Tom Shehan (Fine Gael)

The calculation of pensions on the basis of career average earnings is a change from the current position where the pension is based on final salary and is generally considered a fairer and more equitable system and one which is progressive in application. For example, it affects the pension paid to those who have high earnings, especially in late career. There are examples of people who in their last year or two who become a grade 8 officer in the public sector and achieve the top position for, perhaps, a year and their pension is decided pro rata. A civil servant promoted to top management late in his or her career has more than the pension for those who have a relatively flat career progression, for example, nurses and teachers.

It also provides that a change in the overall rate of pension contributions from staff will remain broadly as applies at 6.5% but will be higher for certain fast accrual occupations. The new scheme provides for post retirement pension increases to be linked to consumer priced, not pay. The expense of retaining an earnings link is estimated in the past 20 years to have resulted in increases twice those that would have applied had post retirement pensions been linked to the cost of goods in the form of the consumer price index. The reduction would not absolutely eliminate post accrual terms, those generally apply to emergency service groups such as the Garda, the Permanent Defence Forces, firefighters, the Judiciary and Oireachtas Members. The uniform services will retain their early retirement age which reflects operational needs.

For the President, Oireachtas Members, the Judiciary, the Attorney General and others who earn accelerated pension benefits the new scheme acknowledges their special circumstances by providing for a double rate of accrual together with a double rate of contribution at 13%. For all new entrants to these offices, it is proposed that the Taoiseach and President continue to receive a pension on retiring from these offices. The definition of "new entrant" will mirror that in the Public Service Superannuation (Miscellaneous Provisions) Act 2004 which will mean that anyone who is or was an Oireachtas Member prior to the enactment of the Bill retains those benefits and scheme membership if they have a break in the Oireachtas service. The scheme will help ensure that when Ireland emerges from the current difficulties, our public service pension policy is on a better long-term and more sustainable footing.

On the matter of the consumer price index, the Minister will be aware that in the context of the public service agreement, that is, the Croke Park agreement, it has agreed that there will be no change in current arrangements for the indexation of pensions for public service pensioners and serving public servants due during the life of the agreement. In the case of public service pensioners and serving staff, the draft legislation provides for the linking of post retirement pension increases for pensioners and serving staff to the consumer price index, subject to a commencement order to allow flexibility in regard to the timing of its introduction. In the current climate, given that no pay or pension increases are envisaged, it is considered wise to reflect carefully on the timing of a move to a consumer price index link. The new scheme makes no provision for any enhanced pension arrangements for senior new entrants, appointees such as Secretary Generals and non-commercial State body chief executives. Such persons will be treated the same as other public servants with pension accruing relative to pay and with annual accrued amounts indexed to the consumer price index and aggregated to produce a pension at retirement.

In regard to the banking sector I ask whether the Irish Banking Resolution Corporation, Allied Irish Bank which is State-owned, Irish Nationwide and NAMA come within the remit of the Bill.