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News : Irish Economy Last Updated: Sep 7, 2011 - 3:09 PM

Ireland's top civil servant retires at 57 on €713,000 package and future cost of millions
By Michael Hennigan, Founder and Editor of Finfacts
Sep 6, 2011 - 5:29 AM

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Ireland's top civil servant Dermot McCarthy retired this summer on a €713,000 package and a future cost of millions. He turned 57 last June.

McCarthy was secretary general to the Government, since January 2000 and additionally secretary general of the Department of the Taoiseach since July 2001. He was the main civil servant liaison in the so-called partnership process  and was in charge of what was called 'benchmarking,' which was a roundabout way of giving public servants a special pay increase that averaged 9%. There were 'efficiency' targets to be met as part of the process but civil servants themselves considered them a joke. 

In Oct 2007, almost 3 months after the onset of the international credit crunch, a higher remuneration body recommended that McCarthy get a special 25% pay hike.

In an article, Where is the Outrage? Gombeenism thrives at home while in Paris, OECD staff work on proposals for Irish public service reform, we said: "Super VIP Benchmarking has provided additional benchmarking increases over the sham benchmarking that every politician, civil servant and retiree received some year ago. The additional Super VIP Benchmarking has been provided by a mechanism known as the Buckley reports. This year, the secretary-general of the Taoiseach's Department has got one of the biggest hikes - - 25% - - he will no doubt be in charge of drafting the pleas for pay restraint that will inevitably emanate from his Department in the coming year. The Taoiseach's chief flunkey/political adviser Gerry Hickey gets paid 210,141- - a doubling in ten years compared with a 30% rise in the Consumer Price Index.

The Dublin City Manager got a whopping 36.2% pay rise of €66,000, going up from €184,000 to €250,000 - -  there will of course be the béal bocht for the lower paid in the Corpo."

Following a public outcry, officials such as the Dublin City Manager, were given a 5% pay rise.

John Drennan wrote in The Sunday Independent in respect of the pay increases of 15% that were recommended for the Cabinet: "Of course in situations such as this our politicians love to use that well-worn phrase about paying peanuts to get monkeys. However, a look at our Cabinet suggests that even though we are paying them loads of cash, we're getting a lot of Stans and no Jacks.

If they were not ministers, Micheal Martin, Mary Hanafin and Noel Dempsey would be school teachers whilst Brian Cowen and Dermot Ahern would be nothing more than small town solicitors.

Ms Harney may very well be the great defender of the private sector but our heroic scourge of dirty nurses and greedy hospital cleaners has managed to avoid the delights of working in the private sector for her entire career.

As for Bertie, if he had not being busy saving Ireland our Taoiseach would now be a balding harried accountant in the Mater and no, the rest of the CVs aren't particularly inspiring either."

C'est la vie!

In addition to an annual pension of €142,670, McCarthy received a once-off lump sum of €428,011. He also got a full year's pension as a special severance payment of €142,670. The overall package was worth €713,000. Details of the package were released to RTÉ under the Freedom of Information Act.

The lump sum is based on 1.5 times final salary; even though McCarthy’s annual salary had fallen from €285,000 to €208,000 because of pay cuts in recent affecting high-earning public servants and ministers, his final salary for pension purposes remained the original figure of €285,000, giving him the lump sum of €428,000.

Handy going for a man who unlikely ever had to make a consequential decision himself, in his professional life.

McCarthy paid tax on the first €200,000 of the €428,000 but following changes in the Finance Act 2011 also paid tax of 20% (or €45,600) on the remaining €228,000. The net worth of the lump sum is €382,400.

Unless the existing pension system is changed, any pay increases successors in his position will get, he will get the same increases on his pension.

The current system is a shameful one. It was devised by politicians and senior civil servants who are the main beneficiaries.

People with guaranteed job security from the State, in addition are paid pay premiums over counterparts in the private sector and have an unfunded very generous pension system, paid by workers in the private sector, who typically have none.  

Full text of the letter from the Department of Public Expenditure and Reform to RTÉ News:

Dear Mr Hunt

I refer to your request under the Freedom of Information Acts 1997 and 2003 for details of the severance pay and pension arrangements for Mr Dermot McCarthy, retired Secretary General, Department of the Taoiseach.

I am setting out below the details of the severance and superannuation arrangements that applied to Mr McCarthy, which are based on the standard Top Level Appointments Committee (TLAC) terms applied to Secretaries General in accordance with Government decision of 5 March 1987.

Pension ... ... €142,670.50.

Lump sum ... ... €428,011.50.

Special Severance Payment €142,670.50.

The pension was based on Mr McCarthy's salary prior to the salary reduction under the Financial Emergency Measures in the Public Interest (No.2) Act 2009 (€285,341) and 40 years service (including 67 days additional notional service). An annual reduction of €13,980.49 is applied to the pension under the Financial Emergency Measures in the Public Interest Act 2010. The lump sum was subjected to taxation in accordance with new pension lump sums provisions in the 2011 Budget/Finance Act.

These superannuation arrangements are subject to the abatement terms that apply to Secretaries General superannuation in the event of them resuming employment in the Public Service.

Yours Sincerely

Tony Jordan
Pensions Section
Department of Public Expenditure and Reform

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