Departing port chief gets €800,000 pension top-up
A SEMI-state company with a pension deficit of almost €50m gave a massive €800,000 top-up to its departing chief executive, the Irish Independent has learned.
The pension payout was paid to Dublin Port Company chief executive Enda Connellan, who is due to step down later this week. This is on top of a basic salary of €239,000 he received last year.
He was also paid director's fees of €12,000 and other benefits totalling €66,000, bringing his total pay packet to €317,000 in 2009.
This is a significant rise on the €222,000 he was paid in 2008.
Revelations about the Dublin Port chief's pension boost came after it emerged that Finance Minister Brian Lenihan was planning to cut the salaries of chief executives of commercial semi-state companies.
Dublin Port's annual accounts reveal Mr Connellan was given a pension top-up of €802,000, which is tax free.
"The chief executive retired on December 8, 2009. In addition to the above amounts, a past service pension cost of €802,000 arose in 2009," the company accounts state.
Although the exact details of Mr Connellan's pension scheme are unknown, the contributions made by state and semi-state employees are generally a fraction of the eventual payout.
The departing chief executive was given the huge payout despite the company's annual accounts revealing a potentially massive liability in its overall pension scheme.
Dublin Port has pension fund assets of €203.9m. However, it also has liabilities of €250.8m, leaving a deficit of €46.9m.
Despite this, the company insisted the pension scheme was in a "strong position".
It recorded an operating profit of €25.6m last year and paid a €5.3m dividend to the State.
The company did not seek permission from the Finance Minister before awarding the pension top-up to Mr Connellan because there is currently no legal requirement for it to do so.
Mr Connellan announced his retirement last December, but was asked to stay on as chief executive until a replacement was found.
He is due to leave this Friday, with new chief executive Eamonn O'Reilly taking over a week later.
Mr Connellan has worked for the company for 33 years in total. That leaves him seven years short of the standard 40-years' service many pension schemes require to qualify for a full pension.
Pension experts last night said it was likely Mr Connellan was given the €800,000 top-up to make up the remaining seven years of service and bring his pension up to 40 years' value.
An €800,000 payout for seven years would mean Mr Connellan was receiving an extremely generous pension by public or private sector norms, they added.
Dublin Port Company confirmed "added years" had been given to Mr Connellan through the pension top-up, but refused to say what his overall pension package was worth.
It also declined to give a reason for the massive payout, but insisted it was in line with the standard provisions of its pension scheme for top executives.
The semi-state company confirmed it had given pension top-ups to other departing executives, saying this was "common practice" for senior professional executives throughout the public service.
Fine Gael's communications spokesman Leo Varadkar said Mr Connellan's pension top-up was another example of outdated practices which had to be stamped out in the semi-state sector.
"There has been a 'Bord Snip' for the public sector but nothing for the semi-states," Mr Varadkar said.
"We have the Colm McCarthy group looking at possible privatisation of the semi-states but we need a group that will look at cutting costs."
The establishment of a special review group to examine the pay rates and bonuses of bosses at companies such as the ESB and Bord Gais was approved by Cabinet last week.
The terms of reference of the review group, and the experts who will sit on it, will be announced by Mr Lenihan in the autumn.
The salaries of semi-state workers have remained untouched so far, despite cuts of up to 20pc being imposed across the public sector.
Some semi-state bosses earn over €500,000 a year -- more than double the salary of Taoiseach Brian Cowen.
A spokesman for Mr Lenihan said that it was too early to speculate on the size of any pay cuts.
A uniform cut may not be implemented on all chief executives, but salaries could be looked at on a case-by-case basis.
Such details would be up to the members of the special review group, the spokesman added.