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Saturday 24 February 2018

Health chief to get €540,000 pension pay-off

State paid out rather than offer him new job

PAY-OFF: Outgoing Health Secretary General Michael Scanlon,
and former ESB chief Padraig McManus, above, both
received generous pension deals in excess of €500,000
PAY-OFF: Outgoing Health Secretary General Michael Scanlon, and former ESB chief Padraig McManus, above, both received generous pension deals in excess of €500,000

DANIEL McCONNELL Chief Reporter

The Government awarded a significant pension top-up to the departing secretary general from the Department of Health because it didn't want to offer him another job.



The boost given to outgoing Secretary General Michael Scanlon, whose retirement package is worth €540,000, was sanctioned by the Cabinet on the "advice of the attorney general," the Sunday Independent has learned.

Mr Scanlon is the latest senior official to depart with a "golden handshake" retirement package in excess of €500,000 since the Government took office last March.

However, the Government is also under pressure this weekend from within its own ranks to defend the €800,000 payout to the recently retired boss of ESB, Padraig McManus, and to make sure no other similar payments are made in the future.

Mr Scanlon is retiring with 38 years' service and was awarded an added-years top-up to his pension to allow him retire on the maximum 40-year pension level -- despite this being contrary to government policy.

On his retirement, Mr Scanlon will receive a largely tax-free cash lump sum of €323,385. He will also receive a special severance payment of €107,795.

However, as a result of the generous pension top-up of one-and-a-half years' value, Mr Scanlon will receive an annual pension of €107,795 for the rest of his life.

Since the crash, the Department of Finance has sought to clamp down on the practice of awarding "added years", which were handed out like confetti during the previous decade.

Public Expenditure Minister Brendan Howlin has reformed existing terms and conditions for top civil servants -- known as the Top Level Appointments Committee (TLAC) -- which include the abolition of added years for departing officials. Yet despite this, the top-up was awarded to Mr Scanlon because they decided not to "offer him an alternative post" -- according to the Department of Public Expenditure and Reform.

"At the end of Mr Scanlon's sec gen term, the only discretion open to the Government was to offer a different position or provide the TLAC terms on retirement. Due to the length of service of the person in question has (more than 38 years) the Government decided not to offer an alternative post," a spokeswoman for Mr Howlin said.

"Advice was previously sought from the Attorney General on whether the Government had any further discretion -- the advice was that the Government had no other discretion," she added.

The former ESB chief, Mr McManus, who stepped down before Christmas, is said to have received a lump sum payoff worth €600,000 and will be in line for an annual pension worth €200,000. Mr McManus's basic salary was €420,993 in 2010.

The former energy chief, who was the highest paid semi-state worker, retired before Christmas after 38 years at the utility company -- not long after electricity prices shot up by 12pc.

Mr Howlin asked semi-state bosses to also take a 15pc cut where their salary was more than €250,000.

Eight came in at more than €250,000 -- An Post, the National Roads Authority, Bord Gais, the Irish Aviation Authority, the ESB, Iarnrod Eireann, the Dublin Airport Authority, and Coillte.

Coillte chief David Gunning was the last to bow to pressure from the Government, agreeing to have his €297,000 salary slashed by almost €45,000.

New figures from Mr Howlin's office show that there are 24 post holders in the civil service being paid more than €200,000. These include the President, the Chief Justice, the Ombudsman and a number of university presidents. There are also 89 academic medical consultants being paid in excess of the Taoiseach's salary. In total, 191 people in third-level are earning more than €150,000.

The revelations have led to furious calls from within the government backbenches to stop these payments when the country is bankrupt. The series of payments to semi-state bosses has been branded as "sheer lunacy" by government TD Pat Deering who has called for them to be taxed.

"I have a big problem. These payout figures are startling. They are totally out of synch of where the country is," he said.

Since coming into office, Mr Howlin has introduced a broad range of pay and pension reforms. He introduced the public service pension reduction of between 12 and 20 per cent, a new single public service pensions scheme Bill that will see pensions based on average earnings and not final salary, and a pay cap of €200,000 in the public service.

All secretaries general have taken voluntary reductions to the €200,000 level and, in light of this and other pay-related reductions, take home pay of level one secretaries general has fallen by 42 per cent since 2008.

Mr Howlin has also reformed TLAC terms. Under the new rules, retiring top officials will no longer get added years, no pension payable prior to the minimum pension age, no severance pay -- except in the case where a person is not of minimum pension age or has not been offered an alternative post, then severance of up to one year's salary applies.

Sunday Independent

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