# Good article on why we should not be borrowing to pay increases to public servants



## Brendan Burgess

A good article by Eamon Delaney 

*Hard work should be a goal not a penalty, even for public sector unions*

_Which makes it all the more puzzling that the Government is in danger of immediately blowing the improved public finances and that for short-term electoral gain, they would risk our historic and still precarious recovery.


Minister Brendan Howlin said that he will be prudent but he seems to be endorsing completely the wrong approach by saying that after years of austerity people are asking:’What am I going to get back?’.

...


This is ridiculous: giving the gains of our hard-won recovery, not to hospitals and schools where they are really needed, but to the pay packets of public sector workers, including our already over-paid politicians._


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## Purple

The Public Sector establishment got massive pay increases and increases in numbers during the boom. They were cut after the crash but they are now getting them back.
Their Unions feel able to put a gun to the head of the people of Ireland again. There is no evidence so far that they are wrong in that opinion and with a member of their political wing as Minister for Public Expenditure they should be very confident of the outcome they want.

Our children will have to pay for it but that seems to be what the anti-austerity/ anti-take responsibility for our own actions people want.


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## venice

Is there any point in starting another Public V Private thread in an attempt to divide one with the other?

There is an election coming up and the only way a party has any chance of getting substantial votes is to give back a lot of what the Government took over the last number of years.

And they would be fools not to.

People might not like it but the public sector are in for a big increase in there take home pay with cutting the Pension levy and the USC, not to mention Tax cuts and pay increases.


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## Purple

venice said:


> Is there any point in starting another Public V Private thread in an attempt to divide one with the other?
> 
> There is an election coming up and the only way a party has any chance of getting substantial votes is to give back a lot of what the Government took over the last number of years.
> 
> And they would be fools not to.
> 
> People might not like it but the public sector are in for a big increase in there take home pay with cutting the Pension levy and the USC, not to mention Tax cuts and pay increases.


This has nothing to do with some public versus private sector argument. It has to do with borrowing money to give pay increases when we are just about solvent as a nation. It is about where we spend our scares resources; do we spend them on the poorest and most vulnerable or do we spend them on minimising the impact of our stupidity and greed on our children and their children... or do we spend them giving pay increases to the relatively well paid.


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## billyben

If you speak to friends or family in the Public Sector the majority it seems believe that,

1. They are paid the same or less than the private sector
2. That the modest pay cuts taken during the financial crash should be paid back


I am dissapointed in the current governments strategy of blantantly buying votes.  This will further add to to massive pay gap between public and private sector pay. Regardless if you think the very well paid should be paid more,, the fact is that using borrowed money to increase pay is madness.


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## Brendan Burgess

billyben said:


> the fact is that using borrowed money to increase pay is madness.



This is the Key Point. 

Borrowing money to give increases in salary is asking our children to pay for those increases. 

Brendan


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## rob oyle

Thing is though (and the above points would broadly reflect my own view), if you were to look at it the other way, who says money is being borrowed to pay increases? What if all capital investment was stopped (completely) and pay increases were given and overall expenditure was reduced? Would we be any better? Obviously not. So you bring back in the capital expenditure and suddenly, you're borrowing to fund *this *expenditure and not the pay rises!
What I'm saying is why would a pay increase be viewed as using borrowed money (the 3% or so that the State needs to borrow) when other spending, such as the replacement of staff in key areas or capital expenditure, would be viewed as an investment by the State?


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## Deiseblue

Another key point is that the arbitrary pay cuts were underpinned by emergency legislation - FEMPI
Minister Howlin is acutely aware that such legislation may not survive a legal action by Public Service Unions given that the Courts may rule that such an emergency no longer exists .
Minister Howlin obviously feels that an orderly wind down of such legislation is an infinitely preferable option & that incremental moderate pay restoration will have to form part of any successful negotiations with the Unions , the Unions are also aware that if FEMPI was to fall foul of legal action then an immediate restoration of pay & terms & conditions would place an impossible burden on the State & they seem to be at one with Minister Howlin that negotiation is the best way forward - still the spectre of legal action is a good bargaining tool going into such negotiations !
From the Unions point of view the forthcoming general election &  the fact that the current Government are constantly heralding an improvement in the Countrys economy couldn't have happened at a better time.


