Statement: Retention Payments

The Central Bank has previously stated that it faces issues retaining and attracting staff in the key competitive market in which it operates and found it necessary to introduce a retention policy in 2014. This statement clarifies and quantifies payments made under this policy to date and details previous measures undertaken prior to the introduction of the policy to address acute retention issues. The retention measures have been applied in very limited circumstances and are necessary to avoid failing to accomplish critical projects because of an inability to retain staff with the skills and specific knowledge needed to carry them out.

The details of both now follow:

As has, for example, been highlighted by five recent external reports* on the performance of different aspects of the Central Bank's functioning, prepared in compliance with the Central Bank Act 2010 there are significant concerns about the Central Bank's ability to attract and retain high calibre skills due to uncompetitive pay scales. In some areas and for certain skills and knowledge, these challenges are acute. This is why, in very limited circumstances, it has become necessary to take action to address this risk.

In 2014 the Central Bank reviewed the retention risks across the organisation and determined a need for a retention scheme that might have to be applied in more than one area. A narrowly defined retention policy was adopted in 2014. This policy sets out strict governance procedures and specified criteria. Having taken legal advice the Bank is satisfied that payments under this policy are compliant with FEMPI legislation.

The policy remains in place today and currently applies to 29 people, located in two areas of the Bank. Under the contractually agreed arrangements, these individuals have, or will, receive retention payments that are, on average, 21% of their annual salary. These are retention payments and not bonuses. These payments are made in tranches designed to ensure continuity of service of staff.

Previously in 2011, a group of 8 specifically qualified experts working in areas with a critical mandate and where attraction and retention issues were particularly acute, were offered and accepted retention payments at intervals over a three year period to assist in retaining their skills. Those retention agreements are now exhausted with the final payments having been made in 2014.

The vast majority of those covered by retention agreements are in the professional and administrative grades that Unite, the Union represent (four are or were more senior staff).

The full cost of retention payments made to date is €234,176. The retention payments are specific and time-bound and are subject to normal deductions.

We estimate the total cost of the retention agreements to date represents 0.1% of the Central Bank pay bill over the period.

Notes

Under the Central Bank Act 1942, the Treaty on the Functioning of the European Union and the Statute of the ESCB, the Government has no role in the setting of terms and conditions of employment in the Central Bank. The Act, the Treaty and the Statute guarantee the independence of the Governor in carrying out his ESCB related functions and control over pay and conditions is seen as a necessary part of that independence. The employment of staff at the Central Bank and their terms and conditions are matters for the Central Bank Commission. When consulted, the Governor of the Central Bank did not object to the Central Bank being covered by the FEMPI legislation. Central Bank staff is subject to the same pay cuts that have applied across the broader public service and are also subject to the pension levy.

The retention policy was approved by the Budget and Remuneration Committee of the Central Bank Commission and all retention arrangements have been approved by the Governor’s Committee.

 *The following are the five external reports:

• IMF ROSC on Banking
• IMF ROSC on Securities Regulation
• IMF ROSC on Insurance 
• AFM Peer Review of Consumer Protection (PDF 580.6KB)
• ICURN Peer Review of Credit Unions