Thursday, 20 December 2018
Public Service Superannuation (Age of Retirement) Bill 2018: [Seanad Bill amended by the Dáil] Report and Final Stages
The Minister of State, Deputy O'Donovan, has been waiting for quite a while. I welcome him to the House. This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Order 118, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question "That the Bill be received for final consideration", the Minister may explain the purpose of the amendments made by the Dáil. This is looked upon as the report of the Dáil amendments to the Seanad. For Senators' convenience, I have arranged for the printing and circulation of the amendments and their proposed grouping. The Minister will deal separately with each related group of amendments. Senators may contribute once on each grouping. I remind Senators that the only matters which may be discussed are the amendments made by the Dáil.
I thank the Seanad for facilitating the Bill. It will allow, hopefully by the end of the year, the enactment of very important legislation. The first group is amendments Nos. 1 and 7. Amendment No. 1 is a technical amendment which is necessary in order to reflect the insertion of a new section into the Bill, the subject matter of which was not previously reflected in the Long Title. Amendment No. 7 excludes amounts forgone under a Revenue approved salary sacrifice scheme from the definition of pensionable pay in section 29 of the Public Service Pay and Pensions Act of 2017. The effect of this is that the amounts will not be liable for additional superannuation contribution, ASC, the salary sacrifice arrangements which are in operation currently, the cycle to work scheme or the TaxSaver ticket scheme. In general, these are technical amendments.
The purpose of ministerial amendment No. 2 is to exempt the staff of the Central Bank from the provisions of the Bill. The Government has agreed that the creation of a compulsory retirement age under primary legislation for the staff of the Central Bank is not appropriate in light of the bank's autonomy in setting pay and conditions for its staff as set down in the Central Bank Act 1942. This is also a technical amendment.
The intention of the Central Bank has been communicated to Government because it works in conjunction with rules set out by the European banks. Its intention is to bring in its own rules to reflect the Government's wish to allow for staff to continue until aged 70.
Amendment No. 3 was tabled by Deputy Jonathan O'Brien on Committee Stage in the Dáil. The amendment, which I accepted, relates to the Minister's power to increase the compulsory retirement again in the future, by order, in certain circumstances. Section 3A(2) of the Bill provides a power for the Minister to increase the compulsory retirement age further in the future, up to a maximum age of 75. Subject to certain conditions, Deputy O'Brien's amendment removes the upper age limit of 75, although it is difficult to see where the proposed cap of 75 will prove to problematic. In the interests of facilitating the passage of the legislation, the removal of the cap and the discretionary power made available to the Minister were agreed in the Dáil.
My party has made it clear that we support the full abolition of mandatory retirement, believing that the duration of somebody's working life should be their decision and that any judgment on their work should be based on quality, not age. If a worker wishes to work beyond the age of 65, it is his or her right to do so and the age given is not up to anyone but that worker. This Bill offers tentative steps in the direction of removing age as a determinant of quality of work or the right to work. Age is not an indicator of good performance in the workplace and removing mandatory retirement does not reduce the number of positions available to younger workers as populations, economies and labour markets grow. This amendment removes the upper age limit at which public servants can work and it is consistent with the Employment Equality (Abolition of Mandatory Retirement Age) Bill 2016 of Sinn Féin, which is on Committee Stage in the Dáil. Last year, the Citizens' Assembly overwhelmingly voted in favour of abolishing mandatory retirement on the basis of age, with a vote of 86%. This amendment will ensure that the public sector respects this vote and refuses to allow forced retirement on the basis of age.
I agree with the sentiments of Senator Conway-Walsh on the changes to compulsory retirement age but the pension age in Ireland is moving towards being one of the highest. Some people may have started very early in their life, such as at 20, or aged 15. It is important to note that they are different.
The name of the Bill is the Public Service Superannuation (Age of Retirement) Bill, and it refers to pensions. The Government has to have an age set so that we can forecast how much public service pension will cost. Section 3A(2) states that subject to subsection (3), the Minister may, by order, prescribe an age being higher than 70 years but not higher than 75. This amendment takes out the phrase "not higher than 75". The Minister can change the age in the future. This Bill is about the public service pension drawdown and is not about telling people they must retire. Many people leave the public service on a pension and continue to work in a private or self-employed capacity.
Amendment No. 4, from Deputy Barry Cowen, was accepted in the Dáil. I pointed out that any potential remedies that related to the cohort of workers to which he referred would be likely to require further legislative change, which would be a matter for the Minister for Public Expenditure and Reform. The amendment inserts a new section 3A(6) and requires a report to be prepared by the Minister within three months of the enactment of the Bill. The report will address the issue of public servants who were required to retire at the age of 65 in the period between the Minister's announcement of the policy change, which was 6 December 2017, and the commencement date of the necessary legislation, including potential remedies, as referred to by Deputy Cowen, to assist the group in question. Many of the group availed of the interim arrangements, which enabled them to retire and be rehired for one additional year on a fixed-term basis up to the age of eligibility for the contributory State pension, which is 66. Many did not avail of it, because of the clarity given at the time by the Government, but they will cease work on reaching the age of 66 and are not covered by the legislation.
