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Government should not have approved Dermot McCarthy Special Severance Gratuity

8 September, 2011 - by Mary Lou McDonald TD

Sinn Féin Public Expenditure and Reform Spokesperson Mary Lou McDonald TD has today called on Minister Brendan Howlin to step in and end his Government’s practice of granting special severance gratuities to senior civil servants. The Dublin Central TD also described the possible appointment of former Secretary General Dermot McCarthy as the state’s Ambassador to the Vatican as completely inappropriate.

Deputy McDonald said:

“Recently retired Secretary General to the Department of An Taoiseach Dermot McCarthy received a bumper €713,000 pension payoff in July. Following public anger at the scale of the payment the Taoiseach and his Ministers have hid behind claims of contractual arrangements that could not be undone.

“As part of his pension pay off Dermot McCarthy received a special severance gratuity payment of €142,670. However the Superannuation and Pensions Act of 1963 states that ‘the Minister, if in his discretion he so thinks proper’ can grant such a payment to a civil servant. This payment could only have been paid to Dermot McCarthy on the instruction of the Minister for Finance or Public Expenditure and Reform.

“In addition Dermot McCarthy has received his full pension at age 57 without any actuarial reduction despite not reaching the standard pension entitlement age. Again this is a decision the Government signed off on under the Superannuation and Pensions Act of 1963.

“Secretary Generals, if the Government agrees, can be allowed the option of early retirement with enhanced pension benefits. The enhanced benefits consist of an award of up to ten added years and a special severance gratuity of six months’ salary on the terms specified in Sections 6 and 7 of the Superannuation and Pensions Act, 1963.

“The Government has promised legislation to deal with excessive senior public sector pensions and to end the practice of added years however these changes will only apply to new entrants. Methods must be looked at to tackle the excessively high pension arrangements for existing public and civil service top dogs.

“Increasing the tax rate applied to the balance of lump sum payoffs is just one option. However the Government can refuse to grant the special severance gratuity payment of six months’ salary as the legislation clearly states that such payments are to be applied at the Government’s discretion. In addition, the Government can refuse to sign off on any notional service and the non-application of actuarial reduction to benefits.

“There have been reports in today’s media that Dermot McCarthy is being considered as the next Ambassador to the Vatican. If this appointment comes to pass it will be an even greater slap in the face to struggling families and the unemployed. The mere suggestion that any Government Minister would deem it appropriate to give such a high paid job to a retired civil servant in receipt of a €713,000 lump sum pension payoff is completely inappropriate and reeks of cronyism.” ENDS

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