Lama newsletter Autumn 2013

LAMA NewsLetter Autumn 2013

Cumann Chomhaltaí na nÚdarás Áitiúil

LAMA Autumn

Revision of Electoral Area Boundaries of the local elections in their functional areas.

Seminar 2013 October 11th and 12th The Falls Hotel Ennistymon Co. Clare ***  Economic Development  Job Creation  The Role of Local Authorities after June 2014 *** Seminar Banquet Friday 11th October 8pm sharp Kindly supported by Clare County Council and Irish Public Bodies DATE FOR YOUR DIARY

LAMA

Spring Seminar

2014

January 31st, February 1st Four Seasons Hotel Monaghan

LAMA Community & Council Awards 2014 Nominate now in over 24 categories at www.lamaawards.org or call Orla on (01) 432 2232

FEDERATION OF EUROPEAN COUNCILS

Cllr Hugh McElvaney, LAMA Chairperson, and Cllr Noel Bourke, General Secretary, LAMA Statutory orders – implementing new local electoral areas and preparing maps.

1. The minister has accepted in full the recommendations in the report and is to make the necessary local electoral area orders to give effect to these in due course.

The local electoral areas specified in these orders, and the number of members to be elected for each electoral area, will apply at the 2014 local elections. These orders are to be finalised and signed when the Local Government Bill 2013, providing for the reform of local government, is enacted. A proof copy of the draft order in respect of a council's functional area will be circulated to each respective local authority in advance of being signed.

It will then be a matter for each local authority to produce and make available illustrative maps of the relevant local electoral areas. Further guidance on this point will issue from the department in due course, but at this point it is advisable that preparations be made to produce these maps. It should be noted that such maps will be for illustrative purposes only. The legal basis for local electoral areas is the ministerial order which contains the detailed technical description of the local electoral areas concerned.

Consequential revisions to the register of electors pursuant to section 18 of the Electoral Act 1992.

2. 2014/2015 Register of Electors The 2014/2015 register of electors will be used for the local elections in 2014.

Registration authorities should, therefore, prepare the register in accordance with the recommendations contained in the report of the committee so as to facilitate the holding

Split Polling Districts/Register 3. Where, in preparing the 2014/2015 register, an existing polling district is split by an electoral area boundary: a) join it, or parts of it, with any adjoining polling district or districts within the area; or b) constitute it as a polling district and appoint a polling place for it.

Arrangements made in this regard should continue in force until the next polling scheme for the city or county comes into effect. The arrangements required in each area should now be identified but should not be formally made until the necessary statutory order referred to in paragraph 1 above has been made by the minister. The arrangements do not require the sanction of the minister but they should be notified to him when made, indicating the following: a) the name and/or identifying letters of the split polling district; b) the parts of the split polling district contained in each of the local electoral areas concerned (by reference to electoral divisions, townlands, streets, etc.); c) the number of electors in each part of the split polling district; and d) the arrangements made for each part (i.e. whether it is constituted as a separate polling district or joined, or parts of it joined, with an adjoining polling district or districts).

A map showing the arrangements made for the split polling district should also be submitted.

Single new authorities 4. The Government has decided that single new local authorities will be established in Limerick, Tipperary and Waterford with effect from the 2014 local elections. The department wrote to the authorities concerned on 20 March 2013 in connection with the preparation and publication of the 2014/2015 register of electors and the Electoral, Local Government and Planning and Development Bill 2013 has since been published. Accordingly, the tasks in relation to the register and the split polling districts, as outlined in paragraphs 2 and 3 above, should be undertaken by Limerick County Council, South Tipperary County Council and Waterford County Council.

LAMA NEWSLETTER 1

Elected Members' Retirement Scheme A Guide for County/City Councillors

Introduction

T

he local elected members' gratuity arrangements are implemented by means of a number of regulations and directions issued by the Minister for the Environment, Heritage and Local Government under the Local Government Act 2001.

The purpose of this document is to explain the current retirement scheme and what it means in monetary terms to an elected member who is retiring.

This document is for information purposes only, and is not intended to be a legal interpretation of the various regulations and circulars which have been adopted by the Department.

It is a matter for each Councillor to inquire from the Finance Department of their local authority to obtain a calculation of his or her entitlements and to contact their local tax office in relation to any tax implications which may arise for them.

On retirement a local elected representative with at least two years' service will receive a lump sum payment of a gratuity for service from 4th May 2000, and an ex-gratia payment for years of service prior to that date up to a maximum allowable 40 years' service.

