Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I welcome the opportunity to introduce the Public Service Superannuation (Age of Retirement) Bill 2018 on behalf of my colleague, the Minister for Public Expenditure and Reform, Deputy Donohoe. This Bill is a positive and timely measure which responds to the growing consensus that the traditional retirement age of 65 years no longer reflects contemporary life and society. The legislation provides that a large cohort of long-serving public servants, those recruited prior to 1 April 2004, will have the opportunity to continue in their public service employment up to the age of 70 years, should they wish to do so. At present, there is a statutory requirement for these public servants to retire at the age of 65 years. When this change was announced in December, it was welcomed by public servants, many of whom feel they are fit and healthy enough to continue working. For some, financial commitments such as mortgages and supporting children through third level education make retirement at 65 years an impractical prospect. Others simply enjoy their work and feel they have valuable skills and expertise to contribute to their organisations.

All the Deputies here are aware of individual public servants who want to continue in their employment past the age of 65 years. I am eager to ensure that this Bill is enacted as quickly as possible so that as many of those public servants as possible can avail of the new compulsory retirement age. While this will facilitate those who wish to remain at work for personal, professional and financial reasons, it will also address the income gap which is currently experienced by public servants who must retire at 65 years but do not receive the State pension until they are 66 years old. This creates considerable inconvenience for those affected and addressing this anomaly was one of the driving forces behind this legislation. The new compulsory retirement age of 70 years will also accommodate the scheduled increases to the State pension age to 67 years in 2021 and 68 years in 2028, ensuring that this income gap will not crop up again in future. When the Bill is enacted, no public servant, other than a member of the uniformed pension fast accrual group - gardaí, prison officers, firefighters and members of the Permanent Defence Forces - will be required to retire before the age of 70 years.

While this legislation is directed towards public servants, it also responds to the challenges and opportunities that changing demographics in Ireland present for society and the economy. The life expectancy of Irish men and women has increased significantly since the first official statistics in 1926. In the period to 2011, male life expectancy had increased by 21 years and female life expectancy had increased by 24.9 years. This upward trend is set to continue. Ireland, like most European countries, is facing an ageing population as life expectancy increases and birth rates fall. The number of pensioners is projected to more than double over the next 40 years. The result of this is a significant increase in the number of people of pension age relative to the number of people of working age, which has serious implications for the sustainability of the Social Insurance Fund and the State pension system. One of the ways to absorb the impact of this demographic shift is to encourage and facilitate longer working.

Supporting fuller working lives is one of the key policy strands in the Roadmap to Pensions Reform 2018 - 2023, which was published by my colleague, the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, in February. The roadmap commits to ambitious reform across the pensions system - State, public sector, occupational and private pensions - with the aim of modernising pension provision so we can all enjoy a life of security and opportunity as we get older. This Bill is one of the key actions committed to by the roadmap in respect of public service pensions.

It is widely recognised that supporting fuller working lives is key to promoting positive ageing and the continued integration of older people in society. This approach is supported by advocacy groups such as Age Action and was reflected in the recommendations made by the Citizens' Assembly in 2017 with regard to responding to Ireland's ageing population.

This demographic shift is not just an economic challenge but is also an opportunity. The Department of Health's national positive ageing strategy recognises that increasing numbers of older people, better educated and in better health than previous generations, are an enormous opportunity for economic, social and cultural development. I could not agree more with this sentiment. People are living longer, healthier lives and in many cases have the energy and desire to work into what are traditionally considered the retirement years.

The new compulsory retirement age of 70 recognises the significant contribution that older public servants, many of whom have built up years of valuable experience in the public service, are able and willing to make.

In line with the Government decision of 5 December last, the purpose of the Bill is twofold: to increase to age 70 the compulsory retirement age for public servants recruited before 1 April 2004, other than the uniformed pension fast accrual group; and to ensure that the additional service by a public servant up to the age of 70 can benefit from pension accrual subject to the maximum of 40 years’ service. The provisions for the compulsory retirement age in the public service have been addressed in previous legislation on a piecemeal basis. Compulsory retirement age for public servants is generally determined by their date of recruitment to the public service. Public servants recruited between 1 April 2004 and 31 December 2012 have no requirement to retire on age grounds, while those recruited since 1 January 2013 are members of the single public service pension scheme and have a compulsory retirement age of 70. Public servants recruited before 1 April 2004 are, therefore, the only group currently required to retire before the age of 70. They generally have a compulsory retirement age of 65 and it is this group that I cater for in this Bill.