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## Protocol

venice said:


> People might not like it but the public sector are in for a big increase in there take home pay with cutting the Pension levy and the USC, not to mention Tax cuts and pay increases.



The PS may get some of their paycuts restored during 2016, but it won't be a "big rise".


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## Protocol

I can see why some people are against restoring any element of the PS pay while the State continues to borrow.

However, that logic implies that you are also against any other spending rise, or any tax cut, while the Govt still borrows.


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## Protocol

Lower paid PS are paid more than the private sector.

However, higher paid PS are paid less than their private equivalents.

Overall, the PS pay premium has now fallen to the range [-1% to 1%], and this is before the third round of paycuts.


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## Deiseblue

Protocol said:


> The PS may get some of their paycuts restored during 2016, but it won't be a "big rise".


 
I agree , pay restoration will be on a moderate scale.
It is imperative that the Unions do manage to achieve forward momentum in the pay & terms & conditions arena in the current negotiations not only for 2016 but to set a template for following years.
Thankfully given the current political & economic climate such forward momentum should be achievable.


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## Purple

Protocol said:


> Lower paid PS are paid more than the private sector.
> 
> However, higher paid PS are paid less than their private equivalents.
> 
> Overall, the PS pay premium has now fallen to the range [-1% to 1%], and this is before the third round of paycuts.



I agree. The argument can be made for pay increases for higher paid public sector employees, if better T’s and C’s, pensions, time off etc. Are ignored but there is no case to be made for pay increases for lower paid state employees.

I also agree that it is hypocritical of many people to look for tax cuts while opposing pay increases for state employees.

There should be no pay increases or tax cuts while we are still borrowing to fund current expenditure.


It should be government policy to be in the top 5 most competitive economies in the world and they should be prohibited from taking any action that would or could knock us out of that top five.


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## thedaddyman

I thought public sector workers had got payrises over the last few years except that they are known as increments. I know Haddington Road lengthened the gap between such payments but are they not still in existence?, apologies if I got that wrong

Secondly, if they do exist, what is the average increment worth to an individual? If you include such increments, does anyone know how the average salary of a public sector worker say on €30k 6 years ago has actually changed?


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## Purple

thedaddyman said:


> I thought public sector workers had got payrises over the last few years except that they are known as increments. I know Haddington Road lengthened the gap between such payments but are they not still in existence?, apologies if I got that wrong
> 
> Secondly, if they do exist, what is the average increment worth to an individual? If you include such increments, does anyone know how the average salary of a public sector worker say on €30k 6 years ago has actually changed?


See the [broken link removed]. Increments are still being paid but every 15 months rather than 12 months, but only for the duration of the agreement. According to the Brethren in Impact the modest pay cuts will be reversed quite soon anyway.


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## Protocol

Yes, some would have got increments, those with long scales, e.g. teachers.

Others at top of shorter scales means no increments


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## venice

Due to recruitment embargo for the last number of years, Increments are no longer as issue as most PS staff are at the top of their scale so longer get them.



Protocol said:


> The PS may get some of their paycuts restored during 2016, but it won't be a "big rise".



I feel there will be “big rises” with the promise of bigger if the present Government are in power.

Of course these promises will be broken no matter who is in power.


This pre-election budget is a one off chance for the unions to claw back what was taken over the last number of years.


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## Deiseblue

Protocol said:


> Lower paid PS are paid more than the private sector.
> 
> However, higher paid PS are paid less than their private equivalents.
> 
> Overall, the PS pay premium has now fallen to the range [-1% to 1%], and this is before the third round of paycuts.




The pay cuts imposed on those earning between €65,000 & just over €100,000 under the Haddington Road Agreement are to be restored in full in 2 tranches - April 2017 & 9 months later.


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## Jon Snow

venice said:


> Due to recruitment embargo for the last number of years, Increments are no longer as issue as most PS staff are at the top of their scale so longer get them.
> 
> 
> 
> I feel there will be “big rises” with the promise of bigger if the present Government are in power.



