Finian McGrath (Dublin North Central, Independent) | Oireachtas source

I welcome the opportunity to contribute to the Second Stage debate on the Social Welfare and Pensions (No. 2) Bill 2013. This is an important debate because we must ensure existing pensioners and those who will be in receipt of pensions in the future are treated in a fair and correct way. We cannot live in a society in which pensioners are not looked after and cared for in their later years. Any society which does not care for its senior citizens, people with disabilities and the sick is one without a heart and a soul. We must focus on that issue in the context of the legislation before us. Pensioners' rights must be protected.

The Bill amends the Pensions Act 1990 to change the manner in which the resources of a defined benefit pension scheme are distributed on the wind-up of a pension scheme. It also broadens the category of benefits that can be reduced where a defined benefit scheme is being restructured because it does not meet the statutory minimum funding standard. It amends the Social Welfare Consolidation Act 2005 to provide for a number of technical changes. That is the purpose for which the legislation has been introduced. In that context, it is important that we plan for the future and ensure fairness for all pensioners.

Earlier today I received letters from two constituents on this urgent and important issue. The first states:

I am a defined benefit pensioner, who contractually had to sign up for the scheme on entering employment. I had no other option.

I am just amazed, it is beyond belief, that the Government could consider introducing a law that would reduce pensioners' income by 10%. Pensioners have invested, over their 40 years employment, into the pension fund, and it is the employer's responsibility to address the funding shortfall problem not the pensioners.

I find it hard to understand how my contract can be renegotiated by the Government just because it has the legal powers to do so. What is the value of any contract now (e.g. owning my own home) if the Government can just change the terms of any contract.

Please oppose any legal changes to reduce my pension by 10% and continue to press employers to take responsibility to make some effort to correct the deficit.

The second item of correspondence I received came from a person who used to work for Aer Lingus. It states:

Dear Mr McGrath

As a retiree of Aer Lingus, having served for 36 years, I am appalled that my modest pension, membership of which was a term of employment and hard paid throughout my working life, can simply be diminished at the stroke of a Minister's pen. This new Bill which Minister Burton is proposing is fundamentally unfair, immoral and ageist. Surely there is a more equitable manner in which to deal with the problem than wielding a hatchet at the victims who have done their duty, paid their way, but are now no longer apple to supplement their pensions.

The average Aer Lingus employee was (is) not highly paid; therefore individual pensions are quite modest. During eleven years of retirement one modest increment was paid by the IASS Trustees, but it was clawed back by this Government under some "spurious" label.

The time has come to shout "ENOUGH IS ENOUGH! HANDS OFF OUR PENSIONS". I sincerely request that you reconsider the Social Welfare & Pensions (No. 2) 2013 legislation.

These are the views of two of my constituents but many more communicated their opinions to me in recent weeks. It is important to place these views or record because it is essential that we deal with this issue. I urge the Minister to consider the injustice of what is proposed.

On the broader issue of pensions, it is very important to consider what is happening in the country. Ireland will experience a significant ageing of its population in the coming decades. The population of the European Union is projected to increase from 501 million people in 2010 to a peak of 526 million around 2040 and to then decline to 517 million in 2060. The greatest proportion of population growth is expected to be in Ireland.

It is projected that the Irish population will increase by 46%. During this period, the share of the European Union population aged over 65 years is expected to increase from 17% in 2010 to 30% in 2060. While the projected increase in the proportion of the population aged over 65 years in Ireland, from 11% in 2010 to 24% in 2060, is less than the projected EU average, it still amounts to a major change in the age distribution of the population.

As the proportion of the population aged 65 years and over increases, the task of financing associated pensions spending will fall to a diminishing share of the population. The ratio of workers to retired persons, which stood at 5.3:1 in 2010, is expected to decline to 3.9:1 in 2020 and 2:1 in 2060. This demographic transition, while slightly less dramatic than the average across the European Union - whose population is among the most rapidly ageing populations in the world - constitutes an unprecedented change. A robust and dynamic pensions system will be required to maintain an adequate and sustainable income support for older people. I urge the Minister to listen to my concerns and examine all the issues raised in this debate.

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