Thursday, 6 July 2023
Nithe i dtosach suíonna - Commencement Matters
I will raise a number of issues about pensions in An Post. It appears the company is not complying with legislation. The Minister for the Environment, Climate and Communications must investigate to ensure good corporate governance.
More than 3,000 of the current pensioners are ex-civil servants who were transferred to An Post on its vesting day, 1 January 1984. They were given a firm guarantee that the conditions of their pension entitlements would not be less favourable in section 46(4) of the Postal and Telecommunications Services Act, 1983. The rules of the company pension scheme approved by the Minister specifically state that the terms and conditions will not be less favourable than those to which they were entitled by reference to the Civil Service regulation in force on 31 December 1983. Those Civil Service rules were section 29(2) of the Pensions (Increase) Act 1964 and regulations made under the Act, namely SI 381 of 2002. These confirmed that from 1 September 1983, pensions would be increased under the principle of pay and pension parity, i.e. wage and pension increases would be similar. An Post complied with the principle for many years.
After the financial crash the company's pension scheme suffered a funding issue. The company and its unions entered into collective agreement in 2013 to amend the scheme and include a cap of 2% or the consumer price index on pensionable pay. Collective agreements apply only to current staff, not to pensioners. When seeking ministerial approval for these changes, An Post informed the then Department of Communications that the proposed changes would not have any impact on current pensioners or preserved pensions in any way. However, the agreement made with the union in December 2013 states the cap also applies to increases to pensions in payment and to deferred pensions. It appears the Minister was misled by the company. An Post is now re-interpreting the legislative guarantee and capping the pension increase entitlements of these pensioners.
It has no authority to repudiate the legislative guarantee. In January 2004, the Attorney General advised the Department of Finance that nothing can take away from the pension rights enshrined in the 1983 Act. An Post also has statutory obligations derived from EU directives to re-value preserved pensions in line with changes in the consumer price index, subject to a cap of 4%. Since 2008, the Minister for Social Protection has issued regulations under section 3(4) of the Pensions Act 1990 prescribing cumulative increases of 17.8% whereas An Post pensions have increased by only 6.7% in the same period.The State pension increased by 18.8%. Postal unions do not represent pensioners and the CEO and chairperson of the company refuse to answer pensioners' correspondence. The trampling on the legitimate entitlements of these ex-civil servants is deplorable by a State company choosing what laws it complies with. These pensioners devoted their lives to the service of the State. I ask that the House brings the Minister in as soon as possible to discuss governance and oversight of An Post and the responsibility under section 46(4) of the 1983 Act to ensure it is implemented as intended by the Oireachtas and not as decided on by An Post. That is the situation in An Post. The Minister of State will be aware that pensions are property rights and to interfere with a property right is repugnant to our Constitution.
I am here on behalf of my colleague, the Minister of State, Deputy Chambers, who has delegated authority over postal policy in the Department of the Environment, Climate and Communications. Under section 46 of the Postal and Telecommunications Services Act 1983, the Minister for the Environment, Climate and Communications, with the concurrence of the Minister for Public Expenditure, National Development Plan Delivery and Reform, approves any superannuation schemes submitted by An Post. The operation of the schemes is a matter between the management of An Post, staff representatives and the trustees of the schemes.
The 1983 Act requires that, for civil servants who transferred to An Post on vesting day, that is 1 January 1984, An Post’s pension scheme must provide for not less favourable conditions than those to which the members of staff were entitled immediately before the vesting day. It is a transitional provision which ensures that transferring employees were no worse off on vesting day than they were immediately before the transfer.
The pension entitlements of pre and post vesting members of the An Post superannuation schemes are set out in the scheme rules which were approved at the time by both Ministers. Paragraph 13 of the An Post main superannuation scheme 2012 - pension increases - accurately reflects the pre-1984 discretionary nature of the award of increases to pensions in payment.
An Post has indicated that the trustees are not aware of any basis on which the superannuation entitlements of the pensioners are less favourable under the scheme in a manner that would amount to a breach of section 46 of the 1983 Act. The benefits for those members to whom section 46 of the 1983 Act applies did not include automatic increases. They included discretionary increases.
Section 46 of the 1983 Act sets a minimum level of parity between the An Post scheme and the scheme that applied to staff members of the Department of Posts and Telegraphs as it stood on the day before vesting day. It does not provide that the conditions in the An Post scheme must continue to match any subsequent improvement in pension conditions for the award of pension increases in the Civil Service. It is a transitional provision which was intended to ensure that transferring employees were no worse off than they were immediately before the transfer. Section 46 does not give rise to an entitlement to pension increases other than those granted in accordance with the An Post superannuation scheme rules.
Prior to vesting day, any increases to pensions in payment were discretionary. They were awarded at the discretion of the Minister for Finance. The rules of the scheme accurately reflect the pre-vesting day discretionary nature of pension increases in the public sector. The pension increase rule has remained unaltered since the commencement of the scheme.
The company has advised that the circumstances of An Post, including the nature and governance of its pension arrangements, are different from those which apply to “established civil servants” and the superannuation handbook and guidance notes for the established Civil Service scheme 2006. Pension increases are considered by An Post annually. An assessment is carried out taking into consideration the relevant factors in deciding whether to seek ministerial approval for a pension increase, including, among others the sustainability of the scheme's funding relative to its liabilities.
I realise the Minister of State’s script was written before I made the points I made earlier. I repeat: An Post is repudiating section 46(4) of the Post and Telegraphs Service Act 1983 and it has no legislative authority to reinterpret the intent of the Act. It should be complying with section 29(2) of the Pension (Increase) Act 1964 and regulations made under that Act, namely SI 381 of 2002 that applied to the transfer of civil servants pre-vesting day and should continue to apply to them after vesting day. It has applied the terms of a collective agreement to these ex-civil servants when such agreements can only apply to current employees. The line Minister must investigate these breaches of the law.
In note 24 of the annual accounts, a figure of €1.2 billion appears under pensions as an experienced adjustment without any explanation. This has a material impact on the value of the fund and the profits of the company and needs to be fully investigated.
These are pensioners who have no voice at the table when negotiations take place. There has to be engagement with pensioners. We are finding it right across the public service. I appreciate the Minister of State taking the Commencement matter today.
Senator Craughwell will appreciate this is a complex matter. There are a lot of legal issues here and it is important I put the exact official position on the record. I am sorry if I could not address points he raised in his opening remarks. He raised very detailed and specific points which I will take to the Minister of State, Deputy Chambers, for him to reply directly.