I don't expect, nor see it as very likely, that there'll be big rises. Nor do I get the impression from talking to colleagues that they do.


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## Jon Snow

Deiseblue said:


> The pay cuts imposed on those earning between €65,000 & just over €100,000 under the Haddington Road Agreement are to be restored in full in 2 tranches - April 2017 & 9 months later.



Isn't the whole point of the current talks to find a way to unwind the HRA so that it doesn't come to that abrupt end? (I hope you're right though, if you can prove it my wife might agree to let me change my 12-year old car...!!)


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## venice

Jon Snow said:


> I don't expect, nor see it as very likely, that there'll be big rises. Nor do I get the impression from talking to colleagues that they do.



We must mix in different circles so.


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## Protocol

Jon Snow said:


> I don't expect, nor see it as very likely, that there'll be big rises. Nor do I get the impression from talking to colleagues that they do.



Correct.

PS that I have spoken to are somewhat aware of the talks, but do not expect a substantial reverse of the paycuts.


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## venice

The ones I have been taking to are expecting a big increase in take home pay and the unions are feeding these expectations almost like its inevitable.

Time will tell I suppose


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## Protocol

Given the state of the public finances, they are very naive.

The Govt have repeatedly said any reversal of paycuts will be modest.


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## venice

Protocol said:


> they are very naive



I think you are naive if you believe anything the Government say.


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## Protocol

The Govt simply can't afford big restoration of paycuts, given the constraints imposed by troika and EU budget targets.


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## roker

Why is it when the private sector negotiate a pay rise, they have to increase productivity in some way, but the public sector or more specifically TDs just get a rise even if they mess things up?


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## venice

The public sector got pay cuts and increased productivity, but don't let the facts get in the way of a good rant.


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## seantheman

venice said:


> The public sector got pay cuts and increased productivity, but don't let the facts get in the way of a good rant.


Not aimed at you venice, I've always been bemused by this idea of increased productivity. since I left school i've always been in employment, firstly in the UK and then since returning home in 2000. I've always given 100% to my employers in terms of commitment during my working day (I'm not a believer in the 110% BS) I dont have any room for increased productivity in my day unless i work extra hours. So, how does the extra productivity come about?? Were these employee's cheating their employers before agreements were put in place?? I'm being serious here, How can people give more if they're already giving their all? or is it all a charade between unions and employer representatives to appease the general public?


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## Protocol

Productivity across the economy has been growing by maybe 2% pa for the past 20 years.

Main way is new machines, etc.

Example: ATM machines in banks.

Previously teller dealt with 100 transactions per day.

Now with machine and teller both available, transactions per teller might be 200 per day, as the machine also does 100 lodgements per day.

Note that the teller isn't working any faster, but transactions per teller have risen.


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## Deiseblue

seantheman said:


> Not aimed at you venice, I've always been bemused by this idea of increased productivity. since I left school i've always been in employment, firstly in the UK and then since returning home in 2000. I've always given 100% to my employers in terms of commitment during my working day (I'm not a believer in the 110% BS) I dont have any room for increased productivity in my day unless i work extra hours. So, how does the extra productivity come about?? Were these employee's cheating their employers before agreements were put in place?? I'm being serious here, How can people give more if they're already giving their all? or is it all a charade between unions and employer representatives to appease the general public?



The answer is contained in the body of your post.

" I dont have any room for increased productivity in my day unless i work extra hours " - that is exactly what happened to public sector workers , their  hours have been arbitrarily increased !


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## Purple

venice said:


> The public sector got pay cuts and increased productivity, but don't let the facts get in the way of a good rant.


What measures are used to tell us by how much productivity has increased in the Public Sector?
How is the output measured? It strikes me that these things are difficult to quantify and so open to abuse by both sides.

I also don't understand why people would expect a pay increase for an increase in productivity if they don't have to work harder or longer. If an employee is given a better PC or a faster or more efficient process is introduced then why on earth should they be given a pay increase. That makes no sense at all.



