Tony Killeen (Clare, Fianna Fail)

I thank the Senator for raising this issue. The local government modernisation programme has seen major improvements in the range and extent of the financial and other supports available to local elected members. These include a representational payment scheme and gratuity arrangements for retiring councillors. Both were introduced following extensive consultations with the three local government associations.

The representational payment is linked to salary and stands at €15,330 per annum for county and city councillors. The scheme gives practical recognition to the civic contribution local elected members make to their community. It is not meant to be a salary nor is it intended to remove the important voluntary community service aspect of the work of councillors.

In regard to gratuity arrangements, a number of superannuation options for local authority members were examined following the enactment of the Local Government Act 2001. The option considered most appropriate was the retirement gratuity arrangement which was subsequently introduced in 2002. I will briefly outline some of the main features of these arrangements for the benefit of the House. The maximum gratuity is three times the rate of representational payment on the member's date of retirement and is payable after 20 years service. The maximum service allowable is 20 years with a minimum qualifying service of three years.

The gratuity is automatically paid on retirement at or after the age of 50 but payment before age 50 may be made where retirement is due to permanent infirmity or where the member dies in office. In the case of retirement due to permanent infirmity, added years may be allowed. Where a person ceases to be a member before the age of 50, whether voluntarily or as a result of failure to be re-elected, the gratuity will be paid when the person reaches age 50 and will be based on the representational payment applicable at that point.

I am satisfied there is no basis for changing the existing arrangements for a number of reasons. First, the maximum gratuity, payable after 20 years service, compares favourably with the yield from a defined contribution pension plan, based on a 10% employer contribution and a 5% member contribution, and standard public service pension scheme entitlements for a person with 20 years service. Second, the gratuity arrangement provides for universal coverage. A survey of pension arrangements for councillors in other countries showed that in most cases, only certain councillors, usually full-time or employed by larger authorities, are covered.

The gratuity arrangements are free, fair and flexible. They are free because members are not required to contribute. They are fair in the sense that they give coverage to all elected members, unlike in other countries, and give a level of benefit which compares favourably with standard public and private sector pension arrangements. The arrangements are flexible in that members receive the benefit in the form of a gratuity which is tax free in most instances and which they can use, if they wish, to purchase a personal pension, whether by way of an annuity, PRSA or otherwise.

I am satisfied that the retirement gratuity is the superannuation arrangement best suited to the particular circumstances of local authority members. Accordingly, the introduction of a local authority-provided pension for members is not considered appropriate.