Vol. 495 No. 7
I move:
That Dáil Éireann calls on the Government to introduce pro rata pensions for those who were 56 years or over when Social Insurance Pension contributions for the self-employed were introduced in April 1988, and who were required to make contributions but are now precluded from eligibility for the Contributory Old Age Pensions which became payable from 6 April 1998.
I wish to share my time with Deputies Ring, Gerry Reynolds, Deenihan and Donal Carey.
Is that agreed? Agreed.
Since I was appointed last year as spokesperson on social affairs on behalf of the Fine Gael Party, I have been spearheading a campaign to remedy what I consider to be a major injustice. As the motion indicates, the pension contributions for the self-employed were introduced in 1988. The first pensions became payable to those who attained the age of 66 after 5 April 1998, effectively last April.
However, there was one huge gap in the legislation in 1988. No transitional arrangements were put in place for the self-employed who were over the age of 56 in April 1988. They were forced to contribute to a fund, but under the legislation were unable to qualify for a contributory pension on reaching the age of 66. This was so because the legislation provided for a minimum contribution of ten years, which in ordinary circumstances would have been acceptable. However, it was provided in legislation for a group of people who could not meet that minimum requirement.
Pension contributions to the State operate in such a way that they are not payable after the age of 66 and could not be paid after that age, even if the applicants wanted to. Effectively, therefore, a group of people were left in limbo as a result of that legislation. Thus an enormous anomaly was created from the beginning for those who were forced to contribute to the scheme but were unable to benefit from it. Since I became spokesperson for social affairs on behalf of Fine Gael I was conscious of this injustice and anomaly and I raised the issue in the House on many occasions.
This motion was tabled last April following my dissatisfaction with the response by the Minister to a Priority Question I put down at that time. I am delighted with the success of the campaign because this major injustice will be remedied. This is clear from the Government's briefing over the weekend and from the proposed Government amendment to the motion. It seems clear that the principle of pro rata pensions has now been conceded. I welcome the decision by the Government to make this concession. I reserve my position on the issue until the details become apparent, but the principle for which all those involved in the campaign fought has been conceded by the Government and has, therefore, been established.
Many people from around the country contacted me over the past 12 months with regard to the campaign for pro rata pensions. I wish to highlight two files out of perhaps hundreds which I received. One had to be under the age of 56 on 6 April 1988 to qualify for the scheme. I received correspondence from an applicant whose 56th birthday was on 6 April 1988 and who paid all his contributions. I have on my file a copy of the formal response from the Department last May to his application refusing a pension essentially because he was 24 hours over the age at the time of the introduction of the scheme. Many others were days, weeks and months short, but that case highlighted the full impact of the anomaly created.
The other file to which I wish to refer involves an applicant in Dublin who maintained contact with me during the course of the campaign. When I wrote to him last week to advise him of my intention to move this motion on behalf of Fine Gael I received a response from his widow. He died recently and he unfortunately cannot now benefit from the scheme. The benefit to which I believe he should have been entitled from last April cannot now be paid to him.
The question of the various estimates, including the estimates of those caught in the limbo I outlined and of the cost of resolving the problem, needs to be addressed. When I pressed the issue with the Minister for Social, Community and Family Affairs in October 1997 he gave a Department estimate of 20,000 involved. He also indicated that the figure could be in excess of 20,000 because it was possible that many others who might not have indicated their interest in the type of pension involved might come forward. I have always considered that the figure would be much lower because many of those involved would have qualified in any event for a non-contributory pension and, given that the amount of pro rata pension they would get would probably be less than the non-contributory pension, they would not be interested in it. I say this from my practical knowledge and experience as I have no access to the Department's detailed estimates.
Similarly, I have always disputed past figures quoted by the Department to remedy this anomaly. Originally £756 million was mentioned as the cost over the lifetimes of the persons concerned. That figure was mentioned when I raised the issue during Question Time. I noted there was a comment from an unquoted Department spokesperson who indicated that if money of that order was available it would be more appropriately spent. With regard to figures and statistics, there are lies, damned lies and statistics. I believe the cost of remedying this injustice was not addressed at an early stage. I am glad this is happening now because the Minister would require detailed costings before he could concede on the scheme.
A review was undertaken some years after the introduction of the scheme and the original figure of £756 million was quoted as being reduced to £500 million, based on 20,000 qualifying people. I have never accepted that figure either, nor have I accepted a total overall costing of that order. I do not know the exact figure. I hope the Minister is aware of it. However, I believe a sum of £20 million per annum would be the maximum amount required to remedy this anomaly. It may be less depending on the number of people who will be entitled in any event to non-contributory pensions. I understand the Minister now accepts that the cost of removing this injustice is of manageable proportions and accordingly the principle of pro rata pensions is being conceded. I am very pleased about this.
However, while the principle may be conceded a number of issues remain to be addressed. From what date will the pension be payable? Justice would seem to indicate that for those over the age of 66 in April 1998, payment should commence from that date, as that is the commencement date for everybody else involved who qualifies under this scheme. I am talking about somebody who barely qualifies under this scheme only. If the first pension became payable last April, then anybody over the age at that time should be at least entitled to qualify from that date.
I invite the Minister to address some other issues at this stage. There is the question of the pro rata amount to be made payable to those so entitled. I always operated on the basis that if one had paid seven years contributions out of ten, and that was all one could pay, one should be entitled to a pension of seven tenths. That seems to be fair. The Minister may have other ideas and, if so, it would be appropriate for him to sketch in the detail now.
