Thoughts on the Single Public Service Pension Scheme (SPSPS)

[Protocol]

Thank you. That's a very interesting figure. I was thinking it must be something higher than the % contribution public sector employees themselves pay in themselves.

Any idea where you might have seen the 15% figure? Would love to dig into analysis of this!

Please see the attached analysis of PS pensions.

 

[Protocol]

Thank you. That's a very interesting figure. I was thinking it must be something higher than the % contribution public sector employees themselves pay in themselves.

Any idea where you might have seen the 15% figure? Would love to dig into analysis of this!

The pre 2013 PS pension has an average notional employer contribution rate of 29%.



The SPSPS is less generous, so the notional contribution is much less.

 

[Protocol]

For fast accrual grades, the notional employer contribution is very high.

 

[Tadhg22]

Please see the attached analysis of PS pensions.

Thank you for sharing this

 

[PoundMan]

I remember speaking to someone at Standard Life a year or two ago and they told me that although the Public sector pension is not what it once was, it would still be quite difficult to match in a private sector pension. So although it's not the greatest any more, it sounds like it still isn't too bad either.

 

[Threadser]

The pre 2013 PS pension has an average notional employer contribution rate of 29%.

View attachment 8543

The SPSPS is less generous, so the notional contribution is much less.

Just wondering if these percentages take into account the state pension that accrues to private sector workers on the basis of PRSI contributions alone. For example if these public sector employees just made A rate PRSI contributions and didn't contribute to a pension at all they would have been entitled to the state pension at aged66 ? Doesn't everyone who joined the CS/PS after 1995 pay full PRSI? Also rates of PRD are quite significant at higher salary levels and should be included in the calculations to give a more accurate percentage estimate?

 

[Conan]

Public /Civil Servants recruited after 6/4/1995 are typically Class A . Therefore they will be entitled to a Social Welfare pension in addition to any Occupational Pension.

 

[Astoy5]

Thanks for this extremely helpful thread. I understand that purchasing pension annuities under the scheme does not look like good value. But what about the lump sum component? At my age (early 40s) according to the booklet €1 of lump sum will cost me 0.94 cent right now. Taking into account tax relief at 40% and that the lump sum is also updated with CPI and the fact that this is as safe an investment as it gets, is this not a good move? Or am I missing something?

I hope nobody minds if I bump this! Interested in any opinion since I’m pretty clueless!

 

[Threadser]

Public /Civil Servants recruited after 6/4/1995 are typically Class A . Therefore they will be entitled to a Social Welfare pension in addition to any Occupational Pension.

This cohort of public servants have a "co-ordinated" pension, so their state pension is incorporated into their occupational pension. I just wondered if this is taken into account in the notional employer percentages that were quoted for the pre 2013 cohort?

 

[Itchy]

This cohort of public servants have a "co-ordinated" pension, so their state pension is incorporated into their occupational pension. I just wondered if this is taken into account in the notional employer percentages that were quoted for the pre 2013 cohort?

No allowance for the cost of the State Pension (Contributory) has been made in this review as it is
assumed that this has been provided for via the PRSI system.

However the pre-2013 notional contribution is weighted 2:1 to pre-2004 entrants. That balance is likely reversed now, if not far less but 24% is still high (19% less PRD) in any case.

Pre-2013 entrants reflect a mix of pre- and post-2004 entrants (who enjoy different benefit structures and
minimum retirement ages) and the overall rate reflects a weighted average of the number of public service
employees in each group, broadly 67% pre-2004, 33% post-2004.

Interestingly, zero differential vs. private sector for notional contribution rate post-2013.

 

[Tadhg22]

However the pre-2013 notional contribution is weighted 2:1 to pre-2004 entrants. That balance is likely reversed now, if not far less but 24% is still high (19% less PRD) in any case.



Interestingly, zero differential vs. private sector for notional contribution rate post-2013.

View attachment 8551

Given that these figures are from a 2017 review, I'm curious as to how they are affected by the 2020 reduction in asc % contributions for spsps members:

Link :

Cornmarket

www.cornmarket.ie

 

[Tadhg22]

Also presume the 7% contribution figure is for the minority of private sector employees with defined benefit schemes, so as to compare like with like?

