The value of the pensions of several hundred senior Civil Service personnel, at principal officer or above, is now at or above €2 million each, submissions to a Government-appointed review group suggest.
Civil servants claim recent public service pay awards and the failure of Government to index link the limits on the capital value of tax-relieved pension benefits an individual can draw over a lifetime has inadvertently pushed them into the net of facing significant taxation on retirement.
Specialist public service personnel with high incomes such as hospital consultants and judges had previously raised concerns about what is known as the standard fund threshold (SFT).
However, submissions to the review show that senior Civil Service management grades maintain they too will be affected by the existing €2 million ceiling.
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About 100 individuals or groups have made submissions to the review headed by Donal de Buitléir.
Department of Finance documents show Minister for Justice Helen McEntee made representations on behalf of judges.
A spokeswoman for Ms McEntee declined to comment. Garda Commissioner Drew Harris also wrote to the review group.
Last year it emerged that concern over tax implications on retirement was dissuading gardaí from seeking promotion to higher-grade positions.
There is now a strong sense across Ibec’s membership that it has become a barrier to business growth
— Ibec
The STF level has been set at €2 million since 2014.
Public service pension schemes, particularly those in place before 2013, generally provide for 50 per cent of salary and a lump sum of 1.5 times salary based on full service. Groups such as doctors argue that current salary levels could see them hit the SFT limit years before normal retirement age – which could encourage some to depart ahead of schedule.
Submissions to the review maintain that funds above the threshold level are subject to a chargeable excess tax of 40 per cent effective rate.
The employers’ group Ibec said if USC and PRSI was included, this resulted in an effective rate on income above the SFT of up to 72 per cent.
“This is a penal rate of taxation by any standard”, Ibec said.
“There is now a strong sense across Ibec’s membership that it has become a barrier to business growth”, it said.
The submissions also throw light on the value of pensions for senior figures in the public service in comparison with the private sector. Central Bank data last week indicated that on average the pension pots of private sector workers was just over €80,565.
The Association of Higher Civil and Public Servants (AHCPS) represents staff at principal officer grade who earn between €100,000 and €133,000 depending on their scale. Above principal officers are assistant secretary, deputy secretary and secretary general levels.
The AHCPS said that inaction by the Government in amending the thresholds had “brought the pension funds of our members within the scope of the SFT threshold of €2 million. It said the SFT levels had “not kept pace with national pay awards.
The Irish Medical Organisation said a pension of €85,106 and a lump sum of €255,319 for a public service employee retiring at age 70 would see them reach the SFT. It said a public-only hospital consultant could receive up to €261,000, while clinical directors had an additional €50,000 allowance. It said academic consultants can earn up to €320,875. The IMO suggested that this salary level could generate retirement benefits valued at more than twice the existing SFT level.
Business group Isme said if marginal relief was removed on pension contributions for those in the private sector, it wanted “recognition of the imputed contribution by the exchequer to public sector workers via the imposition of tax on the benefit in kind enjoyed”.
The Department of Public Expenditure said it did not have available the estimated equivalent market values of pensions across specific Civil Service grades.
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