There is another important group of individuals whose concerns need to be dealt with. When the scheme was originally introduced in 1988 it was on the basis that refunds would be made for those self-employed who had to make contributions, if the applicant qualified for neither the contributory or non-contributory old age pension. The original principle was that if one did not qualify by having ten years' contributions one applied for a non-contributory old age pension and if one did not get it one was entitled to apply for a refund.
I am not sure of the exact number of applications for refund to date but, when I raised this issue in the House last April, I was told there had been a total of 3,874 applications for refunds, of which 2,868 had been paid. That amounted to £2.5 million plus interest at an average of £900 per person, according to the Minister.
A serious question now arises as to the entitlement of those who sought those refunds under the law as it then applied. Any such person should be entitled to qualify under any pro rata scheme now being introduced. They should be treated in the same way as anybody else who did not go ahead with the application for a refund. Quite a number of people did not apply for a refund in the hope and expectation that the campaign for the establishment of pro rata pensions would be successful and, clearly, they will now qualify. However, those who applied for the refunds under the law as it was at the time will also have to be considered. They should be entitled to pay back the amount of the refund so they would be put in exactly the same position as if they had neither applied for nor received refunds.
When I raised the matter of the ten year period, the Minister quoted to me in the House that the Pensions Board looked at the issue and came down in favour of having a basic ten year rule on contributions. I am not against a basic ten year rule but I have always insisted, and will continue to do so, that special provision has to be made for that tranche of people excluded by legislation at the time of the introduction of the scheme, yet who were obliged to contribute. That is a fundamental point. In the early days of this legislation, I recall raising this very issue but it was not dealt with at the time. Now is the time to deal with it since the pensions have become payable since last April.
For those who may feel I am playing free and easy with Exchequer funds from the Opposition benches, it is important to point out that is not my approach. There is a case in justice to be resolved here. We are dealing with a finite number of people. We are not making a fresh start with a scheme for the self employed. We are only dealing with those people who were caught under the terms of the scheme at the time of its introduction. The situation will not recur.
That is right.
On that basis, justice requires that we do what is necessary to ensure the removal of what is agreed and accepted by everybody as being an anomaly. The Minister should also examine the question of entitlement to free schemes. That is a side issue to be dealt with in the context of the detail of the scheme. It would seem to be only fair that those who qualify for pro rata pensions should also qualify for the free schemes where they otherwise comply with their conditions.
I pay tribute to the many voluntary organisations that have been involved in the campaign for justice on this issue. I will not mention them all by name, but the self-employed pension association was involved along with farming and employers' organisations. They can be satisfied with the result of this campaign if the detail matches the expectation. However, they can be happy that the principle has been established.
I was involved in spearheading the campaign from the Fine Gael side, but Deputies from all sides of the House have been very sympathetic to the issue. When I raised it with the Minister, even though he was not able to concede it, he indicated a sympathetic reaction to the case being made. It is also significant that when I tabled an amendment to the Social Welfare Bill, 1988, relating to this issue, virtually every Deputy, including the Fianna Fáil ones, spoke in favour of the principle, while at the same time voting down my amendment. I suppose they had to do that in the context of the time.
Did that not happen when the Deputy was in Government?
I appreciate the strong support from all sides of the House which has been helpful in ensuring the success of this campaign for what, in essence, is the removal of a basic injustice. That is why I am so glad the campaign has been successful and that pro rata pensions for the self-employed have now been established in principle.
A number of other issues will arise which I will deal with in my reply to the debate. There are a number of issues which the self-employed pension association would wish to raise and I will attend to those in my final reply.
I am delighted the Government has conceded this issue. I spoke to the Minister in the Dáil and in a personal capacity about it. I compliment Deputy O'Keeffe for bringing this motion before the House. We had intended to debate it before now but many other issues arose so it had to be postponed. When Deputy O'Keeffe was appointed Opposition spokesman for social welfare, he told me he would make this issue a priority. I compliment him for bringing the matter before the Dáil. I also compliment the Government for taking it on board.
I hope when the budget is announced no obstacle will be put in the way. As somebody who has been self-employed all my life, I welcomed this scheme when it came into place. Many people thought this was the answer to their pension rights. The numbers involved were small. When someone in my constituency asked me what I liked best about the Dáil, I said it was getting a cheque on fine days as well as wet ones. There were good days and bad days.
The Deputy was not that bad.
Some people worked hard but did not know where the next pound would come from. When this scheme came into place they were delighted, as I was. I have been contacted about this matter by many of my constituents, some of whom are in the Public Gallery today. I welcome them to Dublin. That shows how concerned they are about this matter. There was injustice, and it should not have taken us so long to react, no matter who was in Government. The Revenue Commissioners collected what was due to the State. When these people started making contributions in 1988 they thought that ten years on they would qualify for a pro rata pension. People missed out on the pension by one day, one month, six months, seven months. I hope when legislation comes before this House these people will be given an option either to buy into the pension by paying a lump sum or to be paid a pro rata pension. I hope the Government will concede that. I hope they will also qualify for the free schemes.
I am glad this legislation will be announced in the budget. The Minister of State, Deputy O'Keeffe, announced it on Saturday.
He did not.
It does not matter who announced it. I was pleased to hear it announced.
It was announced a couple of times.
Had it not been announced, I would have been far more vocal than I am now and would be expressing a different view, but one has to acknowledge something positive. I am delighted this is happening. I hope the people concerned will get what is due to them and that the State will learn a lesson from this. The State cannot be always the "Big Brother", holding a gun to people's heads, telling them they must pay this or that. If the State makes a mistake which results in injustice it should correct it quickly. The civil servants have to learn that too. Perhaps now and then a few civil servants could be taken from every Department and brought to Deputies' clinics to give them an idea what the general public are thinking. Civil servants are so tied up with paperwork in their offices that they do not understand what is happening on the ground.
