The Public Service Superannuation (Miscellaneous Provisions) Act 2004 introduced several changes in pension arrangements in the public service. The principal aim of the Act was to secure the long-run Exchequer position by raising the pension age by five years for new entrants. The changes introduced in the Act, including an increase in the minimum pension age by five years and the removal of the compulsory retirement norm of 65 years, apply only to those new entrants who joined the public service after 1 April 2004. The Act does not cover commercial State bodies since they are not part of the public service, although they are normally covered in the inclusive definition of public sector to which the Senator has referred.
Ireland's demographic profile, with one of Europe's youngest populations, allowed the 2004 Act to confine these changes to new entrants. This contrasted with reform elsewhere in Europe, where the pension terms of serving public service workers were adversely affected. The savings which the pension and retirement age changes will produce are, therefore, timed to peak at the time of real need — towards mid-century — when Ireland will have a large number of pensioners relative to workers and a correspondingly large pensions bill.
The fixing of compulsory retirement ages in each area of the public service, such as education, health and local government, is a matter for the Ministers with responsibility for these areas. A sectoral approach for staff already serving before April 2004 makes sense because the numerous factors influencing any decision to change the status quo, including manpower needs, service delivery, productivity, career progression, demands of the work and management capacity to cope with change, are likely to vary across the public service.
The appropriateness of case-by-case consideration has been demonstrated in practice by the Minister for Justice, Equality and Law Reform who recently introduced an increase in the maximum retirement age for the Garda. Occupational requirements may justify lower retirement ages in certain professions, as in the case of prison officers. It might also be appropriate in certain areas of the public service to consider limited retention beyond the normal retirement age to meet specific manpower exigencies without triggering the wholesale removal of the age cap throughout the organisation.
The retirement age of those working in the Civil Service comes under the responsibility of the Minister of Finance. The changes in the Public Service Superannuation (Miscellaneous Provisions) Act 2004 were confined to new entrants who joined the Civil Service and public service after 1 April 2004 while the mandatory retirement age of 65 years was retained for pre-2004 civil servants. This policy is based on several factors. Ireland's demographic profile, with one of the Europe's youngest populations, allowed the 2004 Act to confine these changes to new entrants. In light of these favourable demographics, no financial imperative exists to introduce changes to the terms and conditions relating to the retirement age of pre-2004 civil servants.
The increase in the minimum pension age and the removal of the compulsory retirement age for new entrants cannot be managed in isolation. Other Civil Service human resource processes must be adapted and developed to reflect the changes in the retirement age which must be supported by fully developed systems for the management of performance and career progression. The performance management system, introduced across the Civil Service, is becoming increasingly embedded and will, in time, support the gradual transition to a situation where an increasing number of civil servants will be required to work until 65 years of age before drawing a pension and will have the right to continue to work beyond that age.
A significant possible adverse effect of removing the compulsory retirement age for serving civil servants, while there is no evidence of short-term pressures on labour supply, would be to limit the career opportunities for existing staff and the employment opportunities for people wishing to enter the Civil Service by reducing the number of vacancies and promotions available in the Civil Service in any year.
A recent claim at general council by the Civil Service unions sought the full removal of the retirement age for civil servants that were appointed before April 2004. The claim was rejected for several reasons. The cost imperatives which gave rise to the decision to change the pension and retirement age arrangements for new entrants would not arise in the short and medium term. The relevant human resource processes and practices would have to be adapted over time to address the issues that would arise from the new arrangements. In light of these points, it is not proposed at this time to remove the existing retirement age of 65 years for those officers who joined the Civil Service before April 2004.
Increased protections provided for in the Equality Act 2004 are a very positive step forward in the broader issue of the treatment of older people in employment. Removing the exemption contained in the 1998 Act that allows employers to set retirement ages in employment contracts is a matter for the Minister for Justice, Equality and Law Reform.