Monday 16 December 2019

Pension 'super tax' delay set to halt exodus of judges

Judges will avoid the supertax on their pension
Judges will avoid the supertax on their pension

Dearbhail McDonald and Fionnan Sheahan

SENIOR civil servants and judges have been granted a year-long reprieve from retiring before a 'super tax' is imposed on their pensions.

High-paid public servants were facing the new tax on their pensions if they did not retire by the autumn. That led to concerns about a flight of senior public servants leaving high-level positions with no adequate replacements lined up.

But this so-called grace period has now been extended until June 2015. The move will have particular implications for retention of senior judges ahead of the creation of a new Civil Court of Appeal.

The extension of the Haddington Road Agreement "grace period" will now apply to all public servants.

From January 1 last, senior public servants had a so-called 'super tax' of up to 70pc imposed on any portion of their pensions above €115,000 per annum. But the grace period was introduced for public servants retiring on or before August 31 next.

This meant that public servants and judges who retire before that date will have their pensions and lump sums based on their salaries before cuts were imposed following the Haddington Road Agreement, thereby avoiding the 'super tax'.

JUDICIARY

But yesterday the Government decided to extend that grace period until June 30, 2015.

Last night, judges were informed that they have another year to decide whether to retire before new tax rules on pensions take effect.

The move has been greeted with relief by senior members of the judiciary, who feared an exodus of senior judges.

Judges have been convulsed by the prospect of the 'super tax' on their pensions and new rules which mean that judges will have to serve 20 instead of 15 years before being able to claim a pension – a move they fear will deter senior legal practitioners from applying to become judges.

The Department of Public Spending confirmed that the Cabinet agreed the extension of the 'grace period' for exemption from pay reductions of pension payments to retiring public servants from the end of August 2014 to the end of June 2015.

The effect of the 'grace period' was that public servants who retire during it have their gross superannuation benefits calculated on the basis of the pre-pay cut pay rates, which were reduced on July 2013 by 5.5pc or more.

Irish Independent

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