There is a concern here, which the Minister of State has heard in both Houses because it affects people in these buildings, though it also affects many people outside.
The overall policy intent of the Bill is effectively a recognition of the fact that persons are able to work, contribute and add value up to the age of 70. I feel passionately about this. About eight years ago, in 2010, I was working with Older and Bolder. We produced a report on the demographic dividend, creativity in later life and the extraordinary contribution made in the workplace in many cases by older workers. We know that in every sphere of life people are contributing at a later age. This is the policy intent of the Bill and is something which I think is commended and supported across the Houses and across all parties.
There is, however, something of an anomaly in this. The Minister of State will say this relates to the drawdown of a pension but, effectively, changing the date facilitates the idea that people would work longer. As was said, there is a cohort of people who accepted the interim arrangement between 6 December 2017 and the commencement of the Act. An interim arrangement was offered, which was an extension of a year. In our previous discussions, the Minister of State has indicated his concern about the position if those who have taken the interim arrangement of the year's extension were to be offered, as I believe they should be, the opportunity of an extension and to continue working until the age of 70. There are a number of ways to do this. If they were to be offered the extension, it might also need to be offered to those who chose not to avail of the interim arrangement. I put it to the Minister, however, that taken together, this cohort of persons is quite small. It should be strongly considered that in the three-month review proposed here, if the Government is concerned about not offering a solution to one group of people who are still working and contributing and who face this cut-off point at the age of 66, despite having not only indicated but proven that they are willing and keen to continue working, if in order to offer them a solution the Government must also offer it to others who made a different choice on 6 December 2017 or since, that should not be a buyer. We are still talking about a very small cohort of persons who either opted or did not opt for the interim scheme. It is important that they be able to avail of this scheme and continue.
There are a number of solutions. The Government can offer solutions simply to those who took the interim arrangement. It can offer an extension to those who took the interim arrangement or did not take it. New contracts could be devised and made as a new offer of work to those who are finishing work at the age of 66. This can be a new set of offers. There are policy solutions to this issue. It should be considered that it is an anomaly that really affects people and that when we look across the public service, we do not have the workers we need in areas such as health and education. We know this. Anyone who has sat in on health, housing or education committee debates will know there are shortages of qualified workers with experience in many areas.
The Minister of State has accepted this three-month review, and that is something. I would prefer if we had tried to find the policy solutions in this legislation. I worry about the people who will time out, as it were, within the three-month period between now and this review. I urge the Minister of State to find solutions. If this Bill recognises the huge contribution that persons can make and are making, we should not be afraid of a policy solution that recognises the contributions of those who have faced retirement in the past year. Those who have faced this period of limbo constitute a cohort that should be accommodated, and I think this is felt across the House. I therefore urge the Minister of State not to let down people needlessly and lose the talent, skills and experience of workers needlessly.
This is an amendment tabled by Deputy Cowen of my party. I am glad it was accepted and is incorporated. I will not labour the point we made earlier in this House, which was presumably made in the Dáil and which was equally eloquently addressed by Senator Alice Mary Higgins just now, but it is a very small cohort of people who are affected by this. The intention of the Bill was announced a year ago. I hope the Bill will now pass. We are talking about some people who through being victims of the timing will not be covered by the intentions of the Government's Bill, which is to do exactly what we are trying to do. I therefore ask the Minister of State to carry out the review but also to do as best he can to try to improve the situation of the people affected. What if the Bill had been passed the day it was announced a year ago? Obviously, legislation does not happen that way. We are not asking the Minister of State to go back to 1975, 1995, 2005 or 2015. This is purely to examine the people who saw this anomaly a year ago, thought that if the Bill were passed a little more quickly than it has been they would not be affected or would be covered by the Bill, yet have not been covered by the Bill. I ask the Minister of State to do whatever he can. I know he has spoken about this in the past and it may be difficult to do, but it is a small cohort of people. Not everyone will want to exercise the option anyway, but for the small number of people who may be interested in doing so, I urge him to try to facilitate them as best he can.
I welcome the amendment tabled by Deputy Cowen in the other House. How many people is it envisaged would be caught in this trap, and how much will it cost the Exchequer? Furthermore, is it the case that if this legislation, when it was brought forward first, were rushed through the House, no one would be caught in this trap? If so, could the date not be the date on which the Bill was initiated? Then I do not think anyone would lose out from the Bill.
