How politicians and civil servants hit the jackpot

THE three Ps – privilege, position and a pension – are at the heart of the row over the appointment of former attorney general Máire Whelan to the Court of Appeal. It would cost a 55-year-old judge in the Court of Appeal more than €3m to buy their pension in the private sector – enormous ‘hello money’ for Ms Whelan.

Taoisigh are able to appoint friends and supporters to premium positions for life with disproportionately large pensions. Cronyism bypasses the greasy pole that others must climb in order to claim the golden pension for top public servants.

Irish public life has been devalued by politicians’ addiction to nepotism in recent decades. Times have changed. This is a story told about the Department of Finance in the late 1950s, when the late TK Whitaker was secretary general. One day, the wife of a senior civil servant was seriously ill and he used the office phone to call the hospital. After hanging up, he took a stamp from his wallet and tore it up; it was to cover the cost of the call.

Nowadays, civil servants are among the most competitively acquisitive in the public service.

And when public servants retire, their relative wealth is an insult to pensioners in the private sector.

Comparing the cost of providing public service pensions as assessed by Revenue to the value put on the same pension by the Association of Pension Trustees of Ireland (APTI) reveals the giant advantage for public servants and suggests the Revenue’s estimates are far too low.

All of the APTI’s calculations below are based on pension payments made after full service in the public service. The difference is particularly stark in the case of pensions worth more than €2m. Tax advisers warn clients in the private sector that pensions valued at more than €2m are taxed at around 70%, because anything in excess of €2m is immediately taxed at the marginal rate of 40%, then subject to income tax and PRSI whenever it is drawn down.

For instance, the Revenue estimates that the former taoiseach Enda Kenny’s pension is worth €3.5m. But the APTI says that because of the tax situation, if he had paid for it as a private citizen it would have cost €5,168,875.

But the gap between Revenue and APTI valuations is striking even on much smaller public sector pensions. The Revenue says the pension of a TD who retires at 60 costs the Exchequer €1,485,000, but APTI says the same TD would pay €2,381,630 if he or she had funded it themselves.

The Revenue pegs the cost of the pension for a garda retiring at 60 at €1,122,000, but that garda would pay €1,799,454 if they were to buy the same pension privately.

AHIGH Court judge often begins their appointment later in life and the Revenue says their pension is worth €2,125,000 – but the APTI says it would cost €2,927,956 to buy it privately. The Revenue values a pension for a Hospital consultant who retires aged 63 at €2,400,000 but the APTI says it is worth €3,701,705.

The Revenue estimates the pension of a teacher who retires aged 62 to be worth €930,000, but the APTI values it at €1,447,466.

The pensions the APTI assesses for public service employees are typical averages and broken down by grades. And according to the Revenue, a senior public servant’s pension retiring at 65 is worth €1,450,000 – yet the APTI values it at €2,126,283.

The Revenue estimates the cost of a lower grade public servant’s pension who retires age 65 at €580,000 – but the APTI says the public servant would pay €850,514 for it in the private sector.

The taoiseach, TDs, High Court judges, hospital consultants and senior public servants’ pensions are all worth more than €2m.

The Government, acting on the advice of its senior civil servants, sets public service pension rates – and both politicians and their civil servants are beneficiaries of the extremely generous pensions. Is that not a conflict of interest? The APTI, which prepared the pensions calculator (which is scheduled to be published later this week)m is made up of indigenous Irish firms approved by the Revenue Commissioners to manage and administer Self-Administered Pensions and their investments.

I’VE never confined friendships to people who share my views and I considered Des Hanafin, the honorary president of the Pro-Life Movement who has died aged 86, a friend. He educated me about the hardship of rural life in Ireland after independence. Des swore fealty to Fianna Fáil, where he served as a fundraiser and senator.

A few years ago, Des was writing a memoir of his bingedrinking and hell-raising days as a young man and his later redemption, campaigning against divorce and abortion. I was flattered when he asked me to ghost write it, but I declined. Ten days ago his son, former Senator John, told me Des hoped to publish the memoir soon and that he had retained my suggestion for the title: From Beer To Eternity.

I ASSUME the Taoiseach will not withdraw the invitation for President Trump to visit Ireland simply because there is virtually no chance of the Donald ever arriving. Mr Varadkar clearly loathes Trump, so watch his body language at the annual White House junket next March. But will Leo still be Taoiseach and The Donald still President on St Patrick’s Day 2017?