When the Deputy is over here he will understand.
When the Minister was over here he had a different answer.
I am being fair to civil servants. They are not in an ivory tower.
I think they are and they forget about the public. If they had to attend public meetings, as the Minister and I have to, and listen to people out there, they would know what is actually happening. That was an injustice that the Civil Service should have dealt with before now, and it was seen as an injustice before the Minister came into office. It should not have been necessary to bring a Private Members' motion before the Dáil.
The State introduced this scheme. It told people that if they paid PRSI, they would qualify for a pension after ten years. The State knew when that scheme was introduced that some people entering the scheme would not qualify. That should have been noted before the scheme was introduced, but once it was realised that a mistake had been made it should have been rectified. I am glad that tonight this is being done. I hope there will be no trickery in December when the budget is introduced and that the matter will be handled in a straightforward manner. Only a small number of people are affected and they are entitled to be dealt with fairly.
This is a bit like playing a football match while knowing the result. I compliment my colleague, Deputy Jim O'Keeffe, on bringing to the Dáil this campaign for the payment of pro rata pensions to people who were 56 years of age in April 1988. Both Deputies O'Keeffe played a role — the Minister of State, Deputy Ned O'Keeffe, gave the game away on Saturday when he announced this.
It seems the Deputy does not read the Irish Independent.
I do not read the Irish Independent but I listened——
George Bush used to say "read my lips". I read Deputy O'Keeffe's lips when he made that announcement.
Who rang him before he went on?
The Minister is under so much pressure given that there is no Minister of State in that Department that somebody had to do the job. I congratulate the two Deputies
O'Keeffe on having played such a central role in resolving this difficulty. I compliment the Government on accepting the motion and on the amendment it has tabled this evening.
Natural justice demands that those who were forced to pay contributions should be able to benefit. As my colleague, Deputy Ring has said, the anomaly in the scheme was unjust, and when an injustice is perpetrated by the State, people should not have to go to court. It has taken us a long time to react to this situation. I am glad we are on a positive track and that the whole problem will be resolved by the time the budget is introduced. It will be interesting to hear the details because some people who have made contributions would have been entitled to a pension from last April. I hope the Department will allow that.
The self-employed must be taken into consideration because they have worked for many years. Some of them have their own private pensions but many would not have been in a position to provide for themselves and it would be unjust if, having worked hard all their lives with no great return, they found they had no income and were unable to work the hours they could heretofore. Again I compliment the Government and my colleague, Deputy Jim O'Keeffe, for bringing this campaign to the forefront. I hope the people involved will be satisfied with the result.
I congratulate Deputy Jim O'Keeffe on spearheading this campaign to right this injustice. I thank the Minister, Deputy Dermot Ahern, for accepting the principle of the motion. When I worked in the Department of Agriculture I found the civil servants very good at all times, and if I thought they did not know what was happening down the country I took them down there with me.
When the scheme was introduced in April 1988 it should have included only applicants who were under 56 years who could comply with the ten year statutory deadline. I remember pointing that out in the House at the time and warning the Minister that this could lead to litigation, that people would not be happy with it and that it was unfair. It was a ridiculous decision to extend the payment of social insurance to people over 56 years when it was the intention to exclude them from pensions. It was very unfair to them. I am glad they are now going to benefit by virtue of the fact that they did pay over the years and that Deputy Jim O'Keeffe and others, including the Minister, have accepted their case. I wish them well. In fairness, they continued to pay their contributions because they did not want to break the law, even though they knew they might not qualify for a pension. Those people have been very good and patriotic citizens and it is only right that they should be rewarded.
Self-employed people have made a significant contribution to the economy, and a sizeable number of them would have been affected by that decision. Shopkeepers working in small retail outlets who want to continue working would not qualify for non-contributory pensions. It is to be hoped they will now qualify for the pro rata contributory pension which will help augment their incomes and improve their standards of living. All who have paid contributions should be entitled to payment, and that includes people who have paid anything up to one year's contributions. It is important the Minister clarifies that all those who contributed are entitled to pro rata pensions. I hope there will not be a cut off point at four, five or six years' contributions. Now that the Minister has accepted the principle, all those who made a contribution must be included.
Credit must go to Deputy Jim O'Keeffe for raising this issue and continuing to lobby for it. If it proves one thing, it is that, if someone is persistent and consistent, their efforts will pay off in the end. Deputy O'Keeffe has proved that and is an example to others. I thank the Minister for accepting the motion. Dáil Éireann has done a very good deed tonight. It shows senior citizens who have contributed so much to the country that we, as legislators, can do something right. We have done something very fair this evening by removing this anomaly from the social welfare system and that should be welcomed by everyone.
I join colleagues in commending Deputy Jim O'Keeffe on his perseverance on this issue. I praise the Minister, although he had to be dragged screaming into the Chamber and it took an Opposition motion to finally make him concede. There is no humiliation in that because it is right that some kind of adversarial politics be practised in the Chamber. When the Minister was in Opposition, he made many arguments, some not all that direct. He now sees the logic of Deputy O'Keeffe's argument which has also been that of many people who have pursued the issue for years.