Deiseblue said:


> " I dont have any room for increased productivity in my day unless i work extra hours " - that is exactly what happened to public sector workers , their hours have been arbitrarily increased !


Can you give a link to back that up?
Does it apply to all public sector employees or just the "wurkers"?


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## Protocol

It is well-established that real wages should follow labour productivity.

This would be standard economics.

Over the long-run, this has happened, more or less. [well, the link has weakened recently]

Otherwise, all the gains from more productive labour would go to somebody else, not the worker.


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## Protocol

I'll give you an example of productivity in the public service.

Employment is local councils is down 25%.

Output [difficult to quantify] is not down that much.

Therefore, output per worker is up.


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## Purple

Protocol said:


> It is well-established that real wages should follow labour productivity.
> 
> This would be standard economics.
> 
> Over the long-run, this has happened, more or less. [well, the link has weakened recently]
> 
> Otherwise, all the gains from more productive labour would go to somebody else, not the worker.


Fair enough but if the organisation is not meeting minimum standards and service levels and the employer has to borrow to fund the increases should they still be given? 



Protocol said:


> I'll give you an example of productivity in the public service.
> 
> Employment is local councils is down 25%.
> 
> Output [difficult to quantify] is not down that much.
> 
> Therefore, output per worker is up.


Great.
Employment and funding in the health sector went up massively throughout the boom with little or no increase in quality or service levels. It seems that money is neither the answer or the problem.

Maybe the fact that less than one in every 2000 Civil Servants are dismissed each year is indicative of the real problem. I work in a business employing around 100 people so for us to have the same dismissal rate we would only get rid of one person every 20 years.


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## venice

Purple said:


> This has nothing to do with some public versus private sector argument



Really?


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## Purple

venice said:


> Really?


Really.


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## Purple

Protocol said:


> Otherwise, all the gains from more productive labour would go to somebody else, not the worker.


Just to add to my last post; if a business increases its profits then it will be able to pay more to get better employees (or workers if you prefer). Good people are any organisations biggest asset. That in itself leads to price competition within the employment market and so leads to increased wages.
In a nutshell; f you want the most productive people then you have to attract them with the best wages. If your business processes and systems are not efficient then your employees cannot be truly productive. Both are required.
If an employee wants to be valued then they must make themselves valuable by being competent and efficient.


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## Shawady

I just want to back up what Protocol said; that most PS workers I know do not expect a massive increase and certainly not a full reversal of the previous pay cuts. It looks like it will something like a 2% increase if you can believe reports in the paper.

I would also like to point out that the government is talking about a 1.5 billion spending package for the next budget, roughly split 50/50 between reducing taxes and increasing spending. That equates to €750 million each and as PS pay is approx 1/3 of spending it is probably not a surprise that 200-300 million of that is earmarked for PS pay.
Is it buying votes? - probably but it is not just in the area of PS pay they will be looking to do that.


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## venice

Shawady said:


> most PS workers I know do not expect a massive increase




http://www.rte.ie/news/2015/0528/704515-public-pay-sector

So just to be clear, if the above article turns out to be true, just say, is this a massive increase or a moderate one?


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## noproblem

I find the tone of the posts very much anti PS. As for the so called called pay increases? Are they not a small part restoration of pay cuts, as agreed?.


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## venice

http://jrnl.ie/2131874

So €1000 per year for 2 years. Add tax and usc cuts to that.


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## Purple

noproblem said:


> I find the tone of the posts very much anti PS. As for the so called called pay increases? Are they not a small part restoration of pay cuts, as agreed?.



Pay increases are pay increases. A rose by any other name and all that.



The issue here is affordability.

There are pay increases in some parts of the private sector but I can guarantee that no business in that sector is borrowing to fund pay rises for their employees.


During the boom, when money was gushing from the state pay rise ATM, wage levels in the state sector rose at unprecedented rates to unsustainable levels.

As pay increased so did pensions and future pension liabilities. By 2050 every cent we raise in taxation will have to be spent on state pensions. In that context the pension levy is not just necessary it is crucial and, at current levels, totally inadequate.


Taking to above into account it is clear that the government is now playing politics at the expense of the greater good of the nation. They should be ashamed of themselves.


