Q&A: What happens next with inaccurate pensions?

On Tuesday, Jack Chambers held a press briefing where he announced that 13,000 retired civil servants are set to have their pension deductions checked for potential incorrect payments amid 'serious issues' being flagged. Picture: Sam Boal/Collins

Revelations that retired senior civil servants and government ministers will be asked to pay back tens of thousands of euros for inaccurate pension deductions have led to criticisms of the department of public expenditure.

Minister Jack Chambers made the revelations on Tuesday, but what has happened and what happens next?

What did Jack Chambers announce?

On Tuesday, Mr Chambers held a scantily-attended press briefing on issues at the National Shared Services Office (NSSO), where he announced that 13,000 retired civil servants are set to have their pension deductions checked for potential incorrect payments amid “serious issues” being flagged, with 30 cases identified where the liability ranges as high as €280,000.

What's the NSSO?

The NSSO is a provider for human resources, payroll administration, and finance services for Government departments and public service bodies. It has as over 800 civil service staff based in six offices across Ireland. 

The combination of services was done in 2012 to "focus their resources on core activities leading to administrative efficiency and reduced cost". Its HR function was fomerly known as PeoplePoint.

The NSSO has made an error?

Possibly. At present, the NSSO is not sure of how deep the issues go, but Mr Chambers has said that due to administrative errors, members of the current Government, some members of previous Governments and a number of office holders have had incorrect application of pension deductions. 

This means that some former ministers and senior civil servants owe money back, but that up to 13,000 retired civil servants could have been underpaid.

Who is impacted?

There are three cohorts impacted by the errors: civil service retirees with work-sharing patterns, current and former ministers and office holders, and retired senior civil servants.

Mr Chambers said that the errors "span different time periods" and have been "detected in various ways".

What actually happened?

The issues are technical in nature, but there are three. The first saw the miscalculation and underpayment of pensions for some work-sharing civil service retirees who were in receipt of allowances before they retired in the last 20 years or so. The second relates to the incorrect application of pension deductions for most members of the current Government, Ministers of State, some members of previous Governments and recent office holders, affecting at least the last three governments.

The issue centres on superannuation deductions and additional superannuation contributions (ASC) related to salaries, allowances, and gifted income.

In short, due to administrative errors, members of the current Government, some members of previous Governments and a number of office holders have had incorrect application of pension deductions.

Thirdly there is an issue around chargeable excess tax and withholding tax for senior-grade civil service pensioners. Chargeable excess tax is a tax on pension funds at retirement which exceed what is called the standard fund threshold, currently €2m. 

In a small number of cases, this tax was not correctly applied by the NSSO. Withholding tax is deducted from retirement lump sums over €200,000 and "most likely applies to those from principal officer level upwards". In total, between the two, NSSO has identified 30 cases with liabilities ranging from a few hundred euros to €280,000.