The stress and strain on old people who find themselves in this position has been spoken of already. This issue weighs more heavily on people who have retired which is why I am glad it will be resolved. I support Deputy O'Keeffe's request that pro rata pensions be introduced next April. When the social welfare system was first devised, many people did not believe it would come to play such an important part in their lives. It does now and social welfare is an important part of the economy. It also plays a strong financial role throughout the economy.
The Department of Social, Community and Family Affairs has enjoyed a great partnership with An Post for many years. Some 48 per cent of the revenue going through An Post comes from the Department. However, post office employees who are members of the Communications Workers' Union are beginning to wonder what other initiatives will come from the Department. For example, there are a number of pilot schemes, one of which is in Ennis, whereby old age pensioners will be given high-technology cards to withdraw their money from ATMs, thus bypassing post offices. Old age pensioners have had a long tradition of collecting their pensions at post offices. I have not heard anyone at my clinic complaining about it. The Department's system was flexible in that it gave people a choice of post offices. They could collect in the local one or at a head office.
The proposal to allow old age pensioners to collect their money at various locations in a town will greatly alter matters. It will result in a loss of annual revenue of £36 million for An Post which will seriously undermine its viability. Loss of revenue leads to a loss making enterprise, reduced investment in existing services and increased charges to compensate for the revenue loss. Furthermore, major cost reductions lead to pressure to reduce staff numbers. There is already an indication in Ennis that, if the Minister and the Department decide to deal directly with the banks in the payment of old age pensions, 11 jobs will be lost in the head post office. Customers, principally old age pensioners, did not envisage a change such as that being necessary. Neither were they told there was a possibility that, if they received such ATM cards, they could end up paying charges from their old age pensions because banks would eventually charge for the service. That is not a customer-friendly proposal from the Department of Social, Community and Family Affairs regarding old age pensions. It will certainly discommode many people.
Ennis is the information age town which gives opportunities to explore new high-technology facilities which become available. Nonetheless, the Department should discuss openly the future positions of employees of An Post with them. I spent a great deal of time as Minister of State reassuring people about sub-post offices. If the Minister, Deputy Dermot Ahern, decides that all old age pensioners will collect their money using plastic cards, it will result in the closure of a greater number of rural sub-post offices than has been the case heretofore. There will be a rash of closures which will strike at the heart of rural communities.
I do not know the mindset of the Department on this matter because it has not made any statement of which I am aware. I have had people attend my clinic who are very concerned, especially An Post employees who are also members of the Communications Workers' Union. They are not alone in this as it could affect many post offices in towns around the country. Skibbereen has a substantial post office and Deputy O'Keeffe would probably be able to say how many people would lose their jobs there. I am sure Deputy Kirk, although he is not supposed to go into Dundalk, would be aware of the potential job losses there.
Will the Minister state exactly his intentions regarding people being given plastic cards and being paid through banks, thus bypassing post offices? Has he examined the resulting problems for An Post if he proceeds with playing it and the commercial banks against each other? I do not believe it is in the interests of customers, especially old age pensioners. Why should the Minister do it without advertising or campaigning for it? There is no demand for it so why is he doing it? Is it to save the Department money? If so, it will be old age pensioners and social welfare recipients who will pay in the end. I appeal to the Minister to state exactly his intentions regarding these pilot schemes and to indicate what progress has been made to date.
I wish to share time with Deputies Browne, Fleming and Coughlan.
Is that agreed? Agreed.
I move amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann supports the Government's commitment to addressing the issue of people who narrowly failed to qualify for an old age (contributory) pension and in that context welcomes the decision already taken by the Government to introduce a pro rata old age (contributory) pension for those self-employed persons who were aged 56 or over when social insurance was extended to the self-employed in April 1988 and notes that the issue will be addressed in the forthcoming budget.
I am aware of the issue under debate in which many Deputies have a keen interest. I undertook time and again at Question Time to examine it, not only at the instigation of Deputy Jim O'Keeffe but at the instigation of Deputies on all sides. It was raised on a number of occasions at meetings of the Fianna Fáil parliamentary party since I took office. I guaranteed that I would look at it as sympathetically as possible. I indicated last month that the Government had decided to adopt a particular line. Last Saturday I exhorted the Minister of State, Deputy Ned O'Keeffe, to make the nation aware of its excellent decision. The motion, therefore, is a non-event. As acting Chief Whip, I was surprised to learn last Friday that Fine Gael was proceeding with it. Either Deputy Jim O'Keeffe did not read the newspapers during the Cork by-election or he was playing politics. I am happy he has given me the opportunity to set out the background to this issue and to contrast the approach taken by the Government with the cynical opportunism of the Opposition parties.
I have long held the view that one of the true marks of a progressive society is the regard in which it holds its older people. In preparing An Action Programme for the Millennium we recognised the tangible contribution and sacrifices made by older people in helping to build the country into what it is today. We adopted a deliberate strategy to improve the position of older people in society and to secure their future as we moved towards the new millennium.
One of the principal methods of improving the position of older people is through a strong social welfare pension based on social insurance. In our election commitments we guaranteed a contributory old age pension of £100 a week by 2002. We have made significant progress towards this objective through last year's increase of £5 a week in the basic rate to £83 a week. The Government will continue its work in this area in the coming budget. I have no doubt that the Opposition will thank us as it did last year.
In our election commitments we promised to address the issue of those who narrowly failed to qualify for a pension. I refer Deputies to the policy document, Irish Families — into the New Millennium, dated May 1997, which states, "We undertake to make new arrangements to tackle the problems faced by people who were marginally excluded from participation in PRSI pensions".
What is meant by "marginally"?