The significance of May 4th 2000 is this is the date the Local Government Bill was published.

The Retirement Scheme The Retirement Scheme for elected members comprises two elements: 1 A gratuity payment for service from 4th May 2000 and 2 An ex gratia payment for service prior the 4th May 2000.

1. The Retirement Gratuity Scheme (A) The Minimum Qualifying Period The minimum qualifying period for an elected member to be paid the gratuity is two years.

This means that an elected member is eligible for a payment after two years' service.

(B) A Death in Service Payment A death in service payment is available under the scheme.

There is a minimum payment of the greater of one year's representational payment (currently €16,724 per annum) paid on the death of a serving member or the amount of gratuity/ex-gratia payment which would have been payable to the member on the date of death if the member had ceased to hold office on that date on the grounds of permanent infirmity, whichever is greater.

This payment is made to the deceased member’s legal personal representative on

2 LAMA NEWSLETTER

production of a grant of probate/letters of administration.

(C) Amount of the Gratuity The amount of gratuity payable is for years of service from 4th May 2000 (the date the Local Government Bill was published).

The gratuity payable is 1/5th of the representational (RP) payable at the time of retirement per year of service from May 4th 2000. At the current rates of RP the gratuity is €3,344.80 per year of service from 4th May 2000.

If the member has County Council and Town Council service at the same time the gratuity will be paid for the County Council service only.

If the member had both County Council service and Town Council service after May 2000, but not at the same time, that member will receive a reduced gratuity for the Town Council service. The amount of the reduced gratuity depends on the size of the town council involved.

The maximum gratuity payable after 20 years service from May 2000 is four times the representational payment.

Payment of the gratuity is made once a retired member has reached 50 years of age or earlier if a member became incapable of performing his or her duties due to permanent infirmity of mind or body or dies in office.

When a person ceases to be a Councillor before age 50 due to retirement or not being re-elected, the gratuity will be preserved until that person reaches 50 years of age, and will be paid based on the representational payment applicable at that time when they reach 50 years of age.

Any entitlement to the preserved gratuity will cease if a person becomes an elected member again before reaching age 50. When this happens the earlier service will be aggregated with the subsequent service to determine the amount of gratuity to be paid once the person finally retires.

In calculating the gratuity the total service by an elected member may include a fraction of a year.

A member who was elected in June 2009 and who is not re-elected or retires in June 2014 will receive one full year’s representational payment €16,724.

(D) Additional service awarded where retirement is due to permanent infirmity Where a member with at least three years' and less than 20 years' qualifying service ceases to hold office, on account of having become incapable of performing his or her duties as a

member due to permanent infirmity of mind or body, the local authority may add a period to his or her qualifying service for the purposes of calculating the amount of gratuity payable. The total of added years' service together with the members qualifying service must not exceed 20 years.

Added years may be allowed on the following basis: (a) For service of not less than three and not more than five years, an amount of added service equal to the member’s actual service to the date of retirement or death may be allowed subject to the member’s total potential service to age 65 not being less.(i.e. a member aged 63 would only receive two years' additional service.) (b) F or service of not less than five and not more than 10 years, the greater of the following may be allowed – (i) 10 years less the member's actual service subject to the member's total potential service to age 65 not being less than this calculated period of service or (ii) 3.33 years subject to the member's total potential service to age 50 not being less. (c) For service of not less than 10 years, 3.33 years may be allowed subject to the member’s total potential service to age 50 not being less. (e.g. a member aged 48 would only receive two years' additional service.)

The sum of actual service and added years may not exceed 20 years in total for the purposes of calculating the gratuity payable to the member retiring due to permanent infirmity.

2. Ex gratia payment for pre-May 2000 service An ex gratia payment of €714.23 per year of service is paid to serving councillors for their years of service prior to 4th May 2000. The payment is €714.23 per year for the first 20 years and €476.15 per year thereafter up to a maximum of 40 years in total.

Where a retiring member has more than 40 years' service the amount of gratuity to be paid will be for the period of service from 4th May 2000 with the balance of the ex gratia payment for the number of years service prior to 4th May 2000 up to a maximum of 40 years for both pre-4th May 2000 and post 4th May 2000 service. (For example if a member retires after 50 years with nine years' qualifying service post May 2000 the maximum service which will count towards the ex gratia payment is 31 years.)

