Gerard Craughwell (Independent)
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I welcome the Minister of State to the House. This is my first time to address him since his elevation. I congratulate him. It is great to see him here.

We are here to talk about pension abatement. Contrary to popular opinion, people employed in the public service pay for their pensions and they have a legitimate expectation and right to receive the associated benefits when they retire.

The Public Service Pensions (Single Scheme and Other Provisions) Act 2012 was introduced for new entrants to the public service from 2013. The Act implemented a number of reforms of public service pensions, including the extension in section 52 of the basis of pension abatement or reduction for rehire of pensioners in the public service from the date when the Bill was commenced.

The object of pension abatement was to ensure that the rate of pension, when added to the rate of pay or fee for work in the public service carried out by a retiree from the public service, would not exceed the salary earned pre-retirement by that person. Given that many senior public servants opted to avail of the various deals under the Croke Park, Haddington Road and Lansdowne Road agreements it was understandable that some methodology would be put in place to ensure a person with a large pension could not benefit in retirement by being rehired or by re-entering the public service. In particular, there was a concern at the time that Secretaries General, assistant secretaries general, principal teachers and various other senior people who went out with lucrative pensions and lump sums would not be rehired immediately and benefit from both a pension and a new salary.

However, the latent effect of the 2012 Act has been to penalise a small number of pensioners while many others enjoy their pensions and their new jobs in public service. In truth, the pension abatement scheme is riddled with unfairness and inequality. For example, workers in the health service who are re-employed by the HSE are not subjected to any abatement simply because they are agency workers. The former Minister for Public Expenditure and Reform, Deputy Howlin, explained how this could happen in July 2013. He said that where a private agency employs an individual, the HSE contract is with the agency and not the individual.

To highlight the unfairness, I will set out an example involving two public servants who have retired from a security related post at the age of 58 years. Both still have considerable working life left in them - I imagine the Minister of State will agree with that much. Let us suppose their pre-retirement salary was €45,000 per year. They both now have a pension of €22,500. Then let us suppose both are offered positions in different public hospitals and the salary for the new job is €45,000. Person A, who went to the job by way of an agency, gets a €45,000 salary and his pension of €22,500 as a result of being an agency employee. Person B is hired directly by the hospital. However, because the salary is now €45,000 his pension is totally abated because he cannot earn more or benefit as a result of pension abatement. This is totally unfair. Only a small number of people are affected by this because most staff rehired to the public service come through agencies.

We have frequently heard from Governments in the past that the pensions of former taoisigh and Ministers are subject to property rights and cannot be touched. The argument is that the relevant people have earned them and paid for them and that they belong to them. Yet this does not apply when we are discussing people in the public service who retire on relatively meagre pensions and seek to re-enter the public service or are offered jobs because they have particular expertise.

The financial emergency measures in the public interest legislation was brought in to cut all pensions. The pensions we are talking about have already been cut by the State. The people concerned are entitled to retain their pension in full. This must be dealt with in the forthcoming budget. It is grossly unfair that a small number of people suffer total abatement of their pensions while others, in particular, those in some of the more lucrative jobs, can earns vast sums of money as well as their pensions. I thank the Minister of State for coming to the House. Thank you for your forbearance, a Chathaoirligh.

Pat Breen (Clare, Fine Gael)
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I thank Senator Craughwell for his good wishes. I have become familiar with this House in recent days because I have been here a good deal.

I am taking this matter on behalf of my colleague, the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, who is unable to be with us and who sends his apologies.

I thank Senator Craughwell for raising this issue. Abatement in the public service is intended to ensure that when retired public servants who are in receipt of a public service pension are reappointed to the public service, the associated pensions are reduced in order that they receive no more than the pension and pay that they would have received if they had continued to serve in their former posts.The practice of abatement goes as far back as the Superannuation Act of 1834. The principle of abatement predates the financial crisis and is not considered a financial emergency measure. The universal application of abatement was not introduced via the FEMPI legislation but rather as part of the Public Service Pensions (Single Scheme and other Provisions) Act 2012. With the introduction of the 2012 Act, the application of abatement was widened. Previously, abatement generally applied only where the pensioner returned to work in the same sector or scheme from which the pension was drawn. The principle of abatement was not consistent in its application across sectors. Now, following the introduction of the Act, the principle of abatement may be applicable in respect of any public service employment obtained by a public service pensioner. For example, a retired teacher going to work in a local authority, a retired Deputy securing a public service post, or a retired garda going to work in a third level college will all be subject to the principle of abatement. This extension of the principle of pension abatement to the entire public service was provided for in section 52 of the 2012 Act.

While more pensioners are, in principle, exposed to abatement under the 2012 Act, the issue of whether abatement actually occurs in an individual case, and its extent, that is, whether the pension is fully or partially abated, depends on the circumstances, and in certain scenarios no abatement will apply at all. I am satisfied that the measures taken in the 2012 Act were progressive, fair and necessary. The extension of abatement across the public service was appropriate as a modernising pension reform, and it represents a suitable and measured response to legitimate public concerns about simultaneous payment of pension and salary in the public service. In exceptional circumstances, the legislation also allows the Minister for Public Expenditure and Reform to remove any doubt or question arising in the application of abatement and to waive the abatement provision in limited circumstances.

Gerard Craughwell (Independent)
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I thank the Minister of State for the reply. The truth is that I could bring in a list of people who have retired from the public service in education, health, the Garda, the Army and various other places, many of whom are back working in the public service through agencies and are suffering no abatement whatsoever. Then there is a small number who came directly into a public service job and they are being abated. That is grossly unfair. It is a fault in the legislation. The former Minister, Deputy Howlin, is right - because these people are working for agencies, their pensions cannot be touched, but because some poor unfortunate takes a job directly, their pension can be affected. I appreciate that the Minister of State is here answering for the Department, not on his own behalf. The Department has to look at this. We either apply abatement uniformly across the board, irrespective of who the employer is, or we abate nobody. It is one or the other. We have to make this fair and equitable and it is not that at present.

Pat Breen (Clare, Fine Gael)
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I again thank Senator Craughwell for raising his concerns on this. I will bring his concerns regarding how pension abatements should affect everybody across the board and the examples he has highlighted to the Minister for Public Expenditure and Reform, Deputy Donohoe. However, we believe the extension of the abatement to the public service, as provided for in the 2012 Act, was an appropriate measure, as I stated earlier. It represents a suitable and considered response to legitimate public concerns about the simultaneous payment of pension and salary in the public service. The Minister is satisfied that the abatement of public service pensions, which is what the Senator is talking about, as provided under the terms of section 52 of the 2012 Act is lawful, fair and necessary. However, I will bring the Senator's concerns about the issues raised to the Minister, Deputy Donohoe.