The Deputy referred to everything except the motion. He should allow me to respond. This group of self-employed persons were marginally excluded from entitlement to a contributory old age pension as they could not satisfy the condition of having entered social insurance at least ten years before reaching pension age by virtue of the fact that they happened to be over 56 years of age when social insurance was extended to the self-employed group in 1988. The condition that a person must have entered insurance at least ten years before pension age before he or she is eligible to qualify for a contributory old age pension has been a feature of the scheme since it was introduced in 1961. The purpose of this condition is to ensure entitlement is limited to those who have made a reasonable level of contributions to the social insurance fund during their careers.
It was mentioned that persons over the age of 56 should have been excluded when social insurance was extended to the self-employed. After a period of three years there is entitlement to a contributory widow's pension. Some had class A contributions which when added to their self-employed contributions allow them to qualify for a contributory old age pension. The Department could not, therefore, have provided for their exclusion. If it had, it would probably have found itself in court for discrimination.
I am satisfied the rationale behind the ten year rule is sound. It does, however, create transitional difficulties where the social insurance system is extended to a large group as occurred in 1988 when it was extended to the self-employed. It is not unusual in this and other countries to make arrangements for groups affected in this way.
This issue did not arise today or yesterday. I have no doubt that Deputy Jim O'Keeffe received many representations when in Government. It has been discussed at length in the House. The Deputy may recall that Fianna Fáil in opposition called for the introduction of a pro rata pension for the self-employed. My ministerial colleagues, Deputies Walsh and Woods, raised the issue on many occasions but their proposals were rejected by the Fine Gael-led Government. What did Deputy O'Keeffe do at the time? He did nothing. What did Deputy Durkan who was Minister of State at the Department of Social, Community and Family Affairs do? He did nothing. The previous Government's response was simply to provide for a refund of the pension element of self-employed social insurance to self-employed persons aged 56 or over in 1988 and who had previously paid social insurance contributions as employees provided they did not qualify for a non-contributory old age pension. This amounted to an average payment of £900. That was not of much use when what was needed was a much sought after pension.
That is incorrect, that was provided for in 1988.
In opposition, Fianna Fáil proposed that pro rata pensions should be introduced and promised to address the issue in its election manifesto. In Government, with the Progressive Democrats, it is delivering on its promise. That is consistency.
The Minister waffled for two years.
The truth is bitter. In the last year I have been examining various options with a view to arriving at a formula that would address the specific problem faced by this group of pensioners. I have considered the possibility of making a lump sum payment to this group, allowing this group pay additional contributions to qualify and introducing a special pro rata pension. On balance I consider payment of a pro rata pension to be the most equitable and the only practical way of addressing the situation taking all circumstances into account. Therefore, I am pleased to confirm to the House this evening that the Government has agreed to my proposals to introduce a pro rata pension for those self-employed people who were aged 56 or over in April 1988, who as a result did not qualify for a contributory old age pension and who have at least five years contributions paid since then. Title to this pension will also give access to free schemes. It is estimated that up to 8,000 pensioners and their 2,000 qualified adults will benefit from this measure.
The estimated full year cost of the introduction of pro rata pensions will be £18 million. The total estimated cumulative cost of the measure in the future is over £170 million. Any refunds of PRSI contributions already paid to people who will now qualify will be recovered by my Department, which is a fair arrangement. The precise details in relation to the introduction of the pension will be announced at budget time as one element of a package of measures for the older people in our society thus further fulfilling our election commitments to assist this most deserving group.
This approach is a fair and just one which will be welcomed by those who have made the case for people affected by this anomaly. It addresses the issue of those who, having paid into the social insurance fund in good faith, found themselves excluded from entitlement to a contributory old age pension through no fault of their own. This issue was raised particularly by many farming organisations recently when they came to a Fianna Fáil Parliamentary Party meeting and to the Select Committee on Social Affairs of this House. I am glad to be able to respond in a positive manner to the various submissions they made. The introduction of a pro rata pension for this group will help facilitate older farmers in transferring the farm to the younger generation and will thus have a positive spin-off for farming policy. It is very fitting also that this additional measure to help our older people will be introduced during the UN International Year of Older Persons.
The increase in the number of older people in our society over the coming decades clearly sets a challenge for us all but let me assure the House that this Government will not be found wanting in ensuring that adequate and effective pension arrangements are in place for all citizens. While this new measure is a clear and positive signal of the Government's intentions in this regard, all the social partners have a responsibility and role to play in creating a strong pensions environment that will adequately provide for older people as we head into the new century.
I am delighted my Government colleagues both in my own party and in the Progressive Democrats agreed that this measure should be introduced after many years of people calling for it. Opposition Deputies have acknowledged that the bringing forward of this pro rata pension, details of which will be given in the Budget Statement, follows an enlightened decision by the Government. For all these reasons I commend the amendment to the House and I am sure it will have the support of Opposition Members.
(Wexford): I compliment the Minister on introducing this pro rata pension for self-employed people aged 56 and over in April 1988 and for linking the pension to the free schemes for pensioners. For the past ten years I have argued with various Ministers, going back to Deputy Woods, that the contributory old age pension scheme was unfair to self-employed people. However, only the present Minister was prepared to listen. The reasons the scheme could not be changed were trotted out year after year. During the three years of the rainbow coalition Government I raised the matter at every meeting of the Select Committee on Social Affairs. I was informed by the then Minister, Deputy Proinsias De Rossa, and the Minister of State, Deputy Durkan, that changing the scheme would cost too much and would not be in the interest of pensioners or taxpayers. Last year I differed with the Minister, Deputy Ahern, during the debate on Committee Stage of the Social Welfare Bill. The Minister then gave a commitment to examine the possibility of bringing this group of self-employed people into the contributory pension scheme and I thank him for this re-examination.
