TD asks why civil service did not notice €1.4m payment gap in just 19 employees' pensions

Galway TD Catherine Connolly noted at the public accounts committee that the pension payment shortfall only emerged after a Comptroller and Auditor General probe rather than from internal checks and balances. File picture: Brian Lawless/PA

Concerns have been raised as to how the Government’s oversight controls missed an enormous public sector pension payments gap, after it emerged that in just 19 cases a liability of €1.4m had accrued.

Addressing the public accounts committee, Bernie Kelly, the chief executive of the National Shared Services Office, which fulfils the civil service’s payroll function, said that she expects that the figure of 13,000 affected civil servants or ministers floated by minister for public expenditure Jack Chambers is unlikely to come to pass, with the number set to be a deal lower.

The issue, which saw incorrect calculations used to tally the tax liable on the pensions of some retired senior civil servants whose pension had passed a €2m threshold, was only caught after a Revenue spot audit was performed on the NSSO’s figures earlier this year.

Ms Kelly told the PAC on Thursday that the initial Revenue check had led the NSSO to look at 23 cases, of which 19 had been found to have paid insufficient capital excess tax, representing a total liability of €1.4m.

To date, the highest individual liability identified stemming from the issue is €280,000. All the money owed to the Revenue is expected to be recouped via individual repayment plans, the PAC heard.

Ms Kelly said that while it is not expected that the figure of 13,000 individuals being affected by the issue will prove to be accurate, a review of the first cohort of 2,000 people will commence “over the next number of weeks”, with the NSSO currently attempting to identify a solution to automate the process.

Those 2,000 employees will come from all grades of the civil service, although the pensions issue is believed to predominantly affect those working at senior grades, from the level of assistant principal up.

It is the second pension-related problem to emerge at the Department of Public Expenditure since 2023.

In the first, the department discovered that in 15 out of 21 cases where a capital excess tax liability had been identified over an eight-year period, the tax due — totalling €2.3m — had never been paid to Revenue.

Neither that issue nor the more recent NSSO matter were discovered internally, with PAC member Catherine Connolly noting that the original matter “didn’t arise from the system of checks and balances” but rather emerged following a probe by the Comptroller and Auditor General, something she said “is an issue in itself”.

Department of Public Expenditure secretary general David Moloney conceded that there had been a “significant error” in terms of the department’s oversight arrangements after the C&AG established “weaknesses” within the NSSO’s control environment, and that an internal review had sought to “strengthen” those checks.

In terms of penalties for non-payment of tax to Revenue, he noted that his department had incurred interest due on the liability of €430,000.

Mr Moloney said that, in terms of the pension numbers which as accounting officer he had signed off on prior to the issues coming to light, he relies “on a letter of assurance from” Ms Kelly, the accounting officer for the NSSO.

Along with civil servants, the current NSSO matter affects multiple ministers who had served as long ago as 2019, in the last three governments.

Previously, Mr Chambers described what had happened, with multiple errors within the State’s pensions environment remaining undiscovered for years, as “completely unacceptable” and that the issues would need to be rectified as a “matter of urgency”.

He said new legislation was in the process of being drafted in order to ensure “greater accountability and oversight”.