Wednesday 21 November 2018

No more golden handshakes: Civil servants wave goodbye to generous severance payments

Ed Carty

PENSION benefits for future top civil servants are being radically reformed to prevent high ranking officials walking away with controversial golden goodbyes.

Secretaries general, the most senior government staff, will be barred from early retirement or generous severance payments on top of a €200,000 wage cap.

Brendan Howlin, Minister for Public Sector Expenditure and Reform, said the salary and benefit limits will be in place for 12 months before being reassessed.

"A balance has to be struck to ensure that the right people capable of taking on the complex challenges our country faces now, and in the future are in place," Mr Howlin said.

"Accordingly, we will review the new terms after 12 months to see that they are effective in attracting the desired candidates."

The reforms to the Top Level Appointment Committee (Tlac) terms take effect on all newly appointed secretaries general from today.

Under existing arrangements these high-ranking officials can retire early with an immediate pension, added years top-up payments and severance money.

The most high-profile civil servant to benefit from the controversial pay-outs was Dermot McCarthy, former secretary general to the Government, who retired at 57 earlier this year.

His golden goodbye lump sum was €570,000 and followed up with €142,000 a year in pension payments.

Mr McCarthy was a key player in talks and management for social partnership, benchmarking and the Croke Park agreement.

"These practices will end for secretaries general appointed from now on," Mr Howlin said.

In future the top civil servants will:

- Not get pension payments before reaching minimum retirement age

- Face bans on severance pay - except if an official is below pension age or cannot be offered a new post but lump sums limited to one year's pay.

- Sacrifice severance money if they refuse the offer of an alternative post.

- Be barred from added years schemes to top-up pensions.

- Not be allowed to walk away from the civil service with a retirement package if they have not reached 40 years' service or the pension age.

The Department of Finance said county managers are likely to be subject to similar arrangements being considered by Environment Minister Phil Hogan.

Top civil servants are also subject to the new single public service pension scheme which bases retirement benefits on average career earnings rather than a final finishing salary.

Mr Howlin said the Government was concerned that senior managers in the public sector show leadership on the issue of pay.

"These actions will result in substantial savings for the taxpayers," he said.

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