Cowen to lose just €7,500 from €150k pension as his bank guarantee is scrapped
FORMER Taoiseach Brian Cowen is facing a cut of about €7,500 in his yearly pension as the notorious bank guarantee scheme his government introduced is scrapped.
THE scheme to guarantee the State's teetering banks, introduced in September 2008, will end for all new liabilities at midnight on March 28.
The cost to the State of bailing out the guaranteed banks is estimated at €64bn.
Finance Minister Michael Noonan said the ending of the scheme marked "significant progress" in "breaking the negative link between the banks and the State."
Ending the scheme will remove €73bn of contingent liabilities from taxpayers.
The Eligible Liabilities Guarantee (ELG) covers AIB, Bank of Ireland and Permanent TSB, but will not impact the Deposit Guarantee Scheme, which covers ordinary depositors up to €100,000 per customer per institution.
After March 28, any new debts taken on by the banks, including borrowings from bondholders or new customers deposits, will not be protected by taxpayers.
"The time is right and the banking system is normal enough to survive without the guarantee and operate without artificial supports," Mr Noonan said.
Banks paid over €1bn to the Government last year for the protection offered by ELG. That will drop to €430m this year and will gradually fall away to nothing.
Mr Cowen, who was Taoiseach when the controversial scheme was introduced in 2008, is one of a number of former taoisigh who will see pensions slashed under the revised Croke Park deal.
Mr Cowen will still collect €142,000 a year, while a front-line member of the emergency services will see his or her income fall by €5,400 to €41,400.
Bertie Ahern will see his pension of €150,163 cut by 5pc, bringing it to an amount similar to Mr Cowen's.
The same percentage cut will apply to any former public service employees whose pension is worth more than €90,000 a year.
Those affected by the measure also include former taoisigh John Bruton (65), Albert Reynolds (80) and many members of the previous government.
Mr Reynold's pension will drop to €141,513 from €148,961, and Mr Bruton's will fall to €134,728 from €141,819.
Former Tanaiste Mary Harney (59) will see her pension fall to €123,315 from €129,805, and the pension paid to former Minister for Finance Charlie McCreevy (63) will fall to €113,218 from €119,177.
The cut in pensions is not officially part of the new Croke Park deal, as unions do not represent pensioners, but the measures will go alongside the agreement if it gets the go-ahead.
The €1bn in cutbacks under the deal will hit a wide range of public service workers.
The Government has a clause under the new agreement that it can go back for more cuts from the wage bill if the economy deteriorates further.
And public sector workers will be pushed out of their job if their role is no longer needed.
The Government claims this is not the same as making compulsory redundancies.