Sean Barrett (Independent)

I welcome the Minister, Deputy Brendan Howlin. As is so often the case, I agree with much of what my colleague, Senator Feargal Quinn, has said. It is interesting to consider a number of the recommendations by an bord snip nua in the context of what is proposed in this legislation. In a period when the total number of public servants rose by 27%, the numbers in senior management increased by 82%. That is clearly a significant aspect of the problem the Minister is seeking to address, particularly in regard to the question of final year pensions as compared with average earnings pensions. There was clearly some degree of grade inflation going on during these years.

An bord snip nua addressed, on page 7 of its report, the precise problem the Minister has described to the House, namely, that the cost to a private sector worker of purchasing these types of final year pensions would be prohibitively high. Some of the figures in this regard are astonishing. They obviously astonished the Minister since he decided to bring forward this legislation. The bord snip nua report indicted that to purchase the pension benefits for which they are currently eligible, including the earnings link, would require a contribution of 27% of annual salary in the case of a typical civil servant, 31% for a teacher entitled to retire at 55 years of age, 33% for a hospital consultant, 48% in the case of gardaí, and as high as 87% for a High Court judge. This burden simply cannot be carried forward in a situation where public pay and pensions account for 35% of all current expenditure. I understand the pensions element alone runs to 6%. In particular, the inequitable situation whereby full pensions are awarded to persons who are in post for a very short time is no longer sustainable in view of the difficulties we face. According to a statement issued by the Oireachtas on behalf of the Minister on 29 September 2011, the savings arising from these changes will amount to some €1.8 billion per year. In my view, he has allocated the savings correctly across the various possibilities. I particularly welcome the move to tackle the problem of final year pensions.

On the question of retirement age, I agree it makes sense to increase it. When he introduced the old age pension in Britain, Lloyd George could have had no notion of future costs given the majority of people at that time did not live long enough to be eligible for it. Given that life expectancy continues to increase, people are now obliged to budget for a much longer retirement. In that regard, the Minister is being conservative in the provisions he has made for an increase in retirement age. They are merely reflective of economic realities. In fact, experts predict that one quarter of people born this year will live to 100 years of age. Given so many people now remain in third level education until their mid-20s, the period in which they are net contributors to the Exchequer rather than net beneficiaries is reducing. As such, the retirement age should be kept open as an issue. I have known people who were extremely unhappy at being obliged to retire because their work meant a great deal to them. Perhaps the Minister will indicate whether he has given any consideration to introducing some type of voluntary retirement mechanism in the future.