The party wants to take around €11,000 each off Mr Cowen and Mr Ahern - who get pensions of around €150,000 a year - and save the taxpayer.
However, Mr McGrath said he wanted proposals that would stand up to legal challenge but he admitted the pensions were far too high.
The party accepts the Government's figure that €3.5bn in cuts and taxes are needed, but said it would split its Budget evenly between the two.
Fianna Fail is also proposing a 3pc increase in the Universal Social Charge for income earned above €100,000, and says the time is not right for a property tax. Public spending spokesman Sean Fleming said €350m can be shaved off the public sector pay bill in areas like allowances and overtime, as well as longer working hours.
Fianna Fail also wants a 10pc levy on off-licence alcohol sales and a “junk food” tax that would add 3c to a bar of chocolate and 5c to a two-litre bottle of soft drinks. It also believes €100m can be raised by regulating the price of tobacco.
The party also wants the mortgage interest relief for first time buyers – due to come to an end on December 31 – extended by a year, and a cap of 30pc on pension tax relief.