Bankers’ pay cannot be cut, says Noonan

The Government cannot legally reduce the salaries of bankers who were awarded contracts before it came to power, the Minister for Finance has insisted.

Speaking in Limerick yesterday Michael Noonan claimed reports that bailout money has been used to help fund the pensions of former senior bank staff were “incorrect”.

“The story is incorrect as it is written. This arose from a doorstep last Thursday at the Conrad Hotel. There was 40 or 50 of your colleagues present and the story got a bit of a rewrite in the Sunday Independent this morning.”

“The answer was that pensions that were arranged prior to the Government coming into office were between the government and the banks. It is not legally possible for the new Government to put them aside but that has been said several times before — there is nothing new in that,” he said .

Mr Noonan insisted caps have been applied to bank salaries since his Government took office.

“What is happening is that all the bank executives are being hired below the level set for their salaries and their pensions will be in proportion to their new level of their salaries,” he said.

Mr Noonan said Fine Gael opposed the pensions and salaries of the country’s top earning bankers, including former AIB chief executive Eugene Sheehy, when they were in opposition.

“That was set (pay and pensions of senior bankers). It was a legal agreement and I can’t set legal agreements aside….If a previous government made a legal agreement on redundancies of senior executives from the banks, it is not legally possible for this Government to set that aside. That is our problem — much as we would like to do so.”

Mr Noonan added that you can’t retrospectively change the law to affect people.

Asked should bankers return their high pensions to public coffers, he said it was “up to themselves”.

As regards an increase in the Universal Social Charge (USC) for high earners, Mr Noonan said people will have to “wait and see” until the budget is announced.

Meanwhile, the Minster for Finance has said the analysis of ministers’ pensions, which found it would take more than €36m to fund pensions for the 15 Cabinet members at current market rates, was “based on a series of assumptions”.

The Irish Times priced how much annuities would cost today for the pensions that ministers will be entitled to at the end of this Government’s term, should they all retire at that date.

The analysis found that the 15 members of Cabinet will have pension entitlements by the end of the Dáil term that would cost €36,301,205 if bought in the market today.

The figures are based on the Government serving its full term to Mar 9, 2016.

The Taoiseach Enda Kenny will be entitled to an annual pension of €100,000 by that date. For a married man of Mr Kenny’s age to buy such a pension today would cost €3,290,720.

When asked about the analysis in Limerick yesterday Mr Noonan insisted he had no plans for retirement yet.

“I read the story and I thought it was a very interesting story.

“Obviously they made a series of assumptions and I don’t know whether the assumptions are correct or not,” he said.

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