Every Deputy has met people who do not qualify for a contributory old age pension because their contributions are one or two weeks short. Deputies on all sides of the House believe this is unfair. I know of one case where a pension was denied because of a shortage of two days' contributions. The scheme contains a major anomaly which the Minister has recognised. Since the proposed new scheme was announced in the past week, many people in my constituency have contacted me by phone to ask me to thank the Minister for recognising the need for pensions for this group of people. To deny these people pensions because of the ten year rule was unfair. It was insulting to refund their pension contributions because this money should not have been taken from them in the first instance.
At a meeting last week of the Joint Committee of Agriculture, Food and the Marine Deputy De Rossa, whom one would expect to favour paying pensions to the older generation, argued that it would be too costly a burden on the taxpayer to pay pensions to this group of people. Surely old age pensioners cannot be seen as a burden on the taxpayer during this time of economic plenty. Any person who reaches pensionable age should be entitled to a pension. I thank the Minister for taking this decision to introduce an old age contributory pension on a pro rata basis. It will be welcomed by the 8,000 people who will qualify for it and is welcomed by those Deputies who have fought for this measure for a number of years.
I welcome the opportunity to speak on this topic. I support the amendment that "Dáil Éireann supports the Government's commitment to addressing the issue of people who narrowly failed to qualify for an old age (contributory) pension and in that context welcomes the decision already taken by the Government to introduce a pro rata old age (contributory) pension for those self-employed persons who were aged 56 or over when social insurance was extended to the self-employed in April 1988 and notes that the issue will be addressed in the forthcoming budget”.
I was elected to Dáil Éireann a little over a year ago and this is one of the days that has given me most satisfaction in that time. Before my election I was not fully aware of the difficulties caused by anomalies in the pension scheme. I have met numerous people in my constituency office regarding this issue. I have given accounts of their difficulties to the Minister on many occasions and he is aware of my concern. It should be a primary function of Dáil Éireann to meet the genuine needs and concerns of the electorate when those needs are based on sound factual arguments. We should especially meet the concerns of that sector of the electorate who have devoted their working lives to their country and their families.
I thank the Minister for taking the imaginative approach of choosing the pro rata option. He outlined the other options available to him such as the payment of a lump sum to pensioners. The pro rata option is the fairest and most suitable for older people who want a continuing income rather than a lump sum payment. I appreciate that he has listened to people and has won the support of the Government for this measure. It is important to know that 8,000 pensioners and 2,000 qualifying adults will be affected. A number of self-employed people will also be affected by this measure, including shopkeepers, solicitors and priests, but the majority of people who came to me to discuss the matter were from the farming community.
When the Government introduced the contribution scheme for pensions in 1988, the possibility that it would lead to an anomaly was recognised. The Minister has announced why it was important to take contributions at that time. He said some people may have had contributions from previous employments and it would have been wrong to prevent them from making a contribution and getting a pension to which they were entitled. This difficulty was always going to emerge as we moved towards the end of the ten year period.
I am delighted the Government is responding to this issue. People paid in good faith and many of them were surprised when they did not qualify for a pension. Older people were particularly upset. This was not a dignified way to treat people. I commend the Minister for his actions which show that Fianna Fáil is a caring party. The cost to the Exchequer will be significant, but it will be a poor reflection on our society if we cannot look after our older people. This measure is just one example of the Government's commitment to looking after older people. I know the Minister will announce further details to improve the lot of older people in the next social welfare Bill.
I also welcome the fact that people will be entitled to the free schemes and allowances associated with this pension scheme. I support Deputy Browne's view that it was an insult to issue refunds to people. Older people told me it was a kick in the teeth at the end of their days. I am confident the Minister will deal with that properly in the social welfare Bill to ensure those who took the refund of £900 because they needed it will get their full pro rata pension and that they will not be penalised for taking it. Whether the Minister decides to deduct the refund from people's pensions or asks them to repay the amount, I am sure he will be fair and adopt a caring and sensitive approach.
I commend this amendment to the House. I look forward to the announcement of the final details on budget day.
It is amusing, if not bemusing, that we are speaking tonight on this motion given that the Minister signalled some time ago that he would try to address this problem. While it is of interest to all Members, the Opposition could make better use of its time by raising more important issues, although this one is important.
I, like other Members, have been lobbied about difficulties since pensions were introduced for the self-employed. The Minister indicated these difficulties are transitional, but they are unfair and inequitable. For many years this House has tried to address these anomalies. I was disappointed that a former Minister for Social Welfare from Democratic Left was adamant that this inequity should not be changed. I could not believe my ears on Saturday afternoon when I heard him saying on the radio that he did not support changing this inequity in the social welfare system. It shows a non-caring side to someone who was in a Department which is one of the most caring and which touches every family in the country.
I am delighted the Minister will be able, through his deliberations with all those involved, to introduce a Bill to address this anomaly. I have had representations from farmers, small shopkeepers and fishermen who entered the contributory pension scheme because they were anxious to provide for their later years. They were disappointed when they learned that because they were more than 56 years of age when they entered the scheme, they would not be in a position to draw down that pension. Some people were ineligible because they missed the deadline by a few days or weeks. I am delighted we will be able to address this problem.
I hope the Minister will be able to address the problem of refunds in the legislation. People took the money for one reason or another. A deduction system would be the best way to address this problem. If people wish, they can reapply and be considered for the pro rata pension.