The selection of the age of 70 as the new compulsory retirement age follows extensive discussions with public service employers and consideration of the other options available, such as synchronising compulsory retirement age with the age of eligibility for the State pension. Selecting the age of 70 not only aligns the potential working horizon for a public servant with the increasing age of eligibility for the State pension, it also allows people to work beyond that age should they wish to do so. It is only six years ago that the age of 70 was agreed as an appropriate compulsory retirement age for members of the new single public service pension scheme. Selecting 70 helps to bring about a consistency in retirement ages in the public service by matching the compulsory retirement age of the pre-2004 public servants with that of single scheme members. In taking the decision, consideration was given to the benefits of having a specific age limit which reflected increases in longevity and at the same time respected the existence of a retirement horizon. A defined retirement age is important for planning of recruitment and promotion throughout an organisation. For this reason, it was agreed with public service employers that a specific age limit should be set. While there can be no right answer as to what the perfect compulsory retirement age might be, the age of 70 strikes the right balance.

When the Government made its decision last December, it agreed that the new legislation would not apply to the uniformed pension fast accrual group - for example, gardaí, prison officers, members of the Permanent Defence Force and firefighters - who are required to retire early for operational reasons. It was agreed that issues relating to the retirement ages for these groups could only be dealt with at sectoral level where the detailed policy, operational and manpower issues relevant to those groups could be appropriately considered. On that basis, retirement ages for these groups remain a matter for the respective Ministers.

There is a small number of other groups to which the new retirement age of 70 will not apply. These are groups which, by convention, have no compulsory retirement age. I refer, for example, the President and Members of the Houses of the Oireachtas. Certain groups, such as members of the Judiciary, whose retirement age is provided for in courts legislation, are being excluded from the Bill. Their retirement ages will continue to be covered by the courts legislation. The new compulsory retirement age will not apply to public servants who have retired and been rehired on contract. Their fixed-term contract terms will continue to apply.

I will now briefly outline the main provisions of the Bill, which has been drafted as an amendment to the Public Service Superannuation (Miscellaneous Provisions) Act 2004. Section 2 identifies the public servants to whom the Bill will apply and refers to them as "relevant public servants". These are effectively all pre-2004 public servants other than those I mentioned earlier. Section 3 provides for a new compulsory retirement age of 70 for relevant public servants as defined in the Bill. It also provides that the new compulsory retirement age may be increased further in the future by Ministerial order in certain circumstances.

Section 4 gives effect to the Government’s decision to provide that the service between the age of 65 and the new compulsory retirement age of 70 would benefit from pension accrual, subject to the maximum accrual of 40 years’ pensionable service. Section 5 provides that any statutory instrument which sets a compulsory retirement age, which has been set under any enactment, should reflect the new compulsory retirement age provided for in this Bill.

Schedule 1 of the 2004 Act details the public service bodies to which that Act does not apply. These are mostly commercial State bodies. Section 6 of the Bill updates this Schedule by adding Shannon Group plc and Teilifís na Gaeilge to the list. Both of these bodies have a commercial mandate and were established since 2004. For the avoidance of doubt, a global reference is being added to the Schedule to exempt any pre-1922 public service body of a commercial nature established by an Act of Parliament.

Section 7 and the Schedule contain consequential amendments to various sectoral Acts which provide for a compulsory retirement age for an individual public servant or class of public servant, so that those provisions reflect the increase in the compulsory retirement age provided for in this Bill.

The Government recently approved two amendments to the Bill. These amendments concern the exclusion of Central Bank staff and the accommodation for teaching staff in the education sector to remain at work until the end of the academic year in which they reach the compulsory retirement age. These amendments will be dealt with in detail on Committee Stage.

The purpose of the Bill is to enhance the options available to pre-2004 public servants as they approach retirement. Once it is enacted, 70 will be the new 65 for this group. There will be no change to their minimum pension age but they will be able to remain at work on current terms and conditions up to the age of 70, if they wish to do so. This is a positive change for this large cohort of public servants and it represents a tangible step towards supporting fuller working lives. I commend the Bill to the House.

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