Seanad Éireann - Volume 194 - 26 March, 2009

Pension Provisions.

  Senator David Norris: I welcome the Minister of State, Deputy Mansergh. This is a rather appropriate matter for the Minister of State to take because I know he has a distinguished academic career and is sympathetic to the work undertaken by universities.

On 2 February this year, the Government announced a pension levy that would affect all public servants. I am not sure if this was to celebrate the 127th birthday of the great writer James Joyce but its impact on certain aspects of post-doctoral research is very negative. I have been made aware of this by a number of individuals in this area.

This is not entirely unlike a case in respect of which I was successful some years ago. A blind student was awarded a fellowship and grant in order to pursue a PhD in history. A very mean mechanism was engaged in whereby the value of that scholarship was subtracted from the blind person’s pension, thereby making it impossible for the person to continue with his research. I was successful in this case and hope to be so again today.

I understand the levy will be applied to the personal remuneration of all college employees, regardless of contract or grade, from 1 March. The Government’s argument was that this would compensate them for the alleged advantage of public sector workers in terms of security of employment and pension benefits.

A number of points need to be made regarding the anomalies affecting researchers. Researchers do not enjoy any of the benefits enjoyed by public sector workers, nor do they receive any overtime pay, despite the fact that a great deal of their work is done at night, after normal hours and at weekends. Most researchers are on fixed-term contracts with no guarantee of renewal. There are no defined pay scales and salaries are at the discretion of their supervisor rather than the college or Government. In other words, the instability of employment typically prevents them from enjoying the benefits of pension contributions over the longer term.

I remember very well when the Financial Emergency Measures in the Public Interest Bill 2009 went through the House — it was very recently. There is a clause in section 8 of that legislation that permits the Minister to exempt a group or class of employees on the basis of specific conditions of employment that distinguish them from other classes or groups of public [849]servants. I have and will continue to establish the fact that the individuals to whom I refer comprise a distinct group upon whom a clear injustice will be perpetrated.

Until recently contract researchers were not allowed access to their own pension records associated with their employers’ pension schemes despite the provisions of the Protection of Employees (Fixed-Term Work) Act 2003. As a result of their not having such access or making certain payments, many are now being required to back-pay employee payments for the period during which they were denied access. They did not have information on what they were supposed to pay, yet, when they eventually received it, they were required to back-pay. In other words, they are paying pension contributions on the double and now have further difficulties because of the new pension levy.

Researchers whose programmes are funded by industry or the European Union make full economic contributions for their pensions. The employer contributes at the rate of 20% while the employee contributes at the rate of 6.5%. The Government is not contributing to the pensions but is taking money from them.

In addition to this, most research projects are of limited duration. As a result the researchers will never be in a position to accumulate the years of service necessary to take proper advantage of the pension scheme. I will give an example of someone who was in touch with me who is the recipient of a Health Research Board, HRB, post-doctoral research fellowship. The main point of the fellowship is to provide support for outstanding post-doctoral researchers who wish to consolidate their research skills and make the transition from post-doctoral research training to independent researcher. To receive this type of prestigious award the proposed research project must clearly demonstrate the potential to have an impact on the health service, the needs of patients, health practitioners and the public.

The particular proposal I am discussing was peer reviewed at two different stages by highly qualified and respected peers of international and domestic origin. Each year the Health Research Board awards six to eight fellowships to proposals of merit to individuals in various research institutions throughout Ireland. This is exactly the type of work we want done in universities and the type of intellectual investment we want to attract from outside the State. We are acting to inhibit it by the imposition of financial strictures upon these people.

On top of this is a serious anomaly. People who do this research work in Trinity or other national universities such as the constituent colleges of the NUI are subject to the levy. However, this does not affect people in the Royal College of Surgeons of Ireland who receive exactly the same post-doctoral fellowships, have gone through the same peer review process and have demonstrated the potential to have an impact on the needs of patients and all of the other qualifications. They are not subject to it. Here is a classic contradiction. One group of workers is included in this penal scheme and another receives exactly the same remuneration, grants, awards and fellowships but is exempt simply by virtue of the fact that they are involved in another institution. This is clearly absurd.

I ask the Minister of State to use the facilities he has under section 8 of the quoted Act to review the situation positively. The vast majority of researchers are paid by various funding authorities and they administer the grant money based on peer review recommendations. Who gets funded for scientific research is not and never will be voted upon by the Oireachtas. Essentially, this Bill imposes a special tax on researchers who work in certain institutions but not in others. This appears to be unjustified and unsustainable.

In the interests of the development of intellectual resources and research which is not pure academic research, although there are aspects of this involved, but which will be of benefit to the country, patients and the health services, as is clearly demonstrated, and which involve small amounts of money, I ask the Minister of State to take action to protect this valuable intellectual resource and not to subject people engaged in this to a penny-pinching exercise.

[850]  Deputy Martin Mansergh: I fully subscribe to what Senator Norris stated on the importance of research. As it happens I am very familiar with the situation he describes as I have a daughter who is a research fellow at Trinity and is, of course, subject to the pension levy. However, I have not had representations on the pension levy from that source.

The Financial Emergency Measures in the Public Interest Act 2009 is one of a range of measures which have been implemented recently to address the current economic crisis, focusing in particular on the serious imbalance in the public finances. The grave Exchequer position, which we spent most of the day discussing, demands that exceptional and unpopular initiatives be brought forward in the national interest, and the Government has not been found wanting in acting accordingly. It is against this background that the new public service pension related deduction was included in the Act, which was recently debated and passed in this House.

Public servants enjoy significantly better pensions than most private sector workers. Public service pension benefits are higher and considered to be more secure than those of pensionable private sector workers, and their superiority has been highlighted by the severe losses in value sustained recently by pension funds generally.

