THE state will likely not be able to recoup all the millions of euros lost in pension overpayments to civil servants, the Public Accounts Committee (PAC) heard on Thursday, writes Sarah McGuinness.
One retired civil servant was overpaid by €280,000. Nineteen former and existing senior civil servants received overpayments worth €1.4 million in a major blunder in the National Shared Service Office (NSSO).
It emerged that ‘serious and systemic operational issues’ within the NSSO resulted in senior civil servants being overpaid up to hundreds of thousands of euros in their pension.
The error also extended to cabinet ministers past and present, who could owe up €30,000 each back to the Exchequer.
Up to 30 high-ranking officials could owe money back to the state, the chief executive of the NSSO said, while the pension payments of over 13,000 current and former civil servants are under review.
It comes as TDs also heard that the Exchequer is on the hook for almost €700,000 in interest payments to Revenue for errors in the NSSO – with further penalties still on the table.
The NSSO is responsible for providing administrative services to the State and its employees, including HR, payroll and pension management. It falls under the Department of Public Expenditure.
The PAC was told that the issues were first flagged in the NSSO following a random spot check from Revenue and were flagged with the Department of Public Expenditure in March.
The spot-check examined a sample of 11 cases of pensions above €2m – which are subject to a chargeable excess tax (CET) of 40%. In six of these 11 cases the amount of CET collected has not been "calculated correctly".
NSSO chief executive Bernie Kelly told the committee that a review of all pensions under her remit which are over €2m in value was commissioned. Kelly said that 23 cases have been identified where CET may be owed.
"Nineteen have been validated of which there is a liability of €1.4m which had not been calculated," she said. While numerous cases relating to pensions payments for senior civil servants are "out for query at present", Kelly said she expects "less than 30" individuals have been undercharged on CET.
"There is some opportunity that this could be larger," she added. Sinn Féin TD Joanna Byrne raised the example of one now retired civil servant who was overpaid by €280,000, and questioned how large sums can be recouped without "crucifying" pensioners.
David Moloney, secretary general at the Department of Public Expenditure, said that any liabilities owed to the Exchequer will be paid by the department or state agency that the individual concerned used to work for, and that they will have 20 years to pay the sum back.
However, he acknowledged that many of the people potentially owing money have been retired for years and that any outstanding liabilities will "expire upon death".
Asked if there was a "realistic expectation" that not all the money owed can be recouped, Moloney said: "That is correct. If the person passes away, their debt is extinguished."
According to Mr Moloney, "a number of factors" led to the pension overpayments.
"One of the things is that some civil servants may have private pensions. Possibly another factor is that the STF [standard fund threshold], when it was established, was seen to only apply to the most senior grades of public services. But it is a value threshold. It is not related to grade," he said.
He said that the department and the NSSO will commission a full "end-to-end" review of all pension payments to senior civil servants. Once that external audit is complete, "we will have a much clearer view on the full range of causes".
The NSSO is also reviewing all 13,000 pensions belonging to civil servants under its remit. Moloney said that until that work is done the department cannot estimate how many people may be affected or how much money may be owed to the Exchequer.
(Pic: Getty Images)
