€35,000 every month is real cost of a minister's pension
IT will cost up to €35,000 a month to fund the sort of pension cabinet ministers Dermot Ahern and Noel Dempsey will have when they leave office, a new study has revealed.
The Transport Minister, Mr Dempsey, joined Mr Ahern, the Justice Minister, when he said last week he would not be seeking re-election.
Mr Dempsey will be able to retire with a total package worth €313,000 -- and his annual pension will be worth more than he would have earned if he returned to the Dail as a backbench opposition TD.
Mr Dempsey (57) and Mr Ahern were elected to the Dail in 1987 and both have been in Cabinet for 13 years.
Ministers can retire at 50 on a pension that would cost up to €7m to buy in the private sector, pensions experts Independent Trustee Company (ITC) calculated yesterday.
Tommy Nielsen, of ITC, said that after just 10 years in the Cabinet, ministers were walking away with pension pots worth around €6.8m each. To fund a pension as generous as this it would require a private sector worker to put a whopping €35,000 a month into a fund.
Mr Nielsen explained: "At present, a minister who has served 10 years is entitled to a pension of 60pc of his salary."
He added that ministers were able to get their generous, taxpayer-funded pension even if the minister retired from the position at age 50.
"For a private sector worker to deliver such a pension, they would need to build up a pension fund of €6,870,504. This would require pension contributions of around €35,149 every month.
"This figure is effectively what it costs the taxpayer to fund these ministerial pensions -- on top of a minister's salary, which is just under €200,000 and their expenses."
Cuts to public sector pensions announced in last month's Budget mean Ministers Dempsey and Ahern will lose about €9,200 per year.
But the total package -- including a tax-free golden parachute -- is still worth €313,100 to Mr Dempsey over the next year.
He would have received around €322,300 if he had retired before the Budget. Mr Dempsey, who will also draw down another pension from his years as a teacher in his mid-60s, yesterday denied he was retiring because the pensions deal was so good.
Mr Dempsey's annual pension of around €119,800 will be worth almost €30,000 more than the basic €92,672 a TD in the next Dail could expect.
Justice Minister Dermot Ahern will be paid €318,000 in the first year after retirement following his decision to step down at next year's general election.
When he retires, the 55-year-old will be paid an initial tax-free golden parachute of €177,636, as well as a pension of €140,861 in the first year.
This will be followed by an annual pension worth €128,291 for the rest of his life.
His pension will be worth significantly more than what he would potentially earn as an opposition TD in the next Dail.