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## Fella

I work in the public sector , my experience was my wage was cut a lot with pension levy and other cuts and some small benefits we had taken away.  
There are loads of people working in the public sector on very low wages,  most of the Clerical officers would be struggling to get by on the money , but I find that there are just too many staff for each job and you can't get rid of non performing staff they are just transferred to another department and kept , the higher up are arguably paid too much. 

Its not run like a private sector company I don't think its ever going to be either so its impossible to compare , problem is there are some really good workers who deserve a pay rise and loads of other non performing staff that should be and would be sacked in a private company that don't so meh its an argument that will go on forever .


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## Shawady

venice said:


> http://www.rte.ie/news/2015/0528/704515-public-pay-sector
> 
> So just to be clear, if the above article turns out to be true, just say, is this a massive increase or a moderate one?


 
They did not reach an agreement last night but what seems to be definite is €1,000 increase for each worker introduced on an incremental scale over 2016. That represents an average 2% increase which I would condier moderate.
Where there seems to be disagreement is the unions want this repeated for 2017 targeting lower paid workers.

To go back to the original post by Brendan it is questionable whether the goverment should be incresing spending or reducing taxes while we are still borrowing money to run the country. It is not a shock that these things will kick in a few months before the next election.


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## Delboy

There's nothing 'moderate' about the Govt still borrowing billions every year to keep the country running, paying billions more on interest on existing borrowings...and then deciding to give pay rises to civil servants a few months ahead of an election!


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## Deiseblue

From a Trade Unionist's point of view forward momentum is to be welcomed  - moderate pay restoration incrementally over coming years & a restoration of the pay cuts introduced by the Haddington Road agreement by 2017 allied to universal tax cuts
The ultimate hope must be that the much heralded improvement in the country's finances continues apace thus rendering FEMPI absolete.
If the economy continues to improve surely a concerted Union drive to test the validity of FEMPI legislation in the Courts must be on the cards ?
It must be said that the convergence of a general election , the end of the Haddington Road agreement & the fact that the Government has played up the improvements to the economy has proved advantageous for the Unions.


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## Purple

We should have no tax cuts or pay increases, be they for high or low earners, while we are still borrowing to fund the day to day running of the country.


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## Duke of Marmalade

Purple said:


> We should have no tax cuts or pay increases, be they for high or low earners, while we are still borrowing to fund the day to day running of the country.


It's not quite as simple as that, I think.  The economists talk of "structural" deficits, which apparently can be justified.  Thus at the moment Ireland has 10% unemployment.  That is higher than an economic "norm" and is expected to fall.  Therefore it is valid to recognise that we have an abnormally low tax base and an abnormally high social welfare expenditure.  The economists tell us that this should be bridged by borrowing.  Of course the debate is over what is "normal".

One of the injustices meted out over the crisis resolution was when new teachers and doctors were put on (10% I think) inferior payscales than incumbents - a horrible example of the unions pulling up the ladder.

A similar injustice was that since a certain date PS workers were put on an average salary pension scheme instead of the traditional final salary versions and yet had to pay the same levy (I think).

Surely these two injustices must be addressed first before rolling back any reduction to the pay of the earlier teachers, doctors and other PS workers


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## ashambles

Deiseblue said:


> From a Trade Unionist's point of view forward momentum is to be welcomed  - moderate pay restoration incrementally over coming years & a restoration of the pay cuts introduced by the Haddington Road agreement by 2017 allied to universal tax cuts


Should all pay reductions be changed back? Is 2007 where we want to be?

I don't have a problem with modest or justifiable payrises, however we're in for another economic crash if our starting point is thinking that all the ludicrous payrises of the Bertie and Begg era can be brought back.

Maybe it's time to remind some people with short memories where we were in 2007.

http://www.rte.ie/news/2007/1025/95197-politics/

_The Taoiseach is set to receive a pay rise of €38,000 a year, which will bring his annual salary to €310,000.

The pay increase is under the terms of a pay review for senior public servants.

