Brendan Howlin (Wexford, Labour)

No. It must be remembered that the new regime would be included. As I have advised the House previously, it is appropriate to give effect to this in primary legislation. How it is to be done should be laid out clearly, which is done in section 40. For the avoidance of doubt, if Deputies look at the proposed section 40, there is no great discretion for the Minister not to give the increase. It sets out that there shall be a review of the consumer price index in a process that is proper to lay out in law. At the end of subsection (2) one can see that the referable amounts accrued under the scheme shall be increased to reflect any such increase. Subsection (3)(b) states that, subject to subsection (4), pensions payable under the scheme shall be increased to reflect any such increase - that is, an increase in the CPI.

The clause in subsection (4) that has caused concern is simply to lay a timing mechanism to do that. I understand the logic of Deputy McDonald's amendment which takes away all the structure I have laid out and simply provides that pensions payable under the scheme shall be indexed in line with the CPI. However, it does not mention any mechanism by which that is to be done, or when. Is it weekly or monthly? Nor does it provide, as the section does, that it can only be increased. If they are to reflect movements in the CPI and be indexed in line with the CPI, they can be reduced as well. I know that is not the Deputy's intention but that would be the effect of accepting her amendment. Her amendment simply states that pensions under the scheme shall be indexed in line with the CPI, up or down. That is not something I can accept. I have set out a mechanism whereby this can be done. There is no intention to avoid the increases. It is a one-way valve so there cannot be decreases, even if the CPI goes down as has been the case in recent years on occasion. It also sets out a clear mechanism about how it is to be done. I am advised by the Office of the Parliamentary Counsel that is the appropriate thing to do in primary legislation.

As regards the more substantive point made by Deputy Fleming, he is right to say that this section is different from others in that the generality of the Bill affects future pensioners - in other words, people who have yet to be recruited to the public service. They will, therefore, be recruited on terms that are known to them. They can apply for jobs knowing their pay, conditions and pension entitlements. It is not my intention to retrospectively alter existing pensions in this legislation, save in terms of how future additionality is to be determined. It is a fundamental difference and I have explained this, to Deputy McDonald in particular, until I am blue in the face. She talks about how it is possible to retrospectively impact upon existing pensioners in this section, but it is not possible to do so for pensioners that she wants to cut because of legal advice. I am not cutting pensions in this legislation. I am simply proposing for a Minister in the future to determine, if he or she so wishes, a different mechanism for increasing them. Instead of it being linked to the current officeholder that filled the boots of the pensioner, I am saying that a future Minister can link that basis of increase to the increase in the CPI.

In all my discussions with those in the private sector they regard these provisions as extraordinarily good, and most people would. One gets a pension at the end of one's working life and it is preserved by being index-linked to inflation. Therefore a person's standard of living is preserved into the future, which is not something that many in the private sector enjoy. It is a reasonable provision.

Should I or any future Minister seek to apply the CPI mechanism for increases to existing pension holders, that would have to be done by order of the House. It would require the laying of a statutory instrument before the House and a positive vote of the House. I am sure that newer Deputies are by now well familiar with the process. There are two types of statutory instrument. One cannot become effective unless an annulling motion is passed within a set timeframe. The other type, of which there are fewer in number, requires a positive vote of the House to take effect. This one fits into the latter category. If I or any future Minister determined that the CPI process should apply to pensioners, it would have to be determined by the Dáil, and then be approved by the Seanad before it would have effect. These are important matters.

The effect of Deputy McDonald's amendment is simply to say that pensions should be indexed and I have dealt with that point. If I have not dealt with any other points that were raised I will happily come back again to do so.

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