It is worrying that many people do not consider pensions until they are close to retirement. I am concerned about how we will adequately provide for our older people. The Government and the Fianna Fáil Party have made a commitment, to which they have lived up, to support older people in the community and those who have given their lives to their families and to this nation.
The Minister has indicated that he will ensure old age pensioners receive a pension of at least £100 per week. I am fully committed to that and the Minister has gone a long way towards increasing pensions to £100. The free schemes are exemplary. I know people who worked and lived in the UK, in particular, who are jealous of some of the schemes we provide for our older people. It is fair and equitable that people on pro rata pensions will now be entitled to those schemes.
I hope the Minister introduces a comprehensive Bill in the near future so that we will be in a position to provide for our pensioners. That we will have an imbalance in a number of years in terms of the number of people in work vis-à-vis the older community must be a cause of grave concern for the Department of Social, Community and Family Affairs and many other Departments. I hope the Bill will take on board the concerns outlined by the Irish Pensions Board, the Department and Members here this evening.
I am delighted to have this opportunity to address a problem which has been highlighted since pensions were introduced for the self-employed in 1988. It will alleviate the concerns of many of those who willingly entered the pensions scheme. The transitional difficulties might not have been foreseen as the legislation did not allow enough flexibility. I am also delighted that those who have obtained refunds will be considered for a pension. I commend and support the Government's amendment.
I propose to share my time with Deputies Penrose and Broughan.
I welcome the opportunity to speak on this important matter. It is not the first time we have discussed it and I commend the Minister for agreeing to deal with it. It is not a wasted debate as our pensioners deserve some consideration. There are many other issues as regards pensions with which we must deal. I thank Fine Gael for putting down this motion to deal with this important matter for those aged over 56 who were self-employed.
We have an economy where money is available to the Exchequer to finance expenditure programmes based on the promotion of equality and fairness in our society. It is up to this Government to take key decisions on how to spend our newly found wealth. It can decide to reward those who are already doing well, as was the case in the last budget, or it can decide to eliminate inequalities in society through the removal of poverty traps and anomalies. This anomaly is being addressed, but there are many more.
The lack of accessibility to pro rata pensions for self-employed persons aged 56 years and over who paid their full PRSI since they became legally obliged to do so in 1998 was a terrible anomaly which should have been addressed earlier in the context of our economic boom.
Many Deputies are familiar with sad cases they have come across in their clinics where self-employed people paid into the fund and on their retirement discovered to their shock they had not paid sufficient contributions to draw down their pension or that they were not entitled to a pro rata pension. Recently these cases have become more upsetting. I know people who missed out on a pension by a matter of weeks. They paid ten years of contributions which amounted to nothing but a slap in the face.
Our party Leader, Deputy Quinn, received a letter this week which cited the case of a man who began paying his contributions in January 1989, just one week after his 56th birthday. He missed out on a pension by one week and he was rightly upset. He feared for his financial well-being and that of his wife during their retirement.
In its report, "Securing Retirement Income", the Pensions Board cites more than the necessity of increasing the basic old age pension as a measure to provide for more secure futures for older people. It states, "This should result in a wider coverage not only in terms of numbers covered but also in terms of the types of employment concerned." This was an important report in securing stable and comfortable retirement. In responding to this report, the Government must consider all members of the workforce, including the self-employed and atypical workers.
Self-employment constitutes a vital component of our economy. It includes all sectors of employment, spanning services, manufacturing and farming. Self-employment needs to be regularised and should be seen as part of mainstream employment. The self-employed face many uncertainties as regards their income. A downturn in the economy can result in the immediate closure of the business of a self-employed operator. Differences in sterling and the punt can result in huge financial losses which cannot be borne for long by small self-employed business people. The poor weather conditions, coupled with prices in world markets have resulted in huge difficulties for farmers. We saw thousands of those farmers take to the streets of this city last week.
Such fluctuation and uncertainty in income is not desirable for any group at any stage, but more especially during retirement. There is a vacuum in the type of support offered to those who are self-employed. The availability of FIS to those in employment often causes resentment among the self-employed, but that is a debate for another day. However, if we are to consolidate our tax and social welfare systems, we will have to face up to anomalies which currently exist for those employed directly and those in self-employment.
Self-employment is proving itself as one of the most effective measures in moving the long-term unemployed from welfare to work by means of the back to work allowance. The back to work allowance is far from adequate. There is little encouragement for the self-employed to regularise their tax affairs. To this end, every support should be put in place to ensure they get their books in order. However, the shortfall in pension provisions for the self-employed is a turn-off from regularisation. This will only be remedied when we iron out the anomalies and problems in the system.
Furthermore, a recent debate on the crisis in agriculture has given rise to a discussion of other related matters, one of which was the compliance of farmers to tax and PRSI obligations. Everybody with a sustainable income should pay his fair share. However, in paying their fair share, people should also be treated fairly. It is unfair that farmers, who are part of the self-employed sector, are excluded from drawing down a pro rata pension. The extension of the right of the self-employed to a pro rata pension if they have not satisfied the ten year rule would go a long way. I thank the Minister for dealing with this issue.
The Minister has said on numerous occasions that this issue will be delivered on at a considerable cost. However, some of the estimated cost could be offset if more people were attracted to a fairer, more simplified social insurance system where returns and entitlements were comprehensible and anomalies were eliminated. A fear of the unknown and of lost income prevents people from moving into the formal economy. While successive Governments have warned against black economy activity, there must be reciprocal returns. Workers should be able to look forward to retirement. After long years of service, workers should not have to worry about a shortage of money in their retirement. A stable income is vital for our ageing population.
