Pensions of top public sector staff protected

MARTIN WALL, Industry Correspondent

THE PENSIONS of senior staff in the public sector who take the new voluntary 15 per cent pay cut sought by the Government will not be affected by the move, it emerged yesterday.

In general the pensions of such personnel are based on the salary of the individuals concerned.

However, the Department of Public Expenditure and Reform said that the proposed voluntary pay reduction would effectively be seen as “gifting” money to the State.

In such a scenario the original pay rate would remain the same for pension purposes.

“The voluntary waiver is a voluntary gifting so the pay rate before the voluntary gifting is used to calculate pension entitlements,” it said.

Under the Government’s new measures all staff in the public sector earning more than €200,000 will be asked to make a voluntary waiver of 15 per cent of pay.

Senior staff in commercial State companies earning more than €250,000 will be asked to take a similar voluntary pay cut.

However, hospital consultants will be exempt from the Government’s measure for the present.

Yesterday, the chief executive of the Health Service Executive, Cathal Magee, said he would take the voluntary pay cut.

On his appointment last year it was reported that Mr Magee had a salary of more than €320,000.

In a statement yesterday the HSE said Mr Magee was very supportive of the initiative announced by the Government with regard to remuneration rates for senior public servants.

The State-owned health insurance company VHI said yesterday that its chief executive Jimmy Tolan last year earned approximately “60 per cent of what was possible under the terms of the contract that he signed”.

“In May of this year Jimmy Tolan informed the board of VHI Healthcare that he intends to step down as chief executive.

“Mr Tolan’s contract requires him to give the board six months’ notice.”

In 2009 Mr Tolan received a total remuneration package of about €412,000.

Meanwhile, there was still confusion yesterday regarding the Governments intentions in relation to hospital consultants.

Highly placed sources have confirmed that there was “toing and froing” between the Department of Health and the Department of Finance over recent weeks on whether hospital consultants – who are covered by the Croke Park agreement – would be included in the Government’s pay cut plan for top earners in the public service.

The Irish Times understands there were high-level contacts between representatives of consultants and Department of Health officials on the issue on Monday evening in advance of the Cabinet meeting.

Some sources have suggested that the Department of Health may now seek to draw distinctions between the commitments in the programme for government to reduce consultants’ remuneration and the introduction of a salary reduction.

Some sources suggested that the Department of Health may seek to produce some package of reforms under the Croke Park agreement that could produce savings on issues such as allowances without having to resort to cutting actual pay rates.

Meanwhile, the Department of Public Expenditure and Reform said last night that judges earning more than €200,000 would not be asked to take the voluntary 15 per cent pay cut.