The Review Body on Higher Remuneration in the Public Sector compares pay in the private sector with incomes of around 1600 senior staff including politicians, the judiciary, top gardaí and heads of Government departments and state agencies.
In general, the most senior staff have received the highest increases to take account of their heavier responsibilities.

The average award for these staff will be 7.3% and the total cost of the increases will be around €16m a year._​


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## Purple

Duke of Marmalade said:


> It's not quite as simple as that, I think.  The economists talk of "structural" deficits, which apparently can be justified.  Thus at the moment Ireland has 10% unemployment.  That is higher than an economic "norm" and is expected to fall.  Therefore it is valid to recognise that we have an abnormally low tax base and an abnormally high social welfare expenditure.  The economists tell us that this should be bridged by borrowing.  Of course the debate is over what is "normal".


Of course it has to be bridged by borrowing but while we are bridging it we shouldn't give pay rises.



Duke of Marmalade said:


> One of the injustices meted out over the crisis resolution was when new teachers and doctors were put on (10% I think) inferior payscales than incumbents - a horrible example of the unions pulling up the ladder.


 I agree it was the haves protecting themselves from the have-not's and yes, it was 10%, but if all future employees are hired on that bases it will act to bring public sector pay costs closer to a sustainable level.



Duke of Marmalade said:


> A similar injustice was that since a certain date PS workers were put on an average salary pension scheme instead of the traditional final salary versions and yet had to pay the same levy (I think).


 The pensions time bomb is by far the biggest issue we are facing as a nation. If the T's and C's of existing employees cannot be touched then it is inevitable that new employees will have to be hit harder.



Duke of Marmalade said:


> Surely these two injustices must be addressed first before rolling back any reduction to the pay of the earlier teachers, doctors and other PS workers


If a suitable number of appropriately skilled and qualified people can by found to do a job at current pay rates then there should be no pay increases. If enough suitable people cannot be hired then pay rates should be increased.


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## Duke of Marmalade

Purple said:


> If a suitable number of appropriately skilled and qualified people can by found to do a job at current pay rates then there should be no pay increases. If enough suitable people cannot be hired then pay rates should be increased.


Well that opens up a whole new can of worms.  Junior doctors have gone through 6 years of training and are scarce fit for anything else, teachers also to a lesser extent.  They are at the mercy of the monopolist employer.  Unfortunately new recruits also found themselves at the mercy of the union collaborators only too willing to pull up the ladder.

One slight justification of leaving the incumbents as they were was that they possibly had entered commitments (such as mortgages).  But what I see happening here is that, whether it makes economic sense or not, there is going to be an across the board pay rise.  It is in that situation that I really find it hard to justify how those incumbents with their historic discriminatory advantage have any entitlement.  But of course there are a lot more incumbents hence votes and union membership than new recruits.

I don't know about teachers, I guess they are sorta stuck here, but the approach to doctors has been outrageous and shortsighted and bodes very ill for the future of our health services.  In the week that's in it with Ireland basking in its new found role as the beacon of enlightenment let us remind ourselves that we have been found guilty at the international courts of public sector slave labour for our young doctors and publicly endorsed brutality of our children.  Rant over


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## Sarenco

If you assume that taxation as a % of GNP remains constant, and we do nothing to reduce our current unfunded State pension liabilities, it implies that the % of the total tax take that will need to be expended on State pensions (including the contributory old age pension) will increase from roughly 3.5% today to roughly 23.5% by 2060, based on the C&AG's most recent actuarial projections.

Put simply, on any reasonable projection, our accrued but unfunded State pension liabilities are completely unsustainable.

In this context, it is depressing to read today's reports that public sector PRDs are set to be reduced.  Perhaps this is not particularly surprising but, in my view, history will not look kindly on the current Government's complete failure to make any progress whatsoever on the pension issue.


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## 44brendan

It is not unreasonable to accept that a set fund each year is put aside for PS workers. However, it is unreasonable and in the context of the pension time-bomb also negligent not to put aside a portion of this fund to cover future PS pension payments. The difficulties most of us have in understanding the potential consequences of unfunded future PS pay-outs is the absence of any comparison of the issue with other European countries. I.e. Are we all in the same boat or do other countries have significant reserves set aside to meet future PS pension payments. While this is not directly related to increases in PS pay it should be on the same page!


