Cabinet pensions worth €36m
The 15 members of Cabinet will have pension entitlements by the end of the Dáil term that would cost €36,301,205 if bought in the market today, according to an analysis conducted by The Irish Times.
The figures are based on the Government serving its full term to March 9th, 2016. The Taoiseach, Enda Kenny, will be entitled to an annual pension of €100,000 by that date. For a married man of Mr Kenny’s age to buy such a pension today would cost €3,290,720.
He will also be entitled to a lump sum of €139,008, bringing the total value of his pension entitlement to €3,429,728.
Politicians’ defined-benefit pensions are paid by the exchequer. Those who served in the Dáil prior to 2004 are entitled to a full pension on retirement from office once they reach 50.
The members of the Government receive a TD’s salary and a separate ministerial salary (or “allowance”). Each of the salaries has its own pension scheme and the two pension schemes have different rules in relation to entitlements.
In the private sector, defined-benefit pension funds traditionally buy annuities, which are contracts providing for pensions with specified conditions at the time people retire.
The Irish Times has priced how much annuities would cost today for the pensions that Ministers will be entitled to at the end of this Government’s term, should they all retire at that date.
Tánaiste Eamon Gilmore will have an entitlement to an annual pension of €83,029 at the end of the Government’s term. For a married man of his age, such a pension would cost €3,145,280 if bought in the marketplace today.
Every Cabinet member except Minister for Transport, Sport and Tourism Leo Varadkar will have entitlements that would require pension pots of more than €1 million to fund, were they to be bought today. Five members of the Cabinet – the Taoiseach, Tánaiste, Minister for Public Expenditure and Reform Brendan Howlin, Minister for the Environment, Community and Local Government Phil Hogan and Minister for Agriculture, Marine and Food Simon Coveney – will have pension entitlements worth more than €3 million each at today’s prices.
Annuities have become particularly costly in recent years because of the low bond yields that are related to the economic slump which has badly hit the pension funds on which private pensions depend.
The value of the pension entitlements built up by ministers during a five-year term in government is in fact greater than the amount of salary they receive. A minister is paid an annual salary of €169,275, making for €846,375 over a five-year term.
Over the same period, a minister would accumulate an entitlement to an annual pension of €38,395 when their TD and ministerial entitlements for the period are combined. Such a pension, for a married male minister who was aged 65 at the end of the Government’s term, would cost €1,216,610 to buy at today’s prices (excluding the lump sum payment). On this basis the minister would have received total remuneration of more than €2,042,985 for his five years in office, or €408,597 a year.
TDs and senators pay 6 per cent of their salaries towards their pension entitlements and a further public sector pension levy of slightly more than 8 per cent. The ministerial pension scheme does not involve any deductions from salary.
A spokesman for Mr Howlin said he had no comment to make on the figures.