Just how are ministers' pensions worked out?
A TD who has also served at least two years as a minister receives a pension based on service as a TD plus a separate pension based on service as a minister, which are calculated on different criteria. The two sums are then added
1 Working out a TD’s pension entitlement.
To work out a TD’s basic pension you divide his or her salary by 40 and then multiply it by the number of years they’ve served in the Dáil. A cap of 20 years service applies.
If we take a TD with 20 years’ service, whose salary is €92,672, then to calculate that TD’s pension entitlement, we divide the salary by 40 and multiply it by 20, which means the TD is entitled to a €46,336 a year pension once they reach retirement age. TDs are also entitled to a one-off pension lump sum of three times their pension. So, in this example, the TD would receive three times €46,336 – a lump sum of €139,008
On top of this, TDs who have served more than six months in the Oireachtas are also entitled to a termination lump sum equal to two months’ salary (€15,445).
If TDs have served for longer than three years they are also entitled to up to 12 monthly payments based on their length of service (for a TD the maximum payment total over 12 months is €57,920). Only after these payments end do they receive their pension proper.
2 Working out the pension of a minister.
A number of positions attract a pension entitlement over and above that earned by a TD or senator. These positions are taoiseach, tánaiste, minister, attorney general and ceann comhairle (called “ministerial” offices for pension purposes) and minister of state, leas cheann comhairle, cathaoirleach, leas-chathaoirleach and leader of the Seanad (called “secretarial” posts for pension purposes).
To receive this pension entitlement you have to have served for at least two years in one of these offices. The pension is then worked out as a percentage of the office holder’s salary. After two years a retiring minister is entitled to a pension equal to 20 per cent of his or her salary. After three years this becomes 25 per cent, four years 30 per cent, and five years 35 per cent.
The maximum entitlement is 60 per cent after 10 years’ service. Service as a minister of state is reckonable for ministerial pension calculations, with half the service accrued being counted for pension purposes.
If you are entitled to receive a “ministerial” pension but previously served in a “secretarial” post then half the time you spent in the latter post is reckonable at the “ministerial” rate.
So a minister with the standard salary of €76,603 (this excludes the €92,672 they earn as a TD) and a maximum 10 years’ “ministerial” service would be entitled to 60 per cent of €76,603, making for a “ministerial” pension of €45,962.
3 Working out an office-holder’s long-term pension projection (ie how much the annuities would cost in the private sector).
Add together the pension entitlements reached in steps 1 and 2 above. So a senior minister who has served 20 years or more would be entitled to €46,336 (their TD pension) plus €45,962 (their “ministerial” pension), making a total pension entitlement of €92,298.
This sum is then entered into a pension calculator using an inflation cap of 3 per cent.
4 Working out an office-holder’s long-term pension projection (ie how much the annuities would cost in the private sector) in cases where the TD is not yet the requisite age to receive a pension.
In the case of office holders who would not yet be entitled to a pension, you use a further calculation to work out the annuity cost.
You first calculate how much the pension would cost in the private sector (as per steps 1, 2 and 3 above).
The resulting figure is then divided by 1.02 (where 1.02 represents a 3 per cent inflation cap and a 5 per cent return on investment – a net 2 per cent).
This figure (which we will call x) is put to the power of the number of years until the minister reaches retirement age.
(So if a minister has seven years before he/she reaches retirement age, the calculation is x to the power of 7.)
THE SMALL PRINT
All calculations (both here and in the accompanying table) are estimations based on Oireachtas/government guidelines and are based on “new scheme” pension arrangements that have been in place since 1993. Lengths of service were based on information on the Oireachtas website.
Those entitled to “ministerial” or “secretarial” pensions can either take their pension straight away or avail of a ministerial lump sum and a ministerial severance payment (payable for up to two years) – but they cannot draw down both at once.
All TDs elected after April 1st, 2004, cannot receive a pension or pension lump sum until they reach 65 years of age unless they served in a public service body prior to April 1st, 2004.
Those who served in the Dáil prior to this date are not entitled to a full pension until they reach the age of 50 (although they may receive a reduced pension and pension lump sum at any time between the ages of 45 and 49).
In calculating an officeholder’s long-term pension projection, spouses were included in the calculation where the officeholder is married. On the death of a former officeholder, his/her spouse is eligible for 50 per cent of the pension.
For the purposes of calculating an officeholder’s long-term pension projection, where he or she was married, wives were assumed to be two years younger than their husbands while husbands were assumed to be two years older than their wives.
Since May 1st, 2009, public servants’ remuneration is subject to the following annual pension-related deductions: up to €15,000 – exempt; between €15,000 and €20,000 – 5 per cent; between €20,000 and €60,000 – 10 per cent; above €60,000 – 10.5 per cent.