Kieran O'Donnell (Limerick City, Fine Gael) | Oireachtas source

I thank Senator Hoey for raising the important matter of the retirement gratuity payable to local authorities. It is a matter of which I am acutely aware. It came up when I was taking part in a session on local government on Wednesday, 28 June. More particularly, I have spoken at length with the AILG, the Local Authorities Members Association, LAMA, and councillors nationwide. I travel to all the local authorities, so I am very aware of it. I want to thank the Members for their consistently strong support for local government and councillors. It is important that the vital service given by councillors in their communities is appropriately recognised. I understand the phenomenal work councillors do. It is something about which I am acutely aware.

Unlike the Members of this House, councillors are not part of any single public service pension scheme. The current arrangements for the non-contributory lump sum are unusual in a public service context. I want to give a background to this, because we need to do a proper body of empirical work on this, and I am working with my officials on this. The terms for gratuity payments to councillors are set out in regulations. In essence, retired councillors receive a payment currently worth up to a maximum value of €76,664, subject to their period of service. The gratuity becomes payable once councillors reach the minimum age of retirement which, under the scheme, is 50 years. The calculation of the gratuity is based on the representational payment that was in place when the principal regulations were given effect in 2002, which at that time was worth €11,000 per annum.

Over the years, the representational payment has been adjusted in proportion to any adjustments made to the salary of a Senator. The adjusted representational payment is currently worth €19,166 and the maximum gratuity payment that is payable to a councillor after 20 years of service is worth 400% of that. This would give a maximum gratuity of €76,664.

Where persons cease to be councillors before the age of 50, the gratuity will be preserved until they turn 50, and will be calculated on the basis of the adjusted representational payment on that date. It is the case that the gratuity is not currently linked to the councillors’ current annual remuneration payment of €28,145 per annum, as Senator Hoey has noted. The Government's decision of 2021 to reform the financial support package payable to councillors did not provide for this. Neither did the Moorhead Report recommend any increase to the gratuity. This was before my time as a Minister of State. However, I am acutely aware of this situation, which has been raised with me by the representational bodies, the AILG and LAMA, as well as councillors across the length and breadth of Ireland.

I have instructed officials in the Department of Housing, Local Government and Heritage to review the situation, which we have been doing for a period of time, to set out how the councillors’ retirement gratuity may be more closely aligned with their current annual remuneration package. I have said this to both the AILG and LAMA. I want to do a proper body of empirical work that does justice to this request. It is something I take very seriously. I note that any adjustment to the existing terms of the retirement gratuity for councillors will require new regulations made with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform.My officials are currently liaising with officials in that Department in this regard and anything I bring forward will have to be agreed by it. I thank the Senator for raising this important matter. It is one of the overall issues for councillors to which I am giving serious attention.