Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity to speak on Second Stage of this Bill. We generally need new legislation in this area. The principles of the Bill are generally welcome on this side of the House, as are many of the specifics. On Committee Stage, we would like the Minister to agree to our detailed amendments or take on board the principles thereof and have his departmental staff agree on a satisfactory wording. We would like to see the legislation amended before it passes through the House. I welcome this discussion but flag that, on Committee and Report Stages, we will be tabling amendments that we will want taken into account.

Towards the end of his speech, the Minister outlined some of the specifics of the Bill. Let me make a few general points and then deal with specific aspects of the Bill. The Bill's main purpose, as we all now know, is to provide for a new single pension scheme for all new entrants to the public service. The Minister's briefing note states, importantly, that this will significantly reduce costs to the taxpayer while at the same time ensuring public servants and their dependants will continue to have a reasonable income on retirement. The new scheme will apply to the Civil Service, the health and education sectors, the HSE, local authorities, the Garda, the Defence Forces, the regulatory sector and non-commercial semi-State bodies. It will include Oireachtas Members and members of the Judiciary. The Minister has dealt with this aspect and I do not propose to dwell on it. Other Members may be happy to talk about politicians' and judges' pay. I will leave that to them as they may want to go down that road.

There are important new initiatives in the scheme. The first that will attract a lot of public criticism concerns the higher minimum public service pension age. It is proposed that this be increased initially to 66 to bring it into line with social welfare related increases affecting the State pension. The retirement age will rise on a phased basis to 67 and 68. The Minister made a very strong, cogent and well-documented case for this on the basis that we are all living longer. Many people spend longer in retirement than they spend in the workplace. The purpose of the scheme is to ensure people, during the course of their employment, will contribute to a scheme. It is great that we are living longer. It is great that the health of the nation is improving, despite daily and yearly criticisms. The overall health of the nation has improved, as is evident from the increase in the length of time people live. People are living better lives than they did in the past because of better medical treatment.

It must be recognised that some people feel strongly that it is ageist to be forced to retire when they reach retirement age. There should be an option for people to work a little later than they now do, if only to keep them active for longer. We have all seen people who, having worked all their lives, did not last too long after retirement given that their work was part of what they were. For most new entrants to the public service at present, there is no maximum retirement age. I make this point in the proposed new maximum retirement age of 70.

Another feature of this legislation is the calculation of pensions on the basis of career average earnings rather than final salary. The Minister stated there may have been an abuse of the system whereby people were promoted just at the end of their careers to attract a larger pension. We have all encountered that. It is great for the person concerned but everyone else must pay for it. It was part of the system. Let us not say the system did not allow for it. Perhaps it should have been dealt with much earlier.

Consider the change to the overall rate of pension contribution from staff. It will generally remain at 6.5% but, for those who do not work until they reach the full retirement age that generally applies, there will be an increased contribution rate, given that they receive their pension on a fast accrual basis. Members of the Oireachtas are included in this category.

Modification of earnings linked to pensions comprises a bone of contention. The new scheme provides for the linking of post-retirement pension schemes to the consumer price index and not to pay. We will have to return to this in detail. I understand what the Minister is saying and he might clarify it in due course. Over the course of 40 years, increases in pay could be higher than consumer price index increases. Alternatively, increases in the consumer price index may be higher than pay increases. We must have concrete worked examples of how that will work out.

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