Brendan Smith (Cavan-Monaghan, Fianna Fail)

A number of issues have been raised from time to time arising from the scheme of early retirement from farming. Those that come up most often are the fact that the rate of pension is not index-linked and the requirement that early retirement pensions can be paid only as a supplement to any national retirement pension payable to the participant.

It is not accurate to describe these as anomalies. Both the current early retirement scheme and the previous scheme, which closed to new entrants at the end of 1999, are governed by EU regulations. One requirement of the regulations is that the early retirement pension can be paid only as a supplement to a normal national retirement pension. Consequently, my Department has no option but to deduct the value of national retirement pensions from the early retirement pension.

As regards the rate of pension, under the previous scheme we are paying the maximum that the EU regulations allow — we cannot increase it. Commission officials have confirmed this several times in response to inquiries from my Department. In its proposals for the current early retirement scheme, which commenced in November 2000, my Department included a provision for annual increases in the rate of pension from 2000 until 2006. The European Commission rejected this proposal and insisted on legal grounds that a fixed rate be set instead.

The mid-term review of the CAP has implications for farmers in the early retirement scheme. In general, the new single payment scheme introduced in Ireland from 1 January 2005 is applicable to farmers who actively farmed during the reference years 2000, 2001 and 2002, who were paid livestock premia and-or arable aid in one or more of those years and who will continue to farm in 2005.

Farmers who joined the 1994 early retirement scheme, which closed to new applications in December 1999, did not farm during the reference period and cannot establish entitlements under the single payment scheme. Where they transferred their holdings by lease, the transferees actively farmed during the reference years and it is they who will have entitlements established for them. Entitlements are attached to the farmer who was actively farming during the reference period, not to the land.

During the course of negotiations with the European Commission on the single payment scheme, Ireland secured agreement for an arrangement that will benefit family members or others who now take over holdings that were farmed by third parties who had leased them during the reference period. Farmers who take over such holdings, by transfer free of charge or by a lease of five or more years at a nominal amount, may apply to the national reserve for payment entitlements under the single payment scheme.

Participants in the current early retirement scheme that was launched in November 2000 who farmed during part or all of the reference period will have entitlements in their own right and can, before 15 May 2005, use the private contract clause to lease these entitlements to the young farmer who holds the lease of their land under the early retirement scheme. In such circumstances, the retired farmer must establish the entitlements in 2005 on a special form provided by the Department. The qualifying young farmer may or may not have entitlements and land in his or her own right.

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