An Independent Trustee Company study reveals costs up to €35,000 a month to fund each Minister’s pension.
According to the report, whilst a self-employed entrepreneur has to toil for 40 years and generally make significant and often unaffordable monthly contributions to their pension funds, Ministers only have to serve 10 years in the role to achieve pensions worth up to €6,870,504.
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| The Scales of Inequity |
Tommy Nielsen comments that “presently, a Minister who has served 10 years is entitled to a pension of 60% of his salary, which is applicable even if that Minister were to retire from his position at 50 years of age. For a private sector worker to deliver such a pension, they would need to build up a pension fund of €6,870,504. This would require pension contributions of approx. €35,149 every month. This figure is effectively what it costs the taxpayer to fund these Ministerial pensions - on top of a Minister’s salary which is just under €200,000 and their expenses which have been subject to such media interest”.
Independent Trustee Company’s study looks at the relative value of these benefits and the comparative cost if these were provided under a regular private sector pension.
Ministerial Pension Benefit | |||||
Age of Retirement | New Scheme Pension Entitlements | Salary | Capitalised Cost @ CPI escalation | Est. Monthly contribution required | |
Minimum | Maximum | Maximum | |||
50 | 20% | 60% | €191,000 | €6,870,504 | €35,149 |
55 | 20% | 60% | €191,000 | €5,787,879 | €29,610 |
60 | 20% | 60% | €191,000 | €4,786,967 | €24,490 |
65 | 20% | 60% | €191,000 | €3,875,550 | €19,827 |
Notes: | |||||
Based on Annuity Quotes as at 11.10.2010 | |||||
Assume Male, Married (with 50% spouses pension) | |||||
Salary of €191k w.e.f. Dec 2009 | |||||
If Ministers’ pension benefits were to be subject to benefit-in-kind, it would wipe out their entire salary and they would receive a bill rather than a salary every month.
Entrepreneurs Pension Benefit
In comparison a self-employed entrepreneur must fund the entire cost of the pension benefit out of their own funds – subject only to the benefit of tax relief on contributions.
In comparison a self-employed entrepreneur must fund the entire cost of the pension benefit out of their own funds – subject only to the benefit of tax relief on contributions.
There is a stark difference between the two benefits with the Minister being provided with a guaranteed benefit which is more than 10 times what an entrepreneur paying maximum contributions can hope to get in unguaranteed format.
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This clearly illustrates what we probably always knew. It begs the question "who's serving who"? Until those we put our trust in to lead and govern us actually understand that they cannot ask us to make sacrafices in the name of equity, fairness and economic survival unless they themselves take personal actions that give them the moral authority do so. Their pension, as is illustrated here, is a classic case in point. These types of issues need more publicity rather than, for example, whether there should be a pooled system of or individual ministerial cars
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