Public-sector pensions worth millions, new figures show

Public-service pensions paid to TDs, doctors and judges would cost private-sector workers between €2.4 million and €3.7 million if they were to seek the same retirement benefits, new figures show.

The State uses taxes to fund the guaranteed pensions paid to its civil and public servants, including the €378,000 lump sum and €326,000 a year that former taoiseach Enda Kenny is receiving. The full value of this in private-sector terms is €5.17 million.

Calculations by the Association of Pension Trustees of Ireland (APTI) show private-sector workers and their employers would have to spend millions of euro to earn the same retirement benefits.

At the same time, the figures used by the Revenue Commissioners to “value” pensions paid to retiring State employees for tax purposes also indicate these benefits are worth large sums to the workers who receive them.

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The association's examples include a High Court judge, retiring at 70 with a lump sum of €255,000 and a pension of €85,000 a-year. In the private sector, that would cost €2.93 million for a pot that included a 50 per cent pension paid to a surviving spouse, or €2.6 million without that benefit.

The Revenue Commissioners’ figures estimate that the judge’s pension is worth €2.125 million. They use their own formula for establishing how much a pension is worth, as individual pots valued at more than €2 million are subject to a 70 per cent “super tax”.

Effective limit

Association committee member Kevin Coghlan pointed out that this effectively limits private-sector retirement funds to €2 million.

APTI member Gervase MacCourt, who put together the association’s “ready reckoner” for calculating pensions’ costs, pointed out that High Court judges generally retire at 70 or 72. If they were to leave their posts earlier, the cost of their benefits would rise.

A TD retiring at 60 with a lump sum of €135,000 and a pension of €45,000 a year would pay almost €2.4 million on the open market if the spouse’s benefit is included or without that they would pay €2.1 million. The Revenue’s system values a Dáil deputy’s pension at €1.48 million.

A hospital consultant retiring at 63 with a lump sum of €240,000 and a pension of €80,000 a year would end up with a pot worth €3.7 million in private-sector terms, including the payment to a surviving spouse. Without that, it would cost €3.3 million while the Revenue would value it at €2.4 million.

A Garda retiring at 60 with a €102,000 lump sum and €34,000 pension would have their pot valued at €1.8 million, including the spouse’s benefit. An ordinary public servant, retiring with a €60,000 lump sum and €20,000 pension has benefits worth €850,000 in private-sector terms.

Mr MacCourt acknowledged that as public-sector pensions are paid from current spending it was difficult to establish their actual cost. “It’s a question of how long is a piece of string,” he said.

APTI members look after 22,000 clients with assets worth more than €7.7 billion. The group argues that individual pension provision could be the answer to many of the current problems facing retirement funding. However, it says the debate is skewed in favour of the large life companies.