Michael McGrath (Cork South Central, Fianna Fail)
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To ask the Minister for Finance the steps he will take to bring the pay and pension entitlements of current and retired senior bank executives at the covered institutions to more realistic levels in order to reflect the level of State support for those institutions and the state of the economy at the present time; and if he will make a statement on the matter. [50718/12]

Michael Noonan (Limerick City, Fine Gael)
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At the outset, let me state that the outrage expressed by the Deputy in his question is not the sole preserve of the Opposition. It is shared in equal measure by the Government. However, the Deputy will readily appreciate from the time his party was in office that the Government’s scope for action to claw back or reduce such pre-existing contractual entitlements is limited due to constitutional and legal reasons. These issues are well known to all members of the House. Indeed, some of the pay and pension entitlements he refers to were authorised by the Government which he supported. The Government shares the abhorrence of the public at these extravagant pensions but its scope for action to claw back or reduce such entitlements is limited due to constitutional and legal reasons. Pensions are generally taken to be deferred income and any action to reduce a pension in payment needs to be comprehensively founded lest it run the risk of being considered an unjust attack by the State on the property rights of individuals affected by the proposed legislation. The Government will seek to explore all avenues and options to address this issue subject to the necessary legal constraints.

The Deputy infers in his question that the Government has not taken steps to address this issue. This Government has introduced stringent controls on remuneration levels under the conditionality imposed arising from the round of State investment in the banks in summer 2011. We went much further than the previous Administration by including all elements of the pay package, bar pension contributions, under the €500,000 cap. This is being honoured, as proven in the case of new CEO appointments at AIB and PermanentTSB respectively. No breaches of the cap have been allowed by this Government, unlike the previous policy where exemptions were authorised and the Deputy is now asking me to repair the damage caused by breaches of those caps.

Additional information not given on the floor of the House.

This Government has also committed to conducting a review of remuneration policies and practices at the covered institutions. The purpose of the exercise is to review thoroughly all remuneration practices at the covered institutions with the object of simplifying remuneration and compensation structures, discouraging excessive risk-taking and to better align pay and reward to long term value creation.

I expect the consultant’s report to be delivered by year end whereupon consultations with the various stakeholders will commence. As I have said previously, I fully recognise that there is a real public interest in the levels of remuneration at the covered institutions and have committed to placing the details underpinning the review into the public domain.

Michael McGrath (Cork South Central, Fianna Fail)
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I do not want to get into the blame game. The Minister is aware that some of the current arrangements were put in place before the State intervened. Other arrangements were approved by the previous Government but this Government has also approved arrangements-----

Michael Noonan (Limerick City, Fine Gael)
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Always within the cap.

Michael McGrath (Cork South Central, Fianna Fail)
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-----as was revealed last week in respect of the chief risk officer of IBRC-----

Michael Noonan (Limerick City, Fine Gael)
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He is within the cap.

Michael McGrath (Cork South Central, Fianna Fail)
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-----who has a package of over €500,000. People want to know what we are going to do collectively to deal with the issue. The Minister cited legal and constitutional impediments. People are rightly angry at the level of pay and pensions paid to retired and serving bank executives. He has not given an indication on what he intends to do about the issue, other than a general statement about exploring every avenue. Will he examine whether he can amend the Financial Emergency Measures in the Public Interest Acts or credit institution stability legislation to give himself powers to intervene on the ridiculous sums of money being paid out?

Michael Noonan (Limerick City, Fine Gael)
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I know the Deputy does not like to be reminded of the past but by and large these extravagant pensions and payments are the result of agreements entered into by the Government which he supported. They are Fianna Fáil arrangements. I will wind them down if I can because I, too, am angry about what I inherited. He is like the boy who ran around the streets asking who will put out the fire when his own family burned the building. He should not point the finger of blame at his successors.

Michael McGrath (Cork South Central, Fianna Fail)
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I am asking what he is going to do about it.

Michael Noonan (Limerick City, Fine Gael)
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AIB has already reduced pay significantly. I can supply the Deputy with the details. It has been successful in introducing pay reduction schemes and it has written to those who are in receipt of extravagant pensions to request them to return voluntarily part of their payments. One individual has already made a significant contribution in terms of reducing his pension. IBRC's pay bill has decreased significantly. I wrote to its chairman to ask for board agreement on imposing a pay reduction of 15% but I received a reply stating the board did not think it wise to take that course of action and reciting reasons for this opinion. As far as I am concerned, that is only the first exchange of correspondence and we will pursue the issue further with IBRC.

Last June I appointed Mercer to conduct a complete review of all pay and emoluments in the covered institutions precisely because I share the emotions expressed by the Deputy. I had the information and, as far as I am concerned, the payments are far too high. They are ridiculous in light of what some families have to survive on. I will have a report on that review at the end of the year and I will act on it.

Michael McGrath (Cork South Central, Fianna Fail)
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It is clear that the bankers have an entirely different expectation of the review. When IBRC appeared before the Committee on Finance and Public Expenditure and Reform, it expressed the hope that the review would lead to pay increases because it finds it difficult at present to attract and retain the right staff.

Will the Minister agree to taking legal advice on the aforementioned legislation to determine whether he can intervene in respect of pay and pensions? He started his review in April of last year and then he wrote to us on 18 October that he has now appointed Mercer. What happened to the review that was ongoing for 18 months?

Michael Noonan (Limerick City, Fine Gael)
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I am quite aware of the implications of the legislation and I have set out for the Deputy my approach to the matter. In the first instance I will engage with the covered institutions to achieve the policy ends that have been set out. We will see how that proceeds. I do not know what the IBRC executives said before the committee but, as they say down my way, I hope it stays fine for them.