That Irish Nationwide Fingelton pension plan… Nice work if you can get it… March 27, 2009Posted by WorldbyStorm in Economics, Economy, Irish Politics.
Fair dues to Róisín Shorthall, Labour TD and Spokesperson on Social Family Affairs, who makes a very important point that should not be lost in the current situation when she writes in the Irish Times in response to a piece by Vincent Browne on ‘balance’ in the Budget, that:
I wasn’t on The Week in Politics on Sunday. I was, however, on Questions and Answers the following night, where I made the point that it was indefensible that Michael Fingleton was getting a €27.6 million pension to which he probably didn’t contribute, while at the same time a public servant on €20,000 was being asked to pay a pension levy on his or her pension. Equally, I said it was disgraceful that the taxpayer probably funded several millions of Mr Fingleton’s pension as a result of Government policy allowing big tax reliefs on pensions for the rich.
There are two core issues she raises here. Firstly that the sort of pension in the commercial sector which Fingleton took is open to massive subsidy from the public purse, and as she notes, due to the fact that these pensions are provided for mid and higher level employees/employers in the main they are skewed in terms of coverage to the better off who can avail of the higher rate of relief on their contributions. Relief is such a neutral term, isn’t it? But it does of course cover the basic truth that those are monies that would otherwise find their way into the public coffers.
Secondly she points to the basic injustice of those on 20,000 euro wages being asked to pay a further levy on their pension (I have no problem, incidentally, with a graduated progressive levy that encompasses all state employees and who knows, perhaps the Budget will bring one in).
There is a further injustice. What of those who benefit from neither public nor private pensions but are reliant on the state pension. Well, as it happens the state (contributory) pension is the best I can look forward to in the future so, what princely sum is given to those of us who will be fortunate enough to make it to retirement age (66 – no early retirements here or golden handshakes while you’re in your mid 50s). Here are the figures from citizens info website.
State Pension (Contributory) payment from January 2009:
Column 2: Rate per week
Column 3: Increase for a Qualified Adult (under 66)
Column 4: Increase for a Qualified Adult (aged 66 and over)
48 or over €230.30 €153.50 €206.30
20 – 47 €225.80 €153.50 €206.30
15 – 19 €172.70 €115.10* €154.70*
10 – 14 €115.20 €76.80* €103.20*
€230.30 a week. Which is a grand total €11975.60 per annum. There are some additional benefits available (although those such as free travel look to be on shaky ground). But that is the size of it. Now, I don’t wish to be morbid, but say taking these figures from the CSO to be more or less applicable for today, the average lifespan of a male is 75.1, and more happily for females 80.3 (or perhaps not, dependent on quality of life in our wonderful welfare state). So let’s round it up to 76 and 81 and you’ll see that the overall average expenditure on a state pension for a man is €119,756 and for a woman is €179,634. http://www.cso.ie/newsevents/pr_lifetable0103.htm
Let’s consider once more that presumably non-contributory pension Mr. Fingelton received. We know that it is open to tax relief at the higher rate, but I’d be hesitant about suggesting that over 40% of the sum was effectively paid for by the state. So let’s take Róisín Shorthall’s less categorical ‘several millions’. Indeed, let’s take
It’s not that simple, there are other factors, but nor is it that difficult either. If we take a nominal figure, say €2 million we can see the remarkable fact that you could fund the average state expenditure for a male pension 16 times in that figure and a female pension 11 times. But of course that isn’t the figure that tax relief was availed on. It is probably a quantity many times higher. And the overall €27.6 million is the equal of 153 women and 230 mens pensions.
Now 230:1 strikes me as excessive. Actually 23:1 strikes me as excessive.
Still, there are always those who will defend this situation, or attempt to make it seem less stark than it is.
Finance Minister Brian Lenihan [who] last night revealed the pension pot of Irish Nationwide boss Michael Fingleton is “substantially less” than initially thought.
Mr Lenihan signalled Mr Fingleton’s pension plan had been hit by the dive in stock markets values.
Mr Fingleton (71) sparked an avalanche of controversy this week after it was revealed he would receive a €27.6m payment when he steps down from the helm after 38 years’ service.
And it was revealed €7m of this could be tax-free because private sector workers can take 25pc of their pension tax-free when they retire.
But last night Mr Lenihan attempted to dampen down the controversy by suggesting it had been hit hard in the wake of plummeting stocks.
He’s been hit hard? He has? Hit hard is working your ass off across a lifetime to spend your last decade eking out an existence on a basic of €230. That’s the living definition of ‘hit hard’, and with all due respect to the Minister, to even approach the term, let alone use it, indicates a near Olympian detachment from the reality that perhaps the majority of people in the state that he is a representative of live in. And remember, Lenihan, so it is said, is part of the more leftish inclined group within FF.
Menwhile note the €7million at 25pc. I’m trying to work out whether that is inclusive or exclusive but either way taking recourse in my trusty Excel spreadsheet it will hardly be a surprise to see that 39 women and 58 men could be funded in their pensions.
Is any man or woman worth that? Is the task they undertake of such epic proportions that they, of necessity, should have sums that stagger the imagination passed across to them. And what of the opposite dynamic. How does such generosity and self-indulgence operate in terms of diminishing those of us who will never ever come close to this sort of wealth? What does it say about how little everyone else is valued – their lives, their experiences, their worth as people?
A final insult to add to the injury?
It is believed that even if the fund has dropped to €15m because of the crash in equity values, Mr Fingleton could take €3.75m out of it tax-free.