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COUNCILLORS who lose their seats will share a €20.9m pot when town and borough councils are abolished at the end of the month, the Irish Independent has learned.

A councillor with 20 years service on a small town council can expect to receive some €7,276, while those with similar service on a city or county council are in line for a €50,398 payment.

The money has been set aside to pay so-called gratuities to sitting councillors who fail to be re-elected to one of the country's 31 new local authorities, or who retire after serving at least two years.

The bill is higher than in previous years because 678 councillor positions are being abolished under local government reform plans.

The payments will apply to councillors with at least two years' service and who cease to be a member of a local authority after the May 23 elections.

Sums will be paid out at, or after, the local politician reaches the age of 50, and the amount is calculated based on a percentage of the annual salary, or representational payment.

In addition, extra payments apply to those elected prior to May 2000. The payments are capped at four times the representational payment – meaning a councillor with a long service could receive as much as €66,260.

The Department of the Environment estimates that one in three councillors fail to be returned to office following local elections.

GRATUITY

"However, in light of the proposed abolition of the town council structure under the reform programme, for 2014 the number of councillors qualifying for a gratuity payment will rise significantly," documents seen by the Irish Independent say.

"It is estimated that gratuities following the 2014 local elections will amount to approximately €20.9m, of which €14m will be in respect of county/city councillors, and €6.9m in respect of borough/town councils.

"The additional cost, arising from abolishing town councils, will amount to €4.4m. In the normal course of events, gratuities following local elections would amount to approximately €16.5m."

The retirement gratuities were introduced in 2000. They are not only paid when a councillor retires or loses their seat, but also apply and have benefited councillors who went on to higher office and became TDs and senators.

The last time there was a major exodus from local authorities – following the 2011 General Election – the average lump sum paid was €34,300.

The highest payment made at that time was to Tony McLoughlin (FG), from Sligo/North Leitrim, who received more than €53,000. His website says he was elected to Sligo County Council in the mid-1970s.

One Fine Gael councillor in Carlow, Michael Abbey, received a retirement gratuity of €37,540, records show, when he retired last year. He held the seat since 1994.

The money is paid by local authorities from their existing budgets. The payments are subject to tax.

Additional spending is required because the Government is reducing the number of local authorities across the country from 114 to 31. This includes the abolition of 80 town and borough councils.

The plans, which take effect from June 1, will also result in the number of councillors falling from 1,627 to 949.

The Department of the Environment said that the abolition of town councils would result in a "significant" increase in the number of councillors qualifying for a gratuity.

Irish Independent