Documents released under FOI have revealed how Irish Water also had to pay for external legal advice over arrangements for John Tierney to retire on full pension at age 57 and with a €100,000 severance payment.
Speaking notes prepared for Housing Minister Eoghan Murphy explained that the retirement deal could not be sanctioned without sign-off from him and two other ministers.
A list of “redline issues” was prepared for Mr Murphy included an explanation of how the retirement package meant an internal pension scheme had to be amended and a new severance gratuity scheme created.
Mr Murphy was told to prepare for Opposition comment, suggesting he would be asked about the “extraordinary high costs involved in the establishment of Irish Water”.
The speaking notes said that the department should also be prepared for questions on whether the State would be “vulnerable to any potential legal challenges”.
The Department of Housing and Department of Public Expenditure had on several occasions refused to release documents relating to Mr Tierney’s pension.
However, the documents were eventually released and shed light on why the pension package had to be approved and new rules introduced to allow for it.
A letter from John McCarthy, secretary general of the Department of Housing, to Robert Watt, his equivalent in the Department of Public Expenditure said there had been a “difficulty in relation to the retirement terms”.
It explained how Mr Tierney had ended up in the pension scheme of Ervia, the parent company of Irish Water, but that it did not allow for the retirement terms he believed he was entitled to.
The letter said: Dr Tierney considers, and Ervia, following legal advice accepts that it was intended under the terms of his contract … that his [pension] arrangements would be the same as operated under the Local Government Superannuation Scheme.
Effectively, this means that he would be paid his pension without actuarial reduction and a severance payment of €100,000 on completion of his contract.
It said the changes needed to the Ervia scheme could not be approved without sign-off from three different departments: Housing, Communications, and Public Expenditure and Reform.
A briefing for Public Expenditure Minister Paschal Donohoe said the only person who would benefit from the changes would be Mr Tierney.
A separate briefing document from the Department of Housing said the Attorney General also recommended that Mr Tierney’s pension deal be agreed upon.
The Department of Housing said the severance and pension package were “justified as they were part of a contractual commitment”.