Why Irish Water had to put aside €473,000 so former boss John Tierney could get full pension aged 57

IRISH Water had to put aside more than €470,000 as part of a special deal to ensure former boss John Tierney could be paid his full pension aged 57 and after working for just three years at the company.

Documents have revealed how if Mr Tierney stayed in his previous job at Dublin City Council, he would not have been entitled to his full pension until he was sixty.

However, as part of the deal he made when he switched jobs to take up a position as managing director at Irish Water, his pension instead had to be made payable as soon as his contract ended.

Because Dublin City Council would not have paid Mr Tierney his pension until he was sixty – Irish Water had to make up the shortfall to cover the extra three years.

The special deal had to be signed off by the Department of Housing and by the Department of Public Expenditure, according to Irish Water.

According to an internal memo, the pension scheme for Irish Water allowed for former staff to get their pension prior to age 60 but normally on an “actuarially reduced basis”.

However, Mr Tierney’s contract of employment meant he would be paid his full pension immediately “on cessation of his contract”.

The memo explained: “To facilitate what is contractually provided to Mr Tierney, the Trust Deed and Rules of the Scheme will be amended to expressly provide for early retirement on an unreduced basis specific to him.

“This will require Ministerial, Board, and Trustee approval.”

Dublin City Council had told Irish Water that the rules of their pension scheme did not permit any payments until “age 60 at the earliest”.

The memo continued: “Therefore Mr Tierney’s preserved benefits with Dublin City Council will not be payable until age 60.

“This results in a gap in benefits that the Ervia [Irish Water] scheme will need to make up i.e. the Scheme will need to pay full unreduced benefits at age 57.”

The cost of providing the pension immediately was calculated at €444,000. A further €29,000 was added for the “interest cost” to reflect the fact that the city council would not be making any payments until Mr Tierney turned sixty.

Altogether, the package would cost €473,000 based on current market conditions, Irish Water’s pension advisors Aon Hewitt wrote.

Irish Water said the special package was part of the “contractual entitlements” of Mr Tierney based on his long service in local government.

They said: “Mr Tierney was a member of the Ervia Superannuation [pension] scheme which participates in the Public Sector Transfer Network (PTSN). As he transferred his prior pensionable service, Mr Tierney was entitled to receive a pension based on his combined Ervia and local authority service.”

The Department of Housing said staff who transferred from local authorities to Irish Water generally did so on the basis that their pensions would “not be less favourable” than had they stayed in their previous jobs.

They said: “Mr Tierney’s particular superannuation [pension] arrangements form part of his contract agreed with Ervia and reflects the fact that he had substantial prior service in the local government sector.

“At the time of Mr Tierney’s appointment, the then Minister for Communications, Energy and Natural Resources had responsibility for Ervia, and he approved the contract with the consent of the Minister for Public Expenditure and … the Minister for [the] Environment.”

The Department of Public Expenditure declined to comment on whether they had signed off on the deal saying it was a matter for the Department of Housing.

Mr Tierney’s – who had previously been city manager at Dublin City Council – was originally appointed to Irish Water in 2013 on a three-year contract.

However, his time there was dogged by controversy beginning with a notorious RTÉ radio interview in which he said €50 million of the company’s start-up costs had been spent on consultancies.

He later told an Oireachtas committee that consultancy costs would end up being about €85 million while bonus schemes for staff also caused major PR difficulties for the beleaguered utility.

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