Liam Fitzgerald (Fianna Fail)

Over the coming decades most industrialised countries will face the problem of an ageing population, despite the doubts and reservations about the projections being made and the available statistics. By 2050, for example, on the basis of the information we have, the overall population in Europe will decline by more than 3% and the number of people aged 65 and over in proportion to the working population will increase from 25% to 50% over 20 years. The two big factors contributing to this are low fertility rates compared with earlier years and an increase in life expectancy. Ireland will experience similar trends, to a greater or lesser extent, although currently, as has been pointed out by previous speakers, over this decade we will be in a far more favourable position. As time goes on the trend will take on much the same pattern as the rest of Europe. Projections based on the only statistics we can rely on at this point show that by 2016 there will be about four persons of working age to support each pensioner and by the 2050s there will be only two. The ageing or greying of the population will cause serious problems for us. It presents challenges for the way this and future Governments fund public service and social welfare pensions. Decisions must be made. In 2000 about 4.7% of our GNP went to fund these pensions. By 2026 I understand that will have increased to about 8.1%, and by 2056 it will have increased to 12.4% just to maintain the existing level of pension service. If the Government decides to take no action, if it takes the view that this is conjecture, that things are changing and that it will therefore do nothing now, the likelihood is that the pension prospects of the present and future generations will be at serious risk. The Government is right to take action. I fully supported the establishment of the national pensions reserve fund which was one of the most radical moves in terms of budgetary and financial strategy. For the first time, instead of operating entirely in the system of "pay as you go", the fund introduced a new strategic long-term element into budgetary financing and planning.

This Bill is a significant extension although some speakers on the opposite side of the House have disputed its significance. The national pensions reserve fund is a partial pre-funding. The extent of the savings emanating from the implementation of the Bill's provisions has been questioned on both sides of the House. Other countries did not take action and are now faced with major problems. Due to our predominantly young population and high employment rates we are fortunate in having the time and the capacity to take action.

The recommendations of the commission established in 1996 have been referred to in detail in the House. The report was adopted in principle by Government in 2001. Following the establishment of the pensions fund, many initiatives have been introduced to build on the planning for future pensions. Budget 2004 is being given legislative effect tonight and builds on those reforms especially with regard to age-related pensions reforms.

Discussions on those recommendations have taken place between the social partners at various fora over the past number of years and some progress has been made. It is quite evident that there is no unanimity with regard to this Bill in the House.

The Minister's guiding principles in formulating this Bill are laudable in general but I have some reservations. The principle that there should be no compulsion in the pensions system and that people are allowed to retire at a particular age if they are fit and well enough and willing to work is very positive and I can foresee a big take-up on that provision. I know of people who wanted to work beyond their retirement age who wished to use their experience and expertise. Those who opted out of the workplace for parenting reasons and, having reared their families, now wish to re-enter the workforce will be anxious to avail of the benefits of that provision.

Some of the reservations have been articulated very forcefully in the House. I wish to speak about teachers from the experience of having taught in inner city Dublin in the late 1960s and throughout the 1970s. What I witnessed there gives conviction to what I say. I witnessed teachers in their 60s trying to teach in classes where, despite having tremendous records of achievement such as bringing children to scholarship level in previous years, they had come to a point where they were experiencing total burn-out and where their level of productivity was not just zilch but was very much in the negative zone and where they should not have been allowed to continue teaching. My concerns have been reinforced through the years in my political career.

The proposal is to introduce the standard retirement age of 65 years for new entrants into the public service. While there is merit in the introduction of some changes to the pension terms of new entrants, it is my view that the introduction of a single retirement age of 65 for teachers needs careful examination. To put the matter in context, the teaching profession currently has what are known as "special measures" to allow a teacher retire on pension and lump sum from age 55 onwards, having completed 35 years of service. The current proposal in the Bill would seek to abolish these special measures and replace them with a single retirement age of 65. To adopt an inflexible stand on that aspect would be wrong and I predict that it will be changed in the future. Common sense and wisdom will prevail. If the Minister does not see fit to amend this Bill to take account of those serious concerns, future Ministers will have to do so. There is no way that an inflexible element of this Bill will work for every teacher. Most teachers can and will be very anxious to work up to the age of 65 but there will be a significant minority element who will simply be inappropriate in a classroom at either primary or secondary level beyond 60 years of age. I ask the Minister to consider amending the Bill in that respect.