This payment is based on 75% of the amount which would have been paid under the 1999 Retirement Scheme which were as follows: Retiring members of County Councils or

Corporations of a County Borough were paid £750 for the first 20 years of service and £500 for any additional years of service up to a maximum total service of 40 years. The figures of €714.23 and €476.15 are 75% of these amounts.

Retiring members of Corporations of a Borough (other than a County Borough) or an Urban District Council were paid £375 for the first 20 years of service and £250 for any additional years of service up to a maximum total service of 40 years. The figures of €357.11 and €238.08 are 75% of these amounts.

Retiring members of Town Commissions were paid £187.50 for the first 20 years of service and £125 for any additional years of service up to a maximum total service of 40 years. The figures of €178.56 and €119.04 are 75% of these amounts.

Under the 1999 Retirement Scheme, members who held dual or concurrent membership of more than one local authority were entitled to be paid for service for the local authority which gave the most favourable payment. In the case of both County Council and Urban District Councils service the payment will be for the County Council service only.

All local authority service by an elected member is taken into account for the purposes of determining the ex gratia payment.

If the member was, for example, a member of an Urban District Council before he/she became a member of a County Council, the service on the Urban District Council will be taken into account in determining the ex gratia payment on retirement.

The Taxation of lump sum payments Under current tax legislation a portion of the retirement payment may be liable to income tax.

The Revenue Leaflet IT21 “Lump Sum Payments on Redundancy/ Retirement”, which is available on www.revenue.ie, provides further information on the tax treatment of lump sum payments.

Elected members should check with their local tax office or tax advisor to determine if they have a tax liability. The longer the length of service the greater the likelihood of tax being due and payable on a portion of the lump sum.

The exemptions provided for in current tax law are as follows: 1 A basic exemption of €10,160 plus €765 for each year of service up to retirement or 2 An increased exemption of €10000 over the basic exemption above provided no relief has been claimed in the previous 10 years or 3 Standard Capital Superannuation Benefit (SCSB) is a relief given for each year of service equal to 1/15th of the average annual pay for the last three years of service.

Your Council is obliged to deduct PAYE and USC on all of the lump sum less the basic exemption or SCSB, as previously outlined above.

The taxable part of the lump sum payment is regarded as part of your total income and is taxed accordingly.

In certain circumstances an additional relief called Top Slicing Relief may be due to you.

Top Slicing Relief relates to the tax payable and ensures that your lump sum is not taxed at a rate higher than your average rate of tax for the three years prior to your retirement.

The formula for calculating this relief is: taxable lump sum X (tax rate applied to lump sum – average tax rate for previous three years).

In the case of a couple, taxed under joint assessment, where both spouses or civil partners have income in any of the three years preceding the tax year to which the termination payment refers, the tax rate will be based on the income of the spouse or civil partner who received the termination payment or on the combined income of both spouses or civil partners depending on which rate is the most beneficial to the couple.

Example of Top Slicing Relief based on current tax law: a County or City Councillor retires in June 2014. The taxable amount of the lump sum is €10,000, which is taxed at the marginal rate of 41%. The average rate of tax for the prior three tax years was 32%.

Top slicing relief is: €10,000 x (41% - 32%) = €900.

The tax payable will be reduced by €900.

Top Slicing Relief may be claimed, by contacting Revenue after the end of the tax year.

The time limit for claiming tax reliefs in respect of lump sum payments is four years from the end of the year in which the lump sum payment is treated as income.

Note: Based on current representational allowance March 2013 Contributed by Senator Michael Mullins, email: michael.mullins@oireachtas.ie

Examples of approximate payments to County/ City Councillors retiring in 2014 These examples are based on the current rate of representational payment of €16,724 and are approximate only. In calculating periods of service a part of a year will be taken into account when your local authority does the calculation of your gratuity entitlement.

6: Councillor with 25 years' service

1: Councillor with 5 years' service

7: Councillor with 29 years' service (elected June 1985)

Gratuity:

€3,344.80 x 5 €16,724

2: Councillor with 10 years' service Gratuity:

€3,344.80 x 10 €33,448

Gratuity: €3,344.80 x 14

€46,827.20 Ex gratia payment: €714.23 x 11

€7,856.53 Total Payment: €54,683.73

Gratuity: €3,344.80 x 14

€46,827.20 Ex gratia payment: €714.23 x 15

€10,713.45 Total payment: €57,540.65

3: Councillor with 15 years' service

8: Councillor with 30 years' service

Gratuity: €3,344.80 x 14

€46,827.20 Ex gratia payment: €714.23 x 1

€714.23 Total Payment: €47,541.4 Note: Gratuity is paid for 14 years from 4th May 2000