I accept that the pension related deduction is a significant imposition and that in many cases it has not been a popular development for public servants and their families. The Government, however, is firmly of the view that it is a justifiable and proportionate measure at a time of great upheaval in the economy. Secure pensions are a very valuable asset in the current economic climate. The deduction asks that public servants, who enjoy pension security or who have an analogous arrangement, make a fair and reasonable contribution in recognition of this fact and help play their part in addressing both our immediate difficulties and the longer-term sustainability challenges facing the public service pensions.

Senator Norris expressed concern about the impact of the Act on the position of university research workers, in particular those in receipt, for example, of funds under the Health Research Board post-doctoral research fellowship scheme. In this connection the scope of the Act is clear in terms of the categories of person to whom the deduction applies. Section 2(1) of the Act provides that the deduction is to be made from public servants or persons who are members of a public service pension scheme, who are entitled to a benefit under such a scheme, or who have an entitlement to a payment in lieu of membership in such a scheme.

I am advised that in Trinity College Dublin, research workers, including research fellows are, as a condition of their appointment, enrolled as members of the college’s defined benefit pension scheme and so are liable to the deduction under the Act. In accordance with the provisions of the Act and Department of Finance guidance notes, the view of the Trinity College authorities is that the pension related deduction is being correctly applied at source, that is to say it applies to any employee, temporary or permanent, who is a member of any college pension scheme or, where they are not a member of a college pension scheme for whatever reason, has confirmed on inquiry that they are otherwise in receipt of a benefit under another public service pension scheme or receive an additional payment in lieu of membership of such a scheme. On this basis I can confirm that the college is operating correctly within the terms of the Protection of Employees (Fixed-Term Work) Act 2003 and the Financial Emergency Measures in the Public Interest Act 2009.

More generally, a key point concerning funded research workers in our universities is that Ireland has moved to make them pensionable over recent times and has thus significantly improved the attractiveness of a research career in line with our national strategy. The value of this improvement in terms and conditions is a multiple of the cost of the employee pension contribution. It is also important to note that the nature or source of funding for university posts is not relevant in the application of the deduction. If the individual meets the criteria set out in section 2 of the Act, then the deduction applies.

[851]The deduction is linked to the entitlement of an individual to a public service pension benefit or payment in lieu but I would point out that section 6 of the Act provides for a refund of the deduction in certain limited circumstances. Such a refund will arise in cases where, on leaving a public service job, an employee has no accrued benefit under any public service pension scheme, has not received a payment in lieu of pension scheme membership and has not transferred the service to another public service pension scheme.

Section 8 of the Act also provides for exemption from the deduction in exceptional circumstances when approved by the Minister for Finance. Specifically, where the Minister is satisfied that there is a particular class or group of public servants who, by reason of exceptional circumstances because of some particular aspect or condition of their employment which, in the Minister’s opinion, materially distinguish them from other classes or groups of public servants to which section 2 applies, there is provision under section 8 of the Act for an exemption in whole or in part from deductions or to modify the obligation under section 2 of the Act in such a manner as the Minister for Finance sees fit, if the Minister considers it to be just and equitable in all the circumstances to do so.

It provides that this is for a class or group. The procedure to be followed is that the application be made by that class or group by stating the case in writing to the person who authorises the payment of remuneration to the class or group concerned. The application will be considered by the parent Department and the HEA in the case of bodies in the higher education area and following this consideration, the case will be submitted to the Minister for Finance for a final decision. It would be for a group of persons affected to make the application in writing.

It is also the case that college students or scholars on postgraduate studentship who receive a stipend are not entered into a college pension scheme. Scholarships consisting of a stipend of €16,000 and a fee grant of €8,000, by agreement with the Revenue Commissioners, are treated the same way and so are not subject to tax or PRSI. Scholarships are not considered to be remuneration under the 2009 Act, and those recipients are not members of the pension scheme so they are not subject to the deduction. The distinction must be made between research workers and people who are doing postgraduate research as the levy does not apply to the latter.

  Senator David Norris: I thank the Minister of State for his reply. I am very grateful to him for amplifying beyond the direct typescript as his additional points were particularly helpful. The people who have been in touch with me accept that the country is facing very difficult economic circumstances, but they make the point that they are not public servants in the ordinary sense due to the vulnerability of their jobs, the method of funding and so on.

The Minister of State is right that the college in question is operating correctly. The question is not whether it is operating correctly, but whether it is operating fairly. There is a margin for appreciation. I am not sure how these people can legally constitute themselves as a group, but perhaps they can get in touch. They have a research fellows common room and so on, and they probably have a committee. Perhaps if this committee wrote to the Minister to seek a meeting with him, that could be undertaken.

  Deputy Martin Mansergh: That is nearly accurate, but not completely accurate. There is nothing to say that people cannot constitute themselves into an ad hoc group. They must write in the first instance to the people who pay them. The people who administer their pay must then refer to the higher authority, such as the Department and the HEA. When they have made a recommendation on it, it can be submitted to the Minister. They do not go directly to the Minister as it is a multiple stage process.

Research workers in publicly funded third level institutions are part of the broadly defined public sector. Conditions for scientific research in our universities have vastly improved over the past ten years. We now have career research workers in these institutions, as opposed to [852]lecturers, professors and so on. That is part of the broad context which we have considered. The Senator might have noticed from my reply that anybody who is there for a relatively short period and who will never be able to benefit from a pension can be reimbursed.

  Senator David Norris: I thank the Minister of State for his further elucidation. There are degrees of research workers. Post-doctoral research fellows engaged in particular projects represent a slightly different category. I hope that there may be a positive outcome to this and perhaps the Minister of State’s daughter may benefit.