THE NATIONAL Treasury Management Agency warned the Minister for Finance in a private letter that imposing a pay cap of €200,000 on its staff would impede its work and have “serious detrimental consequences” for the taxpayer.
The State agency, which manages the national debt and is the parent of the National Asset Management Agency (Nama), falls outside public sector pay grades but the Minister asked the agency to apply the €200,000 public sector pay cap to its staff.
John Corrigan, chief executive of the NTMA, responded to the Minister the following day.
“I must stress the NTMA’s increasing difficulty in recruiting and retaining key staff with the appropriate level of experience to work with us on issues vital to the State such as the planned re-entry to the international bond markets, the recovery of money for the taxpayer through Nama and the valuation and sale of State assets,” Mr Corrigan told the Minister.
“I believe that the application of a salary cap of €200,000 without any regard to private sector analogues will directly impede the NTMA in this work with serious detrimental consequences for the exchequer and the taxpayer.”
The Minister for Finance wrote to the NTMA chief executive on December 21st, asking for staff on more than €200,000 “to consider waiving at least 15 per cent of salary or such amount of salary as exceeds €200,000”.
Yesterday Nama chairman Frank Daly defended its pay levels, saying only a handful were on salaries of €200,000.
The average salary at Nama was “well below” €100,000, he said, and the skillset required to run the agency properly meant it had to pay a certain market rate.
“The reality is we’re out there, we’re facing the most sophisticated property companies across the world, equity funds, sovereign wealth funds, and we have to have expertise,” he told RTÉ radio.
“Unfortunately maybe, that expertise is still very much in demand, so you have to pay the average market rate.”
In response to the Minister’s request, Mr Corrigan and Nama chief executive Brendan McDonagh took a 15 per cent pay cut. This reduced Mr Corrigan’s annual salary to €416,500 and Mr McDonagh’s salary to €365,500.
They have also agreed to waive any performance-related bonuses.
The NTMA is still in talks with the Department of Finance on whether the pay cap should be applied to the agency’s employees.
Mr Corrigan told the Minister that senior NTMA managers had already taken an average 24 per cent pay cut by waiving performance-related payments for 2010.
The December letters were not the first between the two sides regarding pay at the NTMA.
The Minister asked Mr Corrigan in a letter on August 23rd, 2011 for the NTMA’s views on “enhancing transparency in relation to remuneration levels [of] about €200,000 in the agency”.
Mr Noonan said the Government was committed to reviewing pay levels at the higher levels in the wider public service. A pay cap of €200,000 on public sector positions was imposed last year.
Mr Corrigan told the Minister in a letter on September 29th, 2011, that the NTMA agreed individual pay deals with its staff outside public sector rates to compete with private firms and attract specialists in “mid-career who would not normally consider working in a public sector environment”.
“The ability to attract and retain specialists in mid-career from the private sector has been a key ingredient in the NTMA’s success,” Mr Corrigan told the Minister. It was worth noting, he added, that two-thirds of staff were on salaries of less than €100,000 and more than a fifth earned less than €50,000.
Mr Corrigan justified the pay levels by outlining various roles performed by the NTMA in his lengthy letter, which included setting up Nama and assisting in reducing the bank bailout costs.
About 350 NTMA staff shared salaries totalling €27 million in 2010, an average of €76,000 each.
Correspondence between the parties was released by the department to The Irish Timesunder the Freedom of Information Act.