How politicians can navigate the rules to maximise generous tax-free pension pots

UNDER the old Oireachtas rules governing pensions, outgoing TDs and ministers were entitled to an annual pension worth half their final salary plus a generous taxfree six-figure lump sum.

However, these rules were revised after 2011 amid anger over the then mass resignations of former Fianna Fáil TDs in the wake of the economic crash.

Under the current rules, politicians elected to the Dáil or Seanad before April 2004 must be 50 years old in order to qualify for a full pension and lump sum.

But if they do not want to wait until they are 50, they can apply as soon as they are 45 for a reduced pension package.

Politicians elected between April 2004 and September 2013 must reach the age of 65 before they can claim full pension entitlements.

They can decide to opt for an early retirement package any time between the ages of 55 and 65, but this could reduce the value of the pensions by around 40%.

Those elected since September 2013 must wait until they are 66 in order to qualify for a generous tax-free retirement lump plus an additional annual pension. But they can apply for a reduced payment once they are 55 years old.

All of these payments are tax free, in comparison to severance payments long-serving TDs can claim.

Under this scheme, outgoing politicians who have not reached normal retirement age are entitled to a maximum of 14 months of their final salary.

This is made up of an immediate lump sum worth two months of their final salary and, depending on their years of service, are also entitled to up a year’s salary paid in monthly instalments.