A number of points have been raised, and I concur with a lot of what has been said, but we have a legal bind. The Bill has gone through a fairly arduous process. Senator Horkan is right that if this had been done more quickly, we would not be in the situation we are in with a lot of people. We have people even in the interim arrangements who availed of this and who have fallen out of it recently while the Bill has worked its way through the Oireachtas. We do not order the business of either House as a Government; we rely on the Business Committee to do so. It is a pity that it has taken so long, and I accept that, but I had no control over that. I have listened to all the contributions made in the select committee, the Dáil and the Seanad. Even if we were able to look at this cohort of people, which we cannot, and we have sought advice from the Attorney General in this regard, which date would one take? Would one take the date of the policy announcement, the date of the Government's decision in Cabinet, the date on which the Bill was published, the date on which it was initiated? There are a lot of problems there.
Then there is a cohort of people who did not avail of the interim arrangements, and we must be equitable. We are very conscious that many people left the public service at the age of 65 in the full knowledge that there was an interim arrangement and they did not avail of it for a variety of reasons so their pensions were drawn down. Then people entered the interim arrangement in the full knowledge that it was to last for another year, until they were 66. A question was raised in the Dáil about whether there have been an interim arrangement at all. Should we have just said we will make 65 the new 70 when the Bill is enacted? We decided not to do this because we wanted to give people an opportunity in the interim arrangements, knowing that they were drawing down their pensions, such that their pensions would be offset against their salaries, in some cases continuing to make a very significant contribution.
To respond to a question Senator Paddy Burke asked, this affects about 450-odd people, I think. I will not guesstimate the amount involved because people are on different scales across the public sector.
I acknowledge they have made a significant contribution. I am waiving the commencement order required in the hope that the Bill can be signed into law five days after it is presented to the President. Every day that passes, another person is either falling out or entering the interim arrangement. I understand the concerns which have been raised. I am not immune to them but there are implications if we were to start unwinding this. The interim arrangement would then go on well into the new year. I would then have to withdraw the Bill. There are tax, social welfare and pension implications that would accrue to people who have entered the interim arrangement. The advice I have been given is that this is not possible.
I accept there has been much cross-party support for the Bill, which I welcome. However, we could wind up in a situation where I would have to withdraw the Bill. I do not want to do that because it would make a bad situation worse. There are people affected who are concerned that they will enter the interim situation in the full knowledge that they will not come out of it. There are others who are getting closer to the age of 65. That is why I accepted Deputy Cowen’s amendment.
I did so, however, making it clear in the other House that there may not be legislative remedies available without unwinding the whole structure. I do not want to be disingenuous. When we published this policy statement and the Bill, we made it clear at the time that an interim arrangement was available which would work along these lines. Many people decided not to enter that interim arrangement. I have to be equitable and fair to those people as well.
I know but I am just seeking clarification from the Minister of State.
Will the Minister of State be engaging with others across the Oireachtas in identifying potential policy or legislative solutions for this report?
Yes, if somebody wishes to bring forward another Bill which takes into account everything I said about the legality of the public service pension scheme. The advice I have been given is that for many people who are currently drawing down pensions and who are in the interim situation, we would have to start looking for pension contributions back. At what scale would they re-enter? What superannuation would they have to start paying? What would the tax implications be? The net result is that I would have to withdraw this Bill. I cannot do that because there are public servants waiting to have this enacted. I do not have a magic formula for this. I do not want to withdraw the Bill and come back in three months’ time with the same legislation, stating 65 continues to be 65 rather than being able to say 65 is now going to 70.
Certain staff in the education sector, such as teaching and lecturing staff, are not required to retire until the end of the school or academic year in which they reach the compulsory retirement age. This is to ensure continuity of the teaching provision throughout the year and to limit class disruption. I am sure Senators will appreciate this, in particular regarding examination students.
On the recommendation of the Minister for Education and Skills, the Government agreed that this arrangement should be maintained in the context of the new compulsory retirement age of 70. The amendment to section 4 is required in order that any service rendered by affected staff in the period between their 70th birthday and their retirement to the end of school and academic year, will be reckonable for pension purposes. The amendment to section 5 is required to ensure that where a statutory instrument or public service pension scheme provides for a compulsory retirement age, it will be read as 70 for the relevant public servants or, in the case of certain relevant public servants in the education sector, the end of the school or academic year in which they reach that age.
Both provisions are limited to the public service pension scheme made or approved by the Minister for Education and Skills with the consent of the Minister for Public Expenditure and Reform. Senators will appreciate that if a teacher reaches 70 in March but is getting their students ready for the leaving certificate or third level examinations in the summer, one does not want the students put out at a vulnerable point in their academic progress.
I will be supporting this amendment. However, as identified earlier, education is one of those areas in which we have extremely qualified persons who it is a pity to lose. We did not have an opportunity to discuss this matter, as we would were this a Committee Stage debate.
