Pensions 'would cost €40m in private sector'
Published 11/11/2011 | 05:00
IT would cost €40m to put together the gold-plated pension deals being paid to 10 of the highest-earning former ministers.
And the ex-ministers have managed to avoid tough new tax limits on their lottery-style pensions.
So generous is the life-long pension of former Taoiseach Brian Cowen that it would cost €8.2m to buy such a retirement deal.
Mr Cowen is entitled to a €152,000 pension a year, but because he is just 51 it would cost anyone else a fortune to secure this type of deal.
A private sector worker who wanted to retire a full 14 years before normal retirement age with an annual pension income of €152,000 would need to have a pension pot of €8.2m, leading actuary Tony Gilhawley of Technical Guidance has calculated.
"These types of pensions are so expensive to fund because they are getting them at such a young age and because the amounts they are getting are astronomical," Mr Gilhawley said.
He worked out that the private sector cost of the pensions being paid to the top 10 highest earning ex-ministers comes to €40.4m.
The pension of former Taoiseach Bertie Ahern would cost €6.2m to fund in the private sector.
Pension expert Aidan McLoughlin said the former cabinet members had escaped paying punitive income tax rates on their bumper pensions because the State used what he said was an inaccurate calculation to value them.
The State set a limit of €2.3m on the size of pension pots for the private sector in the last budgets. Funds larger than this are subject to punitive tax.
If the same pension-fund limit that applies to private pensions was applied to the ex-ministers who stepped down this year they would have to pay a tax bill of around €1.5m each, Mr McLoughlin said.