The small shop-owner, the small farmer, the cab driver, the fisherman, the child minder or the gardener should not have to worry about how they will pay their bills and buy their groceries every week when they reach retirement. Their thoughts should be focused on the way they can enjoy their newly found leisure time. However, I know many self-employed people who, due to the pro rata pension anomaly were forced to continue working past retirement age to ensure a stable income. It is not right that a person who contributes to the economy for his working life should be forced to stay at work past retirement age. Given the changing nature of our workforce and our older population, we need a clear framework upon which to develop a national pensions plan to ensure that retired people, be they self-employed, atypical workers or employees, are provided with a reasonable means of survival when they reach retirement age. To return to the previous example, Ireland has the oldest farmers of the EU and many small farms are inefficient and produce low yields. To overturn this we have tried to encourage young farmers on to the land, but when a farming couple realise they have not qualified for a pension, they are forced to continue working on the land. This is good neither for them nor for agriculture. The National Pensions Board report should be viewed as the beginning of a series of reforms which are necessary to ensure retirement incomes are secured for all members of society. Taxation policy and the social security system are other key areas which must be reformed to prevent people moving into poverty upon retirement.
For those who have been excluded from a contributory pension as a result of the ten year rule, their contribution to the social insurance fund seems like a double tax. For many who do not have a contributory pension the current system makes pensioners liable to pay tax even on a modest pension. My party believes a system of increased personal allowances, moving to a system of tax credits, would ensure not only that low paid workers could afford to take up a pension, but also that any supplementary pension provisions would not be taxed to the hilt during their retirement. Unless we make pensions straightforward and eliminate the fear of means testing for people approaching retirement, we will have failed to encourage older people to invest their money as an alternative to storing it under a mattress, making them prime targets for burglars.
Anyone who has regular contact with young workers knows it is next to impossible to encourage them to make contributions to a pension fund. To them, retirement seems far away, and the idea of putting aside a few pounds each week seems like a waste of money or a double tax.
We have discussed this issue on numerous occasions and although it has now been addressed we will return to it, because old age pensioners deserve more for their years of work. I hope the budget gives them an income of £100 per week. I support the motion.
I am glad of the opportunity to contribute to this motion as Labour Party spokesperson on agriculture and rural development. I compliment the Minister for tackling this thorny issue. There were cost implications, varying between £20 million and £30 million, but in the interest of equity and non-discrimination, the Exchequer should finance expenditure programmes in times of plenty. The Minister has found a sum which will promote equality and fairness by providing pro rata pensions for the self-employed, including farmers, small shopkeepers and fishermen. A mushroom grower in my constituency led the campaign for their inclusion in the scheme and I am sure he is delighted to hear the Minister confirm this evening that he would do so quite soon.
Some ten years ago I dealt with this matter in my former professional capacity, and it struck me that there might be difficulties at the end of the transition period, for example, for people aged 57 at that time. Farmers had no choice but to make the contribution, it was included in the tax assessment. When a legal obligation is imposed there is a legitimate expectation or anticipation that they would reap the same benefits as people making similar contributions in other employment sectors. At the end of the period some people were angry when they were told they were a few contributions short of qualifying for the pension, and massive difficulties were created. It was a hot potato and on several occasions I asked that a new system be devised whereby people in that position would not be denied the right to a pension.
As the Minister said, this matter relates to self-employed people over 56 years of age on the extension of social insurance to the self-employed in April 1988. That was the genesis of the current problem. I am delighted he has taken a positive decision to make the appropriate amendments which will encompass the inclusion of these contributors under the aegis of contributory pension cover from now on. The ten year rule was a barrier to small farmers and the payment of a pro rata pension is the most practical and equitable way of dealing with the problem.
Upon qualification for an old age contributory pension, recipients will enjoy the benefits of the various schemes. This is important because, as many farmers say in the privacy of a politician's clinic, their incomes are low. Two thirds of all dry stock farmers have a household income of less than £100 per week, which is not sufficient. The position was critical and people almost had to go to other agencies in order to survive. This measure will therefore be welcome in the farming community.
Small shopkeepers in rural areas who were competing against major multinationals also found they were denied a contributory pension. This persuaded them to continue trading for a few more years, perhaps making poor profits, until they almost died in service. The same was true of farmers, and this measure will facilitate the transfer of farms, which is important from a socio-economic viewpoint. When I studied for a masters degree, I noted how slow the rate of farm transfer was in Ireland, and it has not accelerated as it should, even under the farm retirement scheme. Some of the problems may be related to the lack of installation aid, which I have often mentioned in the House. This new measure is another impetus to the rate of transfer and it must be welcomed for that reason also.
The self-employed had a legitimate case that they were being discriminated against under Article 40.3 of the Constitution. Once they contributed they expected to enjoy the fruits of a contributory pension. Also, how we care for the elderly is a measure of how humane and compassionate we are as a society, and this is a welcome step in that regard, as is its inclusiveness. The self-employed pay their appropriate taxes and contributions — I say that as one in that category — so why should they, by a quirk of transitory arrangements for such contributions, be denied what is rightfully theirs?
Deputy Moynihan-Cronin mentioned family income supplement. There are practical difficulties in applying the scheme to the self-employed and farmers but this or a similar scheme should be provided for them, because on the basis of equitable application they are entitled to support if their income falls below the threshold set out in the FIS criteria. It is a good night for everybody concerned and I hope the implementation will not be hindered by technicalities or complexities.
