Budget must go beyond paying lip service to fairness

INSIDE POLITICS: Talking the talk on sharing the pain will not suffice for a Coalition that continues to defend its indefensible privileges

NEXT MONTH’S budget will be a moment of truth for the Coalition and it really needs to come up with a bold gesture to show the public that it is going to lead by example when it comes to the imposition of further hardship.

An analysis of the generous ministerial pension regime published earlier this week by The Irish Times was a reminder that the elite among the political class are still pampering themselves, despite the severe cutbacks affecting other members of society.

The analysis put the market value of the pension entitlements of the current Cabinet at €36 million, but it did not take account of the far greater cost of paying very generous pensions to a range of senior politicians who have already retired.

The actuarial cost of that would easily exceed €100 million. For instance Mary Robinson has an annual pension of €187,297 for her 6½ years in Áras an Uachtaráin and 20 years in Seanad Éireann.

Funding a pension of that magnitude for somebody in the private sector would cost a minimum of €6 million and possibly much more. The pensions paid to former taoisigh and former government ministers are not far behind, ranging from about €120,000 a year for most of the ministers in the last government to over €150,000 for Bertie Ahern and Brian Cowen.

Robinson and Ahern have gifted part of the pensions back to the State, but their entitlements are extraordinary and appear to be wildly in excess of the pension arrangements for public figures in other EU countries.

Given the scale of the financial crisis facing the country, and the fact that it has taken the bailout to keep the State functioning for the past two years, it is amazing that no effort has been made to scale back the pension entitlements of former as well as current politicians.

As with other parts of the public service, new entrants into politics in 2010 suffered a significant reduction in entitlements and will be able to claim pensions only at the age of 65, but for the older generation of politicians, almost all of the entitlements they amassed during the boom are intact.

To be fair the current crop of politicians have taken a series of pay cuts since the start of the crisis but their salaries are still among the highest in the democratic world and those already on pensions have hardly been touched.

The excuse given by Minister for Public Expenditure and Reform Brendan Howlin for not touching some of the most privileged pensioners in the country is that they had “a legitimate expectation” that the current arrangements would continue to apply, regardless of the pressure on the State’s finances.

Strangely enough “legitimate expectation” does not seem to apply to those outside the public service. People in private sector pension schemes have received letters in the past two months informing them that their future entitlements will be cut as a result of the levy on pension funds introduced by the Government last year to fund its jobs initiative.