THE EIGHT MILLION EURO MAN
The market value of top civil servant Robert Watt’s taxpayer-funded pension package could make him
DEPARTMENT of Health boss Robert Watt’s pension pot would be worth up to €8m if it had to be privately funded, experts have told the Irish Mail on Sunday.
Details of Mr Watt’s pension entitlements can be revealed after Taoiseach Micheál Martin recently defended the controversial decision to give the 52-year-old civil servant an €81,000 pay rise to run the Department of Health.
It emerged recently that he has received no fewer than three pay rises since he was appointed to the position last April.
And he is due a fourth in eight months, which will push his salary over €300,000 a year.
As he was recruited under the more generous terms and conditions that prevailed under the old system this means he is set to receive an annual pension worth €150,000.
The MoS asked the Department of An Taoiseach and the Department of the Public Expenditure for a copy of the government decision made in March 1987 which outlined
‘It’s beyond the reach of PAYE workers’
the terms and conditions for department secretaries general to which Mr Watt is subject.
Both departments declined to provide this paperwork. But using publicly available information a pension expert calculated Mr Watt’s pension could be equivalent to a private pension pot of €8m.
The Pension Store director Kevin Henry explained: ‘Assuming that Robert Watt retires at 60 on a pension that pays half his €300,000 salary, index linked at 2% with a provision that his wife would get 50% of his benefits on death, a private sector worker wanting to guarantee themselves the same lifetime benefits would need a net fund of €7,225,000.
‘As his wife is two years younger, an additional €150,000 would be needed to pay for the spouse’s benefit which would increase the required fund to €7,375,000.
‘If he were to retire at 55, an extra €1.5m would be needed to pay for the five additional years bringing the total to €8,875,000.
‘A pension fund of €7.2m is mathematically beyond the reach of PAYE workers. To get it, a 20-year-old would need to invest €6,400 every month for 40 years at 5% growth per year net of management fees.
‘A 30-year-old under the same scenario would need to invest €10,800 per month, a 40-year-old would need to invest €20,300 per month while a 50-year-old would need to invest €50,250 per month.’
Comparing the pension arrangements to the private sector, Mr Henry said: ‘The contribution rates in the private sector are generous but they’re capped. For example, the maximum a 20-yearold can invest in a pension under the current system is 15% of the €115,000 salary cap which is €1,437 per month but there’s not many 20year-olds on a salary of €115,000.
‘The maximum a 50-year-old can contribute is 30% of €115,000 which equates to €2,875 per month, so you can see the mathematical limitations.
‘Even if they could do all that, the maximum allowable fund for a private sector worker is €2m and anything in excess of that is taxed at 40%.
‘The reality is that the segment of the private sector with the most realistic chance of hitting that €2m threshold are business owners with a director’s pension plan.’
Mr Watt first joined the public service in the early 1990s when he started with the State’s job creation agency the IDA.
From there he went to the Department of Finance where he worked from 1993 until leaving in 2000 to work in the private sector as an economist.
However, eight years later he returned to the Department of Finance when he was appointed assistant secretary general.
Three years later, in 2011, he was appointed secretary general at the Department of Public Expenditure and Reform.
His former department declined to answer questions about Mr Watt’s pension entitlements when contacted by the MoS this week. A spokeswoman said: ‘Information on the pension entitlements of any individual is of a personal nature. Due to General Data Protection Regulations around personal data these figures cannot be provided.’
When Mr Watt was appointed to the then-recently formed Public Expenditure Department 11 years ago, then-minister Brendan Howlin confirmed he was one of four newly appointed secretaries general – the others being Martin Fraser, Jim Breslin and Brian Purcell – recruited under terms and conditions decided by government in 1987.
Mr Howlin also confirmed these new department bosses were not alone entitled to take early retirement, but they were also eligible for a golden handshake ‘special severance gratuity’.
When Mr Watt was appointed secretary general at Public Expenditure senior civil servants were entitled to annual pensions worth half their final salary.
On their death their surviving spouses would for the rest of their lives’ be entitled to half of their deceased civil servant husband or wife’s annual pension.
These pension entitlements have since been significantly changed so that civil servants are now only entitled to a pension worth half of their average salary throughout their careers, instead of their final more lucrative salary.
A report about Mr Watt’s appointment at the Department of Health was prepared by the Oireachtas Public Accounts and Finance Committees and it was submitted to Public Expenditure Minister Michael McGrath.
Both committees are awaiting a response from the minister.
But last night Dáil PAC member Catherine Murphy told the MoS: ‘It is the minister at the end of the day who signed off on this. One of the
Also eligible for ‘special severance gratuity’
‘It is the minister who signed off on this’
recommendations of the report that went from the Public Accounts Committee and the Finance Committee was that a pension package should be considered in conjunction with salary increases.
‘The pension can be very significant, and in this case it appears to be astronomical.
‘The backdrop this week is that there are people feeling that they’re struggling to put food on the table and there’s escalating prices. This kind of thing infuriates people.’