Paddy Burke (Fine Gael)
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I welcome the Minister of State to the House for this very important matter. We have seen considerable change in the set-up of local authorities over the last few years, something introduced by Deputy Noel Dempsey when he was Minister for the Environment, Heritage and Local Government. Since that period, however, many things have moved on, particularly regarding pensions. We have seen how a previous Minister for Finance, former Deputy McCreevy, brought them to the top of the agenda. However, we find now that remunerated local authority members who pay PAYE and PRSI have no pensions even though employers are duty bound to put pension plans in place for employees. Most local authority members, including county councillors and borough councillors, most of whom work full-time for their local authority, have no pension plan. They get a gratuity when they retire, whether after five years or 30 years, but have no pension. The Government is correct to put the responsibility on employers to provide pension plans for employees because all of us, as we grow older, need the security of an adequate pension. Public representatives are employees of the local authority, as indicated by their payslips.

In view of the stringent controls being placed on employers in regard to pension provision, I hope the State will not renege on its responsibility in this regard. We have seen cases, most recently in regard to elderly people in nursing homes, where the State has been obliged to repay benefits that were due. We do not want to find in 20 or 30 years time that cases can be taken against the State because of its failure to put the proper mechanisms in place to provide pensions for local authority members.

I appeal to the Minister of State to give a progressive response to this matter and ask that it be put at the top of the agenda, as it should be. We must deal with the situation of those local authority members, many of whom are employed in a full-time capacity, who pay PAYE and PRSI but have no pension plan and no prospect that such a plan will be put in place.

Tony Killeen (Clare, Fianna Fail)
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I thank the Senator for raising this issue. The local government modernisation programme has seen major improvements in the range and extent of the financial and other supports available to local elected members. These include a representational payment scheme and gratuity arrangements for retiring councillors. Both were introduced following extensive consultations with the three local government associations.

The representational payment is linked to salary and stands at €15,330 per annum for county and city councillors. The scheme gives practical recognition to the civic contribution local elected members make to their community. It is not meant to be a salary nor is it intended to remove the important voluntary community service aspect of the work of councillors.

In regard to gratuity arrangements, a number of superannuation options for local authority members were examined following the enactment of the Local Government Act 2001. The option considered most appropriate was the retirement gratuity arrangement which was subsequently introduced in 2002. I will briefly outline some of the main features of these arrangements for the benefit of the House. The maximum gratuity is three times the rate of representational payment on the member's date of retirement and is payable after 20 years service. The maximum service allowable is 20 years with a minimum qualifying service of three years.

The gratuity is automatically paid on retirement at or after the age of 50 but payment before age 50 may be made where retirement is due to permanent infirmity or where the member dies in office. In the case of retirement due to permanent infirmity, added years may be allowed. Where a person ceases to be a member before the age of 50, whether voluntarily or as a result of failure to be re-elected, the gratuity will be paid when the person reaches age 50 and will be based on the representational payment applicable at that point.

I am satisfied there is no basis for changing the existing arrangements for a number of reasons. First, the maximum gratuity, payable after 20 years service, compares favourably with the yield from a defined contribution pension plan, based on a 10% employer contribution and a 5% member contribution, and standard public service pension scheme entitlements for a person with 20 years service. Second, the gratuity arrangement provides for universal coverage. A survey of pension arrangements for councillors in other countries showed that in most cases, only certain councillors, usually full-time or employed by larger authorities, are covered.

The gratuity arrangements are free, fair and flexible. They are free because members are not required to contribute. They are fair in the sense that they give coverage to all elected members, unlike in other countries, and give a level of benefit which compares favourably with standard public and private sector pension arrangements. The arrangements are flexible in that members receive the benefit in the form of a gratuity which is tax free in most instances and which they can use, if they wish, to purchase a personal pension, whether by way of an annuity, PRSA or otherwise.

I am satisfied that the retirement gratuity is the superannuation arrangement best suited to the particular circumstances of local authority members. Accordingly, the introduction of a local authority-provided pension for members is not considered appropriate.

Paddy Burke (Fine Gael)
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The Acting Chairman, Senator Jim Walsh, has played an important part in improving conditions for local authority members through the Local Authority Members Association, LAMA. I am disappointed with the Minister of State's response. The Department of the Environment, Heritage and Local Government is in breach of the regulations it has stipulated for employers in regard to pensions. If the LAMA, the General Council of County Councils or the Association of Municipal Authorities of Ireland, AMAI, take a case against the State on this matter, they are likely to win. The Minister should, as a matter of urgency, meet with local authority members through the general council or the AMAI with a view to putting a pension plan in place for local authority members.

Jim Walsh (Fianna Fail)
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As Acting Chairman, I am precluded from commenting on this matter.

Tony Killeen (Clare, Fianna Fail)
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I will draw the matter to the Minister's attention.

Jim Walsh (Fianna Fail)
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I am aware that the Minister's disposition in regard to these matters is not unfavourable in respect of the arguments made. He has done much good work in this area, even prior to becoming a Member of the Oireachtas. That would be acknowledged by everyone. He is the best person to whom to convey this message and I thank the Minister of State for agreeing to do so.

Paddy Burke (Fine Gael)
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Will the Minister of State confirm that he will bring this matter to the attention of the Minister?

Tony Killeen (Clare, Fianna Fail)
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I will.

Paddy Burke (Fine Gael)
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I thank the Minister of State.