Clare Daly (Dublin Fingal, Independent)
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318. To ask the Minister for Public Expenditure and Reform his views on the severance package of €1.119 million received by a senior civil servant between 2011 and 2013; and his further views on other severance packages of over €500,000 paid out during the years 2010 to 2016. [29875/16]

Paschal Donohoe (Dublin Central, Fine Gael)
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The severance value referred to by the Deputy relates to a case quoted in the report on severance payments in the public service published by the Comptroller and Auditor General (C&AG) and recently reviewed by the PAC.  The value cited is the capital value assigned to an entitlement to retire early and an award of added pension years calculated by the C&AG's actuarial consultant based on certain assumptions including the value of pay parity pension increases and life expectancy.

As is evident from the fact that only one such case was identified by the C&AG between the years 2011 to 2013, the availability of high value severance terms to civil servants is highly unusual.  The circumstances of this case were that while the official's substantive grade in his parent Department was Principal Officer, he had served at Assistant Secretary level for about 13 years.  He was awarded 7.66 added years to bring his total service to 40 years so as to avoid the prospect that the entire superannuation benefits would fall to be calculated at the higher salary point.

The cash value of the added years' award is a pension of €10,292 p.a. and a once off gratuity of three times that annual pension.

The figure of €1,119,000 in the report comprised valuations of €454,000 in respect of added years and €665,000 in respect of early payment of pension, with the values of both of these elements calculated by a consultant actuary. 

The capital value calculation does not mean that the retired official will receive €1.119 million in cash payments.  For example, the calculation assumed annual pay increases of 3.5%. In reality, there have been no increases in payment since the pension commenced and 3.5% p.a. increases are highly unlikely to be paid in the short to medium term. Also, there is a large degree of uncertainty in relation to actual life expectancy in individual cases.

In the civil service, the potential for high value severance terms generally only applies in the case of Secretaries General under what is known as the old TLAC terms which were withdrawn for new appointees in October, 2011.  These legacy terms consist of the following:

- Option of offering the person an alternative public service post, or a position in an international institution, if under age 60 on the expiry of their term of office.

- If no alternative post is offered or if they are over 60 on the expiry of their term, the following is provided:

1. Immediate payment of pension and lump sum, without any actuarial reduction

2. Added notional service up to a maximum of 10 years or balance of service to age 65 (capped to ensure that the pension can be no more than half pay).

3. Severance payment of 6 months' salary.

A Government decision of October 2011 set out revised arrangements for Secretaries General appointed since November 2011. Under these arrangements:

- No pension is payable before minimum pension age.

- There are no added years of notional service.

An alternative post will be offered where a Secretary General, who prior to appointment was a civil servant, does not have 40 years of service and has not reached minimum pension age.

A severance payment of up to 1 year's salary where an individual is not of minimum pension age and has not been offered an alternative post.

- No severance is payable where an offer of an alternative post is refused.

There are six Secretaries General who retain an entitlement to the "old" TLAC terms.  Three of these are due to complete their terms in 2017 and a further three in 2018.  The value attaching to the TLAC terms will vary from case to case depending on the specific circumstances applying at each retirement.