the pensioners of the money they have lost.
I join with Deputy Bruton on this issue. Deputy Bruton has outlined the problem quite clearly and I am entirely familiar with the situation. In my constituency quite a number of pensioners are affected by the situation. There has been a good deal of confusion and we need absolute clarification from the Minister as to the extent to which progress has been made in the discussions between himself and representatives of the British Department of Social Security.
We have received a number of inquiries from pensioners and we do not wish to see those people suffer under the transitional EMS arrangements. The arrangements that have developed are likely to continue for many years and it is necessary for us to plan ahead to see to what extent the shortfall can be met either in these negotiations or by way of representations to the current British administration. In the previous administration, when I broached this subject with some of them whom I met at Council of Europe level, I detected some sympathy. I am not at all sure that the current administration in the UK would be as sympathetic or as understanding. I join with Deputy Bruton in asking the Minister for the details of the active discussions and of how he proposes to meet the shortfall which is quite evident in relation to the pension cheques of the pensioners directly concerned.
In our case there is nothing dramatically new. We have lived with this sort of thing for many years so far as American pensioners are concerned. Retired Americans living here drawing US pensions have had to take their chance. They are paid in dollars and have to abide by the prevailing rate for the dollar. In regard to Britain and Ireland there are a number of complicating factors in regard to pensions. It is important to make it clear that neither Exchequer is gaining at the moment. This temporary arrangement has brought about a standstill situation. When it was made nobody anticipated that it would be of great significance one way or the other. The punt has fallen very considerably against sterling since and it is now a matter of some significance. However, neither Exchequer is gaining at the expense of the other or at the expense of the pensioners.
British pensioners here are paid at the face value of the pension in Irish £s, and the same applies in Britain. Irish pensioners over there are paid at whatever the face value of the pension is, in sterling. This situation although not as significant arises in the case of other European countries, but one of the difficulties in the case of Britain and ourselves and the other European countries is that the EEC are not willing to contemplate any form of compensation being paid for fluctuations in exchange rates, because in effect what that would mean is that a national in a certain country drawing his pension in another country would get more than the national who stayed at home. On the other side of the fence another national might lose. There could be a situation where a French person or a German person living in Ireland was getting a better pension than his fellow countryman living at home. In our case there is also the additional factor of the disruption of the postal services which has completely distorted the situation.
The present position is that we made this temporary agreement with the British authorities and we have been pressing for discussions to work out some system to deal with the situation. We have arranged for these discussions to take place this Thursday. We will have to discuss the matter fully and hear what arrangements the British authorities wish to make. There will be no easy solution. The most likely thing is that each side will just pay the appropriate amount in each other's country. That would certainly be in keeping with the EEC provisions. However, I do not want to prejudge the discussions before they take place. We have been pressing for these discussions and Thursday's meeting is at our instance.
The figures given are more or less correct. There are about 30,000 persons living in Ireland drawing British pensions and about 5,000 persons in Britain drawing Irish pensions. Of course the present arrangement means that people living in Britain drawing Irish pensions are gaining whereas British pensioners living her are losing. But I would have to put the word losing in inverted commas. I think we would all agree that the British pensioner here has a moral right to exchange his pension at its full rate. But it is really a matter for the British authorities to say what they want done. After all, these pensions are paid by the British authorities; the arrangement is between the pensioner and the British authorities; we are—if you like—a paying mechanism only; we just pay out, and we would pay out whatever the British agree should be paid out.
I just want to make this point. I know it is a dangerous point for me to make because it could be misinterpreted but I want to say that, strictly speaking, a British pensioner living here, cashing his pension, is not losing in a material sense. Because he is living in Ireland and paying Irish prices, to that extent, he is exactly the same though—and again I repeat—we would probably all admit that he has a moral claim to cash his British pension stipulated to be paid in sterling at its full rate unless the paying authority, which is the British Government, indicates that something else should be done.
I am afraid that is all I can say to the House at this stage except to say that we will be having these discussions on Thursday and, as a result of them, I will make a fuller report to the House as soon as possible.
Could the Minister just clarify why he said that no Exchequer is gaining at the expense of a pensioner? Surely some Exchequer must be gaining if less is being paid?
What I mean by that is that at present we have not squared up; we are just at a standstill. We are paying British pensions at the expressed rate in Irish £s and vice versa—British post offices are paying Irish pensions over there in sterling at the rate expressed in the pensions. But we have not done our sums. We have not done any exchange of funds as a result as yet.
But if the present situation continues some Exchequer will gain at the expense of pensioners. Is that not so?
To be strictly, classically, correct about it, neither should. If one was to follow the sheer economics of the thing, we should pay these British pensions at the sterling equivalent and then claim back the appropriate amount from the British authorities, neither gain or lose on it, and vice versa with them. That means, of course, that either one group or category of pensioners at any given moment is doing a lot better than the other, but this is something we will have to tease out with the British authorities.
Does the Minister see any hope of maintaining parity? He seems very unhopeful.
Does the Deputy mean parity between the punt and sterling?
Well, a lot of people have been very wrong about that so far.
I mean in terms of pension encashments.
We have got to try and work out something. Anyway I am sure Deputies would agree that what we have got to endeavour to ensure is that nobody suffers hardship, that nobody actually loses as a result of these exchange fluctuations but that may not be possible to achieve very easily. I will give the House a full report as soon as I can.
The Dáil adjourned at 8.55 p.m. until 10.30 a.m. on Wednesday, 13 June 1979.