Wednesday 21 November 2018

Shane Phelan: Nest egg will stick in the craw of those affected by the crash

Irish law provides that a pension does not vest in the official assignee or a bankruptcy trustee if it is not accessible for a period of at least five years after the adjudication of bankruptcy. Stock Image
Irish law provides that a pension does not vest in the official assignee or a bankruptcy trustee if it is not accessible for a period of at least five years after the adjudication of bankruptcy. Stock Image
Shane Phelan

Shane Phelan

It is no secret some former senior bankers enjoy large pensions.

Equally, the size of the €4.4m pension pot amassed by David Drumm prior to his exit from the former Anglo Irish Bank is not terribly surprising.

It will, however, undoubtedly stick in the craw of anyone affected by the financial crisis.

Drumm was the man at the helm of Anglo when it all went wrong. As Anglo faltered in 2008, he was telling a colleague they needed to go down to the Central Bank "with our arms swinging" to demand cash.

In one foul-mouthed excerpt from the Anglo Tapes, he could be heard saying: "Get into the f***ing simple speak: 'We need the moolah. You have it. So you're going to give it to us and when would that be?' We'll start there."

The ultimate cost of bailing out Anglo and Irish Nationwide, the two failed institutions which became IBRC, came in at €35.8bn.

The bill will be paid for many generations to come.

So the thoughts that Drumm will be able to enjoy a comfortable retirement when he completes the six-year prison term he is presently serving will be discomfiting for many.

But the fact of the matter is Drumm is entitled to the same pension protections as any other Irish citizen who becomes bankrupt.

Pensions are considered an asset and must be declared in a bankruptcy, in the same way that cash or property would be. However, Irish law provides that a pension does not vest in the official assignee or a bankruptcy trustee if it is not accessible for a period of at least five years after the adjudication of bankruptcy.

At just 51, Drumm has been able to avoid this potential pitfall.

A financial expert who examined Drumm's circumstances told the Irish Independent there was nothing to stop him from cashing in some time in the near future if he wishes, though. One option open to people aged over 50 is to apply for early retirement and transfer the pension into an approved retirement fund.

He could access a certain amount as income, as long as he pays tax on it.

That is not to say he is out of the woods as far as the pension is concerned.

The topic of his pension came up during Drumm's successful application for criminal legal aid ahead of his trial for conspiracy to defraud.

Prosecution counsel Mary Rose Gearty SC said she didn't know what would happen to Drumm's pension but that there were "related civil actions" in progress.

"If his pension is drawn down, there are people waiting," she said.

It would not be surprising to see IBRC, which Drumm owes millions, at the head of the queue.

Following Drumm's extradition from the US, it withdrew from pursuing those debts in the Boston courts, stating it would be re-initiating efforts to collect on its claims in Ireland.

Irish Independent

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