I thank the Chairman. I gave the committee a brief paper in advance, to which I will speak. I will begin with the executive summary. Citizens are being deprived of a significant benefit they earned and paid for. This measure is not designed to help older workers to stay in employment. Employers and unions were given no opportunity to consider the complex labour market issues involved. In terms of the raising of the pension age - it is not the retirement age but the pension age because they are two different things - we are going further and faster than any other country in Europe. We will have the highest pension age in Europe at the end of this relatively short process.
There has been no public debate on this matter. No one has explained to the public why we must have the highest public pension age in the EU. This measure makes nonsense of the advice the Pensions Board gave for years about the importance of long-term planning for one's retirement. This measure flies in the face of the principles of pension reform. The troika did not impose this measure. It was contrived by politicians and public officials who will continue to enjoy good pensions from age 65 and earlier. We are a long time into this process and we have no faith that the cosseted pension elite who contrived this matter have any intention of mitigating the injustice they have caused.
I thank the committee for the invitation to speak to it. We were told that this hasty arbitrary diktat was agreed with the troika. There was no political debate, no public consultation and no cost-benefit analysis of the measure. No consideration was given to the significant labour market issues involved nor was thought given to issues of fair play, equity or minimising hardship on those worst affected. Social policy issues, labour market issues, industrial relations issues, pension policy issues, planning issues and social insurance issues are involved.
Nobody should be fooled by the notion that this has anything to do with austerity. Long before austerity, spurious demographic arguments were being used by the Department of Social Protection and, hopefully to its now shame, the Society of Actuaries in Ireland to tell us that 50 years from now, there would be so many pensioners and so few people at work that we had to do something drastic about PRSI pension entitlements. They even on occasions dressed these assumptions up as inescapable facts. There are no inescapable facts about 50 years from now. Making assumptions about population growth five years ahead is a very good idea if one wants to plan for a school building programme. In terms of pension policy, doing demographic projections 50 years ahead is complete nonsense.
In the run up to 2014, workers were given no advance notice when depending on their age, they stood to lose €12,000, €24,000 or €36,000 per year. The newspapers hardly covered it and the Department of Social Protection did not write to these people to tell them that although they had been paying PRSI for the past 40 years and were expecting a pension at 65, they would not get it. Between themselves and their employers, the people affected by it paid almost 15% of their salary since the PRSI system was invented to pay for this benefit so this is not a handout. No politician or civil servant looked into their heart and said it would be nice to give these workers a pension. This is something these workers paid for and nobody had the right to confiscate these payments because it is confiscation of money earned and paid for by workers paying PRSI. These workers are now victims of decision makers who are not affected at all. The people who happily made this decision will suffer no ill effects as a result of it.
Apologists for this measure suggest that as people are living longer, they should work longer. ICTU holds that people should be free to work longer if they wish but they should not be obliged to do so in order to avoid poverty. No provision has been made to facilitate workers remaining in employment after age 65. When the lower grades in Government Departments, who are on the higher levels of PRSI, reach the age of 65, they are out the door, regardless of whether they have any pension entitlement or not. The Government can hardly expect the private sector employers to keep their people on if it is not prepared to keep its own employees on in this situation. On a number of occasions, we asked the Department of Social Protection what it proposed to do with its lower grade staff on the higher rate of PRSI when they hit 65 if they had no pension entitlements. Even when it was put in writing, that answer was not forthcoming. The reason it was not forthcoming was because it knew exactly what it was going to do. It was going to push them out the door, which is exactly what it did. This has nothing to do with keeping people in the workforce for longer.
Employers and unions were given no opportunity to consider the other complex labour market issues involved. IBEC was concerned about whether the lack of clarity concerning the legality or otherwise of an affiliate sacking workers at age 65 would lead to litigation. We were concerned that if a person with 40 years service was going out the gate with no pension, he or she might picket it. In a way, I am sorry some of them did not do this. It might have brought the matter to a head but as a trade union official whose job it is to fix industrial disputes, I can say it would be a very difficult dispute to fix because this person has been pushed out the door and he or she has nothing to lose by keeping the picket going for the rest of their life.
Other labour market issues that were ignored were the effects on the morale and productivity of workers either being retained in or forced out of employment against their will. This is a big issue for both us and employers. Even if one lets somebody who has been planning to go at 65 stay on to avoid poverty, there are implications for productivity. There are also implications for productivity and morale among other people who are being held back from promotion because people who were expected to leave at a particular age are being kept on. If the Government had decided that people were not getting a pension at 65 but their employers had to keep them on, the troika would have regarded it as a labour market rigidity. I use the term "if" because nobody involved in making this decision with whom I spoke had any intention of doing anything to protect a worker who was being driven out of employment with no pension entitlement.
Another issue that is very dear to my heart, probably because of where my working life began, is the fact that it is all very well for to ask somebody working in this building or organisation, in the various organisations associated with it or in education to work to 68. Where is the justice in asking a scaffolder to work to 68 if one could find an employer who would be irresponsible enough to let a 68 year old man climb a scaffold on a January or December morning? There was no discussion of this matter. If arrangements are made to keep people on - not that anybody has done this - is there a knock-on effect down the line in terms of youth unemployment and positions not being available for younger people coming into the labour market?
Pension reform and pension planning are long-term issues. When we go to negotiate a pension scheme, we engage actuaries and the workers pay them big money to find out how much they have to put away and for how long if they want a certain pension. This must be done over a 40-year period, which is the proper way to plan a pension. To come along 35 years into that and say, "By the way, some of the figures are wrong because we changed the rules. You've paid for three years PRSI pension but we have decided you're not getting it," makes a nonsense of pension planning.
The current Administration is saying that it wants to move towards a mandatory pension scheme or a pension scheme that involves everybody. This decision has done a lot of damage to that prospect. People have been paying PRSI for years and now they see it confiscated. What worker will agree to pay into a pension for their entire career if some Administration in the future can just say, "We didn't really mean it. We wanted you to pay for it but we never had any intention of giving it to you." Huge damage has been done to confidence in pensions as a result not just of this measure, but of others we will not go into. Perhaps we will come back another day and talk about them. To put it simply, if somebody was told five years ago that he or she was going into an occupational pension scheme, they would nearly have celebrated. If it was said to a young worker today, he or she would nearly cry because very few people have any faith that they will get what they are paying for. This decision has been a big contributor to that.
I will not read out the rest of my paper.
In the paper I drew up last year I refer to a person aged 59 years but I will correct that to 60 years of age. A private sector worker who is 60 years of age this year will not get their pension until he or she is 67 years of age. I know this because I am that person. I started to work at 16 years of age in a construction site and I have worked ever since. I will not get a penny out of my PRSI pension until I am 51 years in the workforce. That is assuming my employer allows me to stay on after 64 years of age, which is the age at which I finish work. That is a big assumption. The people who made this decision can get very generous pensions. Most of the people involved have very generous pensions at 60 years of age and never paid the rates of PRSI that I paid.
In my entire life as a trade union official I have tried to avoid the public sector-private sector divide, and that is still very important to me, but it is very hard when well-pensioned elites can make decisions at the flick of a pen which deny people who are much poorer than they an entitlement without a by your leave.
