Tánaiste will not demand return of €713,000 package

A DEMAND that the Government request its former secretary general Dermot McCarthy to pay back some of his €713,000 retirement package has been rejected by Tánaiste Eamon Gilmore.

He told the Dáil “that is a matter for the individual concerned”, after Shane Ross (Ind, Dublin South) called on Mr Gilmore to join him in asking Mr McCarthy to return some of his “enormous pension”.

Later Minister for Public Expenditure and Reform Brendan Howlin revealed that at least one more very senior civil servant who qualifies for a special severance payment has notified the State of his intention to retire before the end of February 2012. Lump sum and pension entitlements will be significantly reduced after that cut-off date.

Mr Howlin warned, however, that “I don’t have any illusions that we won’t have any other incidents” of high-ranking civil servants opting to retire under enhanced pension arrangements.

Derek Keating (FG, Dublin Mid-West) had pointed out that of late many people had been told “terms previously agreed cannot be met” and suggested the Government tell Mr McCarthy “we are no longer in a position to meet the terms already agreed in his contract”.

Mr Howlin said he had “sought a way of abolishing” the payment, but “I do not want to make a pretence that I can do something if I cannot do it and I end up sending lawyers to the High Court costing us more money”. A comprehensive pensions Bill will be introduced this month “which will fundamentally alter the way pensions are determined for all public servants”, he added.

Mr Ross had said Mr McCarthy’s retirement package was “salt poured into the wounds” of people with private pensions whose funds were being “plundered” through the Government pension levy. He said Mr McCarthy was given a “€700,000 pay-off and pension that would make a banker blush”. He claimed it was “not acceptable for the Government simply to say there is little it can do” about the package which includes an annual pension of €142,670, a once-off lump sum payment of €428,011 and a special severance payment of €142,670.

Mr Gilmore stressed that the severance payment “was agreed to and signed off on by the previous government”. He said the Government had already capped salaries of top people in the Civil Service and from the end of February that would also apply to pensions.

When the issue was raised again later Mr Keating called for an emergency taxation system to be introduced on the “vast sums of money by way of bonuses, pensions and special lump sums”. Such an emergency system would give some comfort he said to people who “are suffering with job losses, price increases, reductions in services and difficulties in paying their mortgages”.

Jerry Buttimer (FG, Cork South-Central) said “the giving of largesse to a small coterie of people must be stopped and cannot be allowed to continue”. He added: “To add insult to injury, they see potential for persons in retirement being considered for or asked to take a further job.”

That, he said, “must not be allowed to continue either”.

Mr Howlin said the severance payment arose from an agreement in 1987 under the Top Level Appointments Committee (TLAC) established to get younger people into senior civil service positions. It changed the old system from lifetime appointments for secretaries general to seven-year terms of office, after which they would keep the same salary with a similar post or receive a severance payment.

He stressed that “everyone who has retired under TLAC terms since 1987 received these payments” and “we should not personalise it to one individual”.

The new pensions Bill will calculate pensions on a “career average” basis, which would affect those in very high positions in the public service.