Monday, April 26, 2010

Irish public and private pensions

The scandal of the likes of the European Commissioner, Máire Geoghegan-Quinn, drawing an Irish pension of €107,325 while on a salary of €238,918 in her current post and building up new pension credits, highlights the huge discrepancy between public and private pensions in Ireland.

Corruption is conventionally viewed as the receipt of proverbial brown envelopes for votes or influence. However, there are many variations and when politicians create a very special system for themselves and other public staff, while the majority of private sector staff have no occupational pension and most new entrants to pensions in the private sector have no guarantee of a particular end payment, it is symptomatic of a corrupt system.

The public sector pension scheme is linked to the current salary paid in respective of a person's last job before retirement. However, even though pensioners got a Bertie Ahern benchmarking payment gift, when public sector salaries were cut in the Budget in December 2009, public sector pensions were not reduced.

Geoghegan-Quinn retired from politics in 1997 and two years later, she was appointed by Taoiseach Bertie Ahern to the European Court of Auditors.

She has been drawing a pension since 1999 while earning a high salary and building up entitlement to a fourth public pension.

Speaking in Cork today, Minister for Foreign Affairs Micheál Martin said Geoghegan-Quinn should reflect on her pension because it represents a practice from a different era. “She is not doing anything different to people who were in similar situations in the past. But we are in a different situation and in my view people in such situations should reflect on that because of the climate we are in. It is imperative that we show leadership in that regard.”

Martin is of course a hypocrite having kept his teaching job open since 1989.

In 2008, Geoghegan-Quinn received a ministerial pension of €62,945, according to the Department of Finance, and a former TD’s pension of more than €44,380.

She is paid an annual salary of €238,918 in her current post, having secured the research, innovation and science portfolio last November. Her spokesman said she was not in receipt of a pension from her previous role with the European Court of Auditors in Luxembourg.

Minister for Finance Brian Lenihan today said the Government had no power to strip a person of the pension they had earned.

He said that the terms were not changed for her: "She entered public life in this country in 1975 ... there are many people who get double pension payments from the Irish State at every level".

The current Chief Justice gets a pension of about €70,000 annually for his previous job as Attorney General.

Minister for Finance Brian Lenihan, speaking on RTÉ's Morning Ireland , said he had taken legal advice on the issue from the Attorney General, adding the Government cannot strip someone of their pension that they have earned. "That's not allowed in our legislation - legally, you can't do it. If that's the position, there is nothing that parliament can do short of a referendum on Máire Geoghegan-Quinn's pension."

"If we're going to move beyond that . . . it's open to anyone to make a contribution from their pension to the Minister for Finance - many have, and I want to acknowledge that, and many can reflect on the difficult economic circumstances Ireland is in and decide to assist voluntarily."

Mr Lenihan said taking this step was a matter for individuals to consider their own circumstances. He went on to say that age of retirement and double payment of pensions were issues to be examined, "particularly for very large sums, where someone's combined effect of the pension is that they have an income of more than €100,000 and they are under 65 - clearly there is a need to review that position".

The Minister said "definite pension proposals" were being brought forward by Government this year.

Geoghegan-Quinn's current job was a patronage gift from Taoiseach Brain Cowen and of course the issue of the pension would never have crossed his mind.

Geoghegan-Quinn, who has an abrasive personality, was annoyed when recently questioned on the issue when on a recent visit to Dublin, and she cancelled an agreed interview with RTÉ News.