SENIOR public servants are getting “lottery figures” in pension severance payments and this must end, a Fine Gael TD has claimed.
Dublin North East TD Terence Flanagan claimed awarding full pensions to senior public servants who retire early was “very wrong”.
And he called for the abolition of the six-month tax free severance payment they get for early retirement which “tops up” or increases their pensionable salary.
He also called for a review of the lump sum payment of one and a half years’ salary for senior public servants because they were “extreme and just out of sync with the real world” and the cost of funding them in the long term was “outrageous”.
The 18 months tax-free lump sum payment is the norm for all public servants. Mr Flanagan’s comments came as it emerged that €10.5 million was paid in pension severance packages in the past five years for the most senior civil servants. Among those was David Doyle, secretary general of the Department of Finance, who retired in February this year. Mr Doyle was the most senior official when the bank guarantee was agreed in September 2008.
Eight senior civil servants have retired from the department since 2005 and a total of €2,092,755 was paid in lump sums and €386,478 was paid in special severance gratuities. A secretary general’s salary grade is approximately €230,000. A Department of Finance spokesman said a year and a halfs’ salary tax-free lump sum is paid on retirement to every public servant.
They receive an annual pension of half their salary and at certain grades “if they leave early they receive a severance package of six months’ salary but only get it if they are not moving on to another post”, the spokesman said. “This is all completely in line” with public service agreements, he added.
The Commission on Taxation has recommended taxing pension payments above €200,000.
Mr Flanagan had asked a series of questions across all departments about pension payments and Minister for Finance Brian Lenihan said “a secretary general who reaches the end of his or her contract before age 60 may be allowed the option of early retirement with immediate payment of pension and enhanced terms”.
The “special severance gratuity” of six months salary is paid under the Superannuation and Pensions Act of 1963.