Gratuity: €3,344.80 x 14

€46,827.20 Ex gratia payment: €714.23 x 16

€11,427.68 Total payment: €58,254.88

4: Councillor with 20 years' service Gratuity: €3,344.80 x 14

€46,827.20 Exgratia payment: €714.23 x 6

€4,285.38 Total Payment: €51,112.58

5: Councillor with 23 years' service (elected June 1991) Gratuity: €3,344.80 x 14

€46,827.20 Ex gratia payment: €714.23 x 9

€6,428.07 Total Payment: €53,255.27

9: Councillor with 40 years' service Gratuity: €3,344.80 x 14

€46,827.20 Ex gratia payment: €714.23 x 20

€14,284.60 Ex gratia payment: €476.15 x 6

€2,856.90 Total payment: €63,968.70 Note: A Councillor with greater than 40 years' service will not receive more than the amount in Example 9 above as the maximum service allowable for both the gratuity and the ex gratia payment is 40 years in total.

Any period of service in excess of 40 years is disregarded under the current regulations.

LAMA NEWSLETTER 3

LAMA Establishes Links With Northern Ireland and UK Councillors

O

ver the past 12 months LAMA has established a liaison with the National Association of Councillors in Northern Ireland.

The purpose of this initiative is to share information with each other which would be helpful to each association in its work of looking after the best interests of its members.

The Officer Board of LAMA has met with its opposite number in Northern Ireland on a couple of occasions over the past year and has been able to have very useful discussions about changes in local authority structures taking place in both jurisdictions, conditions under which Councillors work, how Councillors can be more effective with

reduced resources, how information in both areas can be shared, how we can learn from each other, Councillor supports, etc.

It was useful that Councillors from all political parties and independents in the island were involved in the meetings as this gave the discussions a wide dimension and incorporated a good range of views.

LAMA’s membership comprises Councillors on County, City and four of the five Borough Councils and over the past 12 months, in those difficult and changing times, it has been putting forward the Councillors' point of view to the Minister in the strongest possible way.

It is regretful that Borough Councils are being abolished along with Town Councils and that some amalgamations are taking place also, but LAMA will continue to work for the betterment of the members of whatever Councils which are in place after the Local Elections in 2014.

In the past two months or so there has been contact with the National Association of Councillors in the UK and to date this has been through exchange of information electronically. It is expected that some representatives from the UK will attend

LAMA’s Autumn Seminar on October 11th and 12th.

LAMA looks forward to building on the contacts established to date in a positive and constructive way.

Obituaries Two serving members of the LAMA executive died recently:

Cllr Paddy Belton, Longford

Cllr Michael Anglim, Tipperary South

Ar dheis Dé go raibh a anam.

LOCAL AUTHORITY MEMBERS' ASSOCIATION Meeting with Minister Hogan – 21st May 2013 at Leinster House Items for Discussion  Structure, operation and funding of LAMA post-2014 – ref 11.6.5 page 149 of Putting People First – local authorities should continue to partial fund as at present.  LAMA should be listed as an approved body for running courses to meet the specific needs of Councillors – ref 11.6.12 page 151.  Involvement/role of Councillors in LEOs and local development companies.  County/City Councils should be the primary unit.  Powers/functions of Municipal District Councils.

 New electoral areas – likely to be geographically bigger with a reduced number of Councillors in many cases – 114 Councils (1,627 Councillors) to be reduced to 31 (approx 950 Councillors).  There will be fewer Councillors in many counties except those on the eastern seaboard and a small number of counties elsewhere – greater workload which will increase further with the reduction in the number of TDs and if Seanad Eireann is abolished.  Review of representational payment – ref 11.6.15 page 152 – in view

of increased workload this should not be reduced. Strictly speaking it should be increased because of 5 and 6 above but we appreciate that it would be difficult to do that at present time.  Social welfare entitlements for Councillors – in class K at present – paying PRSI but no benefits – should be moved to class A.  Gratuity payment to those under 50 years of age.  Councillors' supports – provision of IT equipment, stationery etc by Local Authorities – guidelines on this from DoECLG would be useful.

Please send on any information that you would like to have included in our next newsletter to: Councillor Padraig Conneely t: 087 259 3886 or Councillor John Kennedy t: 087 241 0540