Seán Fleming (Laois-Offaly, Fianna Fail)

I move amendment No. 18:

In page 25, between lines 44 and 45, to insert the following:

"(3) Where a formula is being used for the calculation of retirement benefits, the Minister shall publish the basis for such formula, prior to the enactment of this Act.".

In the course of calculating what a pension would be based on, the matter proceeded to the Labour Court, which made an adjudication and set a compromise figure of €45,000. I hope the Minister of State will be able to explain the position.

Yesterday, 10 July, the Minister issued a letter to the committee on the Bill and we all received a copy. It dealt with certain aspects of the legislation, including the provision under discussion. I do not fully understand it.

I included my amendment on Committee Stage because I did not know whether we would receive clarification. The Minister has made some effort to provide the basis for the calculation in the letter but some further explanation is required today. A technical note was requested to explain the figures used in the single pension scheme for pension accrual for ordinary members. I refer to appendix 2. I find it hard to reconcile what the Minister says will be the pension entitlement for staff after the introduction of the new scheme with the potential savings listed. We are beginning to get to the bottom of this. The detail has not been given to us heretofore, despite the fact that this legislation has been before us for six months.

We asked for a technical note on how the figures pertaining to the new scheme are being calculated. The Minister's letter claims that, based on the estimates carried out by his Department, which, it must be stressed, are highly sensitive to changes that might happen in the middle of the century given that it will be 43 years before new entrants receive their full pensions, the annual expenditure on the pension scheme will be approximately €5 billion in today's terms. The Minister states the new scheme will reduce the annual expenditure by approximately 35%, or €1.8 billion. Importantly, he states the estimated saving will arise from indexation, in respect of which the figure will be €1 billion. The figure for career average change is €500 million and that for the later pension age is €300 million because people will have to work for three years more than they would have worked under the old scheme. We must take our time with this issue, as it sums up the Bill in one sentence.

The Minister of State will understand the confusion. Appendix 1 provides examples of the single scheme lump sum as a percentage of the lump sum under the current scheme. The public's confusion arises in this regard. I did not get my head around appendix 1 until I read the sentence I mentioned. We have been debating this issue for six months, but we are only now at the crunch. Perhaps the point was clarified, but 99.9% of the public does not know. Maybe the people behind the Bill know what this is about.

According to appendix 1, a clerical officer's pension will stay at 100% under the new scheme versus the current scheme. As the officer is on low pay, he or she will not lose. How was this figure calculated? Different assumptions are made for years of service. Under the new scheme, an executive officer's pension will be 85% of its current level, a higher executive officer's pension will be 78% and an assistant principal's pension will be 73%. This lessening is the essence of the Bill. According to the example used, a teacher's pension will be 83% of its current level, a senior staff nurse's pension will be 87% and a prison officer's pension will be 81%. Under the new scheme, most people will have pensions of approximately 80% of the current levels. Hence, the saving will be approximately 20-25%. However, the Minister stated-----

See this speech in context