 

[Itchy]

Given that these figures are from a 2017 review, I'm curious as to how they are affected by the 2020 reduction in asc % contributions for spsps members:

Link :

Cornmarket

www.cornmarket.ie

The effective rates are c. 2% now, higher back in 2017.

Also presume the 7% contribution figure is for the minority of private sector employees with defined benefit schemes, so as to compare like with like?

Its in the report.

Well what's like for like? Personally disagree with broad public v. private sector wage comparisons because, well, they are not comparable IMO.

At this review a cost of 11% has been attributed to a private sector employee. This comprises a cost of
22% for DB schemes and 7.0% for DC schemes and a weighting of 70%, 30% attributed to these scheme
types reflecting the profile of the post-2004 cohort equivalents in the public sector expected to be members
of these schemes at the current time.

Post-2013 entrants in the Single Scheme are being compared with employer contribution rates being paid
in respect of employees in DC schemes only, reflecting the fact schemes set up since 2013 have virtually
all been on a DC basis. Therefore a cost of 7% has been attributed to equivalent private sector employees
for this cohort.

When we compare pre-2013 scheme with private sector DB schemes the contribution rates are similar or less considering PRD.

 

[Tadhg22]

The effective rates are c. 2% now, higher back in 2017.



Its in the report.

Well what's like for like? Personally disagree with broad public v. private sector wage comparisons because, well, they are not comparable IMO.



When we compare pre-2013 scheme with private sector DB schemes the contribution rates are similar or less considering PRD.

View attachment 8555

So the notional Employer contribution rate for the spsps is now about 11%?

How would rate the spsps against an average or even best in class pension scheme available to post 2013 private sector workers?

 

[Itchy]

So the notional Employer contribution rate for the spsps is now about 11%?

No, its 7%. SPSPS is post-2013.

View attachment 8551

How would rate the spsps against an average or even best in class pension scheme available to post 2013 private sector workers?

With all due respect, that's a bit of a meaningless question. It depends on what your own circumstances are and your financial objectives. When you know that, then you can evaluate if its worthwhile e.g. if you're not suitable to take on investment risk, then the state guaranteed element is probably very attractive and something you can't buy in the market.

 

[Tadhg22]

Tadhg22 said:
So the notional Employer contribution rate for the spsps is now about 11%?
No, its 7%. SPSPS is post-201

Excuse my ignorance, but if the employee contribution via the asc has reduced since January 2020, then hasn't the notional employer contribution increased from 9% to make up the difference?

 

[Itchy]

Excuse my ignorance, but if the employee contribution via the asc has reduced since January 2020, then hasn't the notional employer contribution increased from 9% to make up the difference?

ASC is the new PRD which is excluded from the analysis.

I wouldn't get fixated on the absolute figure provided. The analysis is from 2017 with the all the assumptions that go with an actuarial analysis. Inflation, risk free rate, wage inflation, longevity assumptions etc. would be different now. It gives an idea of the relative differential.

 

[Tadhg22]

ASC is the new PRD which is excluded from the analysis.

Ah I see.

So you're suggesting the current average notional employer contribution to the spsps is about 7%,down from 9% in 2017? What is the reason for the decrease? Does this mean the % employee contribution has increased?

 

[Itchy]

Ah I see.

So you're suggesting the current average notional employer contribution to the spsps is about 7%,down from 9% in 2017? What is the reason for the decrease? Does this mean the % employee contribution has increased?

The report is stating that the notional employer (i.e. public sector) contribution rate to the SPSPS is 9% vs the notional employer (i.e. private sector) contribution rate to the average DC pension scheme is 7%. ASC/PRD is not considered in the 9%, so would be 7% if you incorporate it now.

 

[Tadhg22]

OK, thank you. So when we do include the asc, the notional employer contribution rate for the public sector is 7%,the same as the notional private sector contribution? So apart from the security of state backing, there's no other benefit to the spsps really?