To clarify, Members are not asking the Minister of State to withdraw the Bill in respect of the last grouping. We were asking for clarity around after the Bill passes and the three-month period. It will be complex but there is a will to work with the Minister of State to identify and tease out each issue, be it pension returns or social welfare issues or for that cohort of 450 or 500 persons who might be affected.
I am talking about the education sector, as some of those who will be affected are in interim arrangements.
The Minister of State spoke about the urgency of passing the Bill. That is accepted by all Members. However, we must use that time after this Bill is passed to work in finding solutions to this issue.
At the risk of repeating myself, I am anxious to engage with anybody who would be able to provide a solution to this issue. In hindsight, one could ask whether there should have been any interim arrangement. Should we have just waited until the Bill was enacted? We did that in the full knowledge that this was always going to be a difficulty. Once the interim arrangement was opened, the people who went into it have to come out of it. Every Member would prefer not to see that happening.
Senator Paddy Burke made a pertinent point in his contribution. It is a pity it has taken so long to get this legislation through. Every day that passes, another person enters or leaves the interim arrangement or comes closer to 65.
As I said at the start, I do not order the House’s business. I would prefer to have seen this done faster but it is outside my control. I will have any interaction I can with anybody over the next three months in advance of the reports that the Minister will bring forward on foot of Deputy Cowen’s amendment. I will engage with the Attorney General's office to see what remedies, if any, are available.
We have looked at this in great detail and have listened to all the contributions made in both Houses. I do not want to build up false expectations for people who would have preferred if this had been dealt with a lot quicker.
I made the same point myself along with Senator Paddy Burke. We accept that it was not the Minister of State who ordered the business.
I now call on the Minister of State to speak on the subject matter of the amendments in group 6.
Amendment No. 8, which I proposed on Report Stage, removed the requirement for a commencement order to bring the provisions of the Bill into effect. It waives the Department’s requirement for a commencement order. This will ensure the maximum number of public servants can avail of the new compulsory retirement age of 70 as soon as possible. The Bill will now become effective as soon as it is signed by the President. Under the Constitution, the President can sign a Bill on the fifth, sixth or seventh day after it is presented to him for signature. It is likely, therefore, that the Bill will come into effect over the holiday period.
Once it comes into effect, any public servant covered by the legislation who has not already reached the compulsory retirement age, will have a new compulsory retirement age of 70 and will have the choice to work to that age if he or she wishes. The Bill, as drafted, contains a commencement provision, which I propose to waive with the support of the House.
I support this amendment and commend the Minister of State on waiving the commencement provision to ensure this Bill is enacted early.
I am concerned at the reference to the question of whether we should or should not have had an interim arrangement. The key point for me is the point at which we realised and accepted the policy intent that we want to ensure persons can work until the age of 70. I am not suggesting we change this legislation to address this matter.
In the solutions that have been sought I have noticed that the focus has been on the interim arrangement. The key question is whether those who went over the threshold of 65 years during that period opted for the interim arrangement. I know the Minister of State does not want to create division or inequity, but the way to solve this may be to widen the frame to include all those who turned 65 years during the period in which the policy intent was there and to offer them a route back. That may well mean returning pension contributions. As Senator Horkan said, not everyone will take that option but I accept that an option may need to be offered to all of those affected during the one-year period. Again, it is not a large number. We should change the frame and be less concerned about the interim arrangement and about who did or did not take it. We should look to the collective policy intent and to finding a solution that will address the issue for everybody who turned 65. That is how we might find our solution.
I thank everybody who contributed on the Bill in the Seanad and Dáil. This is historic legislation and should be noted. I thank everybody for their contributions because what we have done today will allow people in the public service who have a contribution to make to continue to make that contribution, notwithstanding other issues. On Committee Stage, reference was made to 70 being the new 65. I wish everybody who will avail of this measure well. It is reforming legislation in respect of how Ireland now views people who are working until 65 and beyond. I thank the staff in my Department who put it together and the Members of the House who contributed. I look forward to further engagement.
I have been in the Seanad on a number of occasions over the past 12 months, both to initiate and to conclude legislation. We have had robust and very informative discussions and a lot of very good engagement both when I was representing the Department of Finance and the Department of Public Expenditure and Reform. As I have said here before, if the level of engagement and legislative scrutiny that takes place here took place in the other House, we might have far better legislation. I am not saying that the other House produces bad legislation by the way.
Finally, I wish Members the very best for Christmas and the new year and thank the staff of the Houses. We can all be very proud of this legislation. Today, we are sending a signal to people across Ireland, and to our public servants in particular, that if they want to continue to make a contribution beyond the age of 65, the Government will welcome that and encourage them to do so. I thank the Members of both Houses for giving people that opportunity.
I thank all the Members. If I was not in the Chair, I would probably say something but we have had a robust debate both during the earlier Stages and today. I thank the Minister of State, Deputy O'Donovan, and wish him a happy Christmas.