Enda's million-euro pension in just two years

I generally steer clear of commenting on politicians on the grounds that I don't believe I could do better myself, so therefore I won't criticise someone else's attempts.  I don't have any connection to any political party either.  But I couldn't resist crunching the numbers from this article from The Journal.ie published online today.

After two years in Government, ministers receive an entitlement to a pension.  The current Government is two years in office today, so that triggers this entitlement. 

According to the article, Enda Kenny's entitlement is a pension of €21,466 per year if he was to retire today.  Let's be clear - that €21,466 is an entitlement that has accrued solely from his two years in Government.  It's in addition to any other pensions he has accrued over the rest of his career. 

For those of you who don't know - Public Service (including Government) pensions are not pre-funded - they're paid out of current Exchequer resources.  In other words, the taxes that you and I pay today go towards paying the pensions of retired Public Servants.  This is a different system to the Private Sector, where pension contributions are used over a person's career to build up a fund from which their pension is paid when they retire. 

But how much would a Private Sector individual need to put into a pension fund in order to provide a pension of €21,466 per year for life?  Mr Kenny is 61 years old and his wife Fionnuala is 6 years younger.  Public service pensions provide for increases in payment and a widow's pension of 50% to be paid for the rest of the spouse's life in the event that the pensioner dies before their spouse. 

A Private Sector individual would need to accumulate a fund of over €989,000 in oder to provide them with a pension of €21,466 per year for life on the same terms, using current annuity rates. 

Let me repeat - that entitlement has been accrued solely in the last two years.  Mr Kenny's total pension when he retires will be a multiple of this, adding in the pensions from the rest of his career. 

Not bad for two years' work!