Pension pay is not fair
Published 18/09/2011 | 05:00
Sir -- The former Government Secretary, Mr Dermot McCarthy retired at age 57 after 40 years service on a retirement package worth €713,000. In addition to an annual pension of €142,670, Mr McCarthy received a once-off lump sum of €428,011. He also got a special severance payment of €142,670.
The lump sum is based on 1.5 times final salary; even though Mr McCarthy's annual salary had fallen from €285,000 to €208,000 in recent years, his final salary for pension purposes remained at the original figure of €285,000, giving him the lump sum of €428,000.
Mr McCarthy paid no tax on the first €200,000 of the €428,000 but following changes in the Finance Act 2011 paid tax of 20 per cent (or €45,600) on the remaining €228,000. The net worth of the lump sum is €382,400.