Ministers’ pensions are valued at €26.7m
06 February 2011 By Richard Curran
Six ministers who decided to retire from the Dáil will walk away with such good pensions that it would require a total of €26.7 million in a pension fund to provide them.
Separately, pension experts have valued former taoiseach Bertie Ahern’s pension at €7.6 million.
The ministers will not face an immediate tax bill on retirement because their pensions will not be covered by new rules introduced last month in the Finance Act.
According to Independent Trustee Company managing director Aidan McLoughlin, ministers can ratchet up a pension fund benefit of €5 million in just ten years.
McLoughlin used the Pensions Board’s own calculator as the basis for working out that retiring transport minister Noel Dempsey’s pension is effectively worth €5.5 million.
Mary Harney’s is worth €5.8 million. Dermot Ahern’s is worth €5.9 million. Tony Killeen’s is worth €2.8 million. Batt O’Keeffe’s is worth €4.1 million and retiring junior minister Noel Ahern’s is worth €2.7 million.
These and future ministers will not have to worry about a tax bill arising from the value of the fund when they retire. ‘‘The Revenue Commissioners have kindly decided to use a discredited and inaccurate calculation that assumes an annuity rate of 5 per cent.
‘‘This leaves Mr Dempsey’s pension with an undervalued official capital value of €2.3 million, thus keeping his and future ministers’ pension funds under or close to this new limit,” McLoughlin said.
The change in the way of calculating the capital value of the pension was inserted into a small paragraph in the recent Finance Act.
According to the pension trustees, the assumed annuity rate of 5 per cent for this generous pension benefit isn’t available anywhere else in the world.
‘‘If the newly introduced pension fund limit of €2.3 million was applied, each minister would have a tax bill of approximately €1.5 million on the day they retired.”
This would have reduced the amount available in their fund by that amount. The new calculation method will bring significant tax benefits to TDs, ministers, senior civil servants and private sector executives whose pension pots are likely to fall between the new tax threshold of €2.3 million and the old one of €5.4 million.
Donal Mac Fhearraigh