Government accused of protecting ‘golden circle’ while burdening private pensions

Legal advice about pensions up to €100,000 designed by people who will benefit, says Róisín Shortall

The Government has been accused of continuing a “golden circle” of pension protection for Ministers and senior public servants while increasing the burden on those with small private pensions.

Former Labour minister of state Róisín Shortall claimed the Ministers for Finance and Public Expenditure and Reform had a "significant conflict of interest" in their failure to levy pensions between €60,000 and €100,000 as promised last year.

It was “completely unacceptable” and “no other jurisdiction would allow a group of insiders to look after themselves in the way this group is doing. It is shameful.”

She said “the people who stand to benefit from a Government policy are the very ones who have designed it. They then hide behind a line about legal advice.”

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Ms Shortall said she had already challenged the Ministers to produce the legal advice about pensions up to €100,000 but they had refused to do so.

“Those who provided it are all part of the apparatus of government at senior level and are the very ones who are conflicted on the issue.”

The Dublin North West TD said the Government at the very least should be seeking independent advice. Otherwise the only other conclusion is that "this is a group of very well protected high earners who are continuing to featherbed their own pensions, at the expense of those who have small pensions which will be now further reduced as a result of the measure in question".

She was speaking in the debate on an amendment introduced by Labour TD Tommy Broughan on the Finance (No 2) Bill which includes provisions for stamp duties and levies on pensions.

Mr Broughan hit out at the extension of the pension levy to 2015 and described it as a “breach of faith” by the Government.

He said people felt incredibly sore about the move. He said Ministers and TDs bore “a special responsibility for people who work in the private sector in the sense that we have access to valuable public sector pensions. “People in the private sector . . . feel vulnerable about their pensions. They believe this measure is another whammy.”

Private sector pensions were now being exposed to a wide range of levies, penalties and restrictions which increased the imbalance with public sector pensions he said.

Fianna Fáil finance spokesman Michael McGrath said there had been a "complete betrayal" on this issue after a firm commitment was given that it would end in 2014.

Independent TD Richard Boyd Barrett described the measure as "an austerity grab and an attack on pensioners".

But Minister of State Fergus O’Dowd said that while the levy did not apply to unfunded public service pension schemes public service pensions were not “unaffected by requirements for fiscal retrenchment” and were reduced in 2011.

He told Ms Shortall that “in order to safeguard the restrictive changes being made to the regime against any threat of a successful legal challenge, the Minister for Finance was obliged to provide “for the protection of individual pension rights against any charge of retrospective or unjust treatment”.

He said the requirement to protect or “grandfather” pension rights in this way was not new and was put in place when the standard fund threshold scheme regime was first introduced in 2005 and when it was reduced in 2010.

Marie O'Halloran

Marie O'Halloran

Marie O'Halloran is Parliamentary Correspondent of The Irish Times