James Bannon (Fine Gael)

I welcome the Minister to the House. As stated, the purpose of this Bill is to remove the compulsory retirement age for certain categories of those who enter the public service on or after 1 April 2004, to increase the pensionable age for certain categories of new entrants into the public service, including Members of either House of the Oireachtas and certain office holders, and to make consequential provisions to provide for certain other categories of new entrants. The Bill indicates that the Government has decided to implement the bulk of the recommendations of the report of the Commission on Public Service Pensions. The recommendations have in turn been the subject of a report by a joint management-union working group, set up to advise on the implementation of the commission's recommendations, as well as having been considered by parallel working groups established in respect of the Garda Síochána and the Defence Forces.

This Bill, if passed, will force new civil and public servants, recruited from 1 April this year at the age of 18 years, to work for 47 years before they can claim a pension. That is manifestly unfair. After 40 years of work everyone should have the automatic right to retire and claim their pension. Nurses, teachers and local government employees will be affected by the change but gardaí, soldiers, prison officers and firemen will have the right to retire at 55. New entrant civil servants will no longer be able to retire early at 60 years and must remain in employment until 65. The minimum retirement age for gardaí will increase from 50 to 55 years, with compulsory retirement age extending to 60. Deputies and Senators elected for the first time after 1 April will not get a pension until 65, while Ministers who are appointed after this time will have to wait until they are the same age, rather than claiming a pension at 55 if they had three years service at this level, as previously applied.

The Minister should, as a matter of urgency, consider the establishment of pension rights for local authority members. As general secretary of the Local Authority Members Association, I have been involved over many years in a campaign for this right. Being a councillor is a full-time position and after 40 years' service many council members have left with nothing. The Minister for the Environment, Heritage and Local Government has recognised the role of the local representatives. Full recognition of their pension rights is the next logical step.

The extension of the Garda retirement age to 60 years is a step in the right direction. There is a high retirement rate in the Garda Síochána. The increased age limit is a positive move to help reverse this trend. However, there is still no sign of the 2,000 extra gardaí promised by the Government in its pre-election whitewash exercise. Teachers have lost the provision whereby they could retire after 40 years' service on full pension or after 35 years on a reduced pension. This is a significant worsening of teachers' conditions of employment, following the imposition of full PRSI in 1995. Nurses are set to lose the right to retire at 60 or 55 if they have 35 years' service. It is neither feasible nor desirable to expect most nurses to work until 65 years of age. The Government seems to have reneged on its agreement with the Civil and Public Service Union that new entrants would have a spread of retirement age options from 62 to 65 years.

Although the Irish population is not ageing as quickly as some of its European neighbours, Irish workers will be quick to realise that this Bill is the precursor of pension related problems for the future. As a result of medical advances, people are living longer. Increased life expectancy is a ticking time bomb for public funding. We are already being warned that we must save more or work longer to avoid dependence on a State pension which pays the equivalent of one third of average earnings. That is less generous than the pensions in most other European states.

A total of 50% of workers in the Republic have private pensions and the introduction of personal retirement savings accounts last year is aimed at increasing that figure. Most people believe that if they are in a pension scheme, their future is assured. However, the cost of annuities is rising due to increased longevity and low interest rates. People outside the safety net of defined benefit or final salary schemes must save more for their retirement than heretofore.

Furthermore, the picture emerging with the elimination of the compulsory retirement age is one of people working until they drop. Who, in the not too distant future, will be able to afford to retire at 65? What has the Government done for those whose hard work created the Celtic tiger? It has squandered the benefits which those people secured for this country and it now expects them to plough back those wasted billions into the Exchequer, by means of stealth taxes and cutbacks. What has the same Government dreamed up for them in the future? It is not a happy and secure retirement but will, instead, impose the necessity to work until our ageing workers have one foot in the grave.

In an effort to cope with future pension bills, the Minister for Finance has graciously eliminated a compulsory retirement age and, one could say, eliminated ageism in the workplace, but at what cost? How far will the parameters be extended? In 40 years from now, will the compulsory retirement age be 70 years and how far upwards can this limit be extended? How far will the caveat of "subject to suitability and health", outlined in the Bill, be extended?

The Minister acknowledges that we have a pensions problem and that we must cope with higher future pensions bills. However, what is his answer to the problem? Last year, massive strikes occurred in France and Austria in response to proposed retirement benefit cuts while similar issues are high on the political agenda in Germany, Italy and Britain. How long will it be before the same reaction is seen here?