Councillors who lose seats or retire after June election in line for increased ‘retirement gratuity’ payments

Councillors who lose their seat or retire after June’s local election will be in line for increased “retirement gratuity” payments.

Plans to change the system of payments are included in a briefing for the new Minister of State for Local Government Alan Dillon.

Under the plans the level of the gratuity is to be linked to the new higher salary that was introduced in recent years rather than the old representational payment for councillors which was lower.

The change means a councillor with 20 years’ service will get a maximum payment of €86,172 once they leave office, €8,356 more than the maximum of €77,816 they would have received under the old system.

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The retirement gratuity is non-contributory so no deductions are taken from their salaries.

There is no pension scheme for councillors and the gratuity, introduced 24 years ago, is paid instead.

Councillors who have left office are entitled to the payments once they reach the age of 50 and have at least two years qualifying service.

Gratuity payments are also made to councillors who are elected to the Dáil, Seanad or European Parliament once they are over 50.

Under the old system calculation of the gratuity was based on the old representational payment which was less than €20,000.

The new increased salary for councillors, which stands at €28,724, was introduced in 2021.

In the wake of the salary increase, there were calls by councillors and representative organisations like the Association of Irish Local Government for the gratuity to be linked to the new salary.

There was a review of the gratuity scheme and Minister for Public Expenditure and Reform Paschal Donohoe approved a business case to make changes that was submitted by Mr Dillion’s predecessor as minister Kieran O’Donnell.

The new scheme will link the gratuity to the new councillor salary and the accrual rate of the gratuity will be adjusted to a maximum of 300 per cent of the adjusted annual remuneration amount after 20 years.

This means that at the current rate of payment councillors would receive a maximum gratuity of €86,172.

The agreed changes require new regulations to be signed by Mr Dillon and Mr Donohoe.

A Department of Housing statement said: “The Regulations are not yet signed but will be in place by the local elections on June 7th.”

It also said: “Councillors who serve out their full term and retire at the elections in June or who lose their seats will be eligible for the revised gratuity scheme (provided they have served more than two years and are over 50).

“If they are under 50, their gratuity is held over until they reach 50.”