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## venice

I agree something will have to be done with the pension time bomb.

We can’t carry on the way we are with the huge amount of private sector workers not paying into a pension fund. As far as I am aware the Government is to introduce a Universal Pension Scheme later in the year to address this.


Everyone should pay pension, not just the Public Sector


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## Deiseblue

New deal to be voted on ,costing 560 million over 3 years


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## Sarenco

venice said:


> I agree something will have to be done with the pension time bomb.
> 
> We can’t carry on the way we are with the huge amount of private sector workers not paying into a pension fund. As far as I am aware the Government is to introduce a Universal Pension Scheme later in the year to address this.
> 
> 
> Everyone should pay pension, not just the Public Sector


 
The problem is that most public sector workers don't pay into a pension scheme - there is no pot of money - public sector pension entitlements (and the contributory OAP) are completely unfunded and are payable solely out of future tax revenue.

This is known as a "pay-as-you-go" system.

When Charlie McCreevy established the national pension reserve fund (NPRF) the object was to provide for future State pension liabilities by contributing funds equivalent to 1% of GNP per annum and investing these funds in a relatively aggressive fashion (80% equities).  The funds in the NPRF have now been spent but the pension liabilities have continued to grow.

Ireland is not unique in facing this problem but Irish State pensions are particularly generous by international standards.

For the private sector, the Government is proposing mandatory enrolment (which they now have in the UK) but an employee can opt-out.  This is really just window dressing.

Oh well, at least it's sunny outside


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## Purple

venice said:


> I agree something will have to be done with the pension time bomb.
> 
> We can’t carry on the way we are with the huge amount of private sector workers not paying into a pension fund. As far as I am aware the Government is to introduce a Universal Pension Scheme later in the year to address this.
> 
> 
> Everyone should pay pension, not just the Public Sector


What on earth are you talking about?
Public sector employees come nowhere near to funding their pensions. We all get a state pension but other than that Private sector employees don't get a pension unless they pay for it themselves. 
The semi-state sector is, for all intents and purposes, part of the public sector as none of those organisations are open to real competition. 
The state pension, which is unfunded and paid for out of general taxation, is also unsustainable and will have to be changed and probably reduced significantly .


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## venice

Purple said:


> What on earth are you talking about?



You just agreed with everything I said???



Purple said:


> We all get a state pension



Incorrect! Pre 1995 Public Sector employees of which there are many do not get the state pension

The real issue here is that 1 in 2 private sector employees do not pay into any pension unlike the public sector who all pay in a pension.


This needs to be addressed.


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## Firefly

Does anyone else think that it was a very opportune time by the government to announce pay rises in the PS just after the national feel-good factor was high after the YES result and also leading into a bank holiday weekend?


----------



## Deiseblue

Firefly said:


> Does anyone else think that it was a very opportune time by the government to announce pay rises in the PS just after the national feel-good factor was high after the YES result and also leading into a bank holiday weekend?



Oh you cynic 

The talks were always aimed to conclude at the end of May one way or the other.
It was important that the teacher unions be in a position to ballot their members prior to going on their richly deserved holiers .
The larger Unions also expect to conclude ballots in July , this is important from the Government's point of view in terms of certainty prior to the preparation of the next budget.


----------



## Firefly

Deiseblue said:


> It was important that the teacher unions be in a position to ballot their members prior to going on their richly deserved holiers .



Oh you troll


----------



## Deiseblue

Firefly said:


> Oh you troll



Ah you have to hang the bait out there sometimes !


----------



## ashambles

I was hoping to see more detail on the claim this would cost 566m over three years.

There seems to be a huge understatement of costs.

Clearly 2k on average for 300k employees is 600m in a full year, so depending on how that's split out we're looking at closer to 1500m over three years, i.e the cost is being understated by 1 billion euro, unfortunately this sort of subterfuge was rife in the Bertie and Beggs era. So we seem to be back to square one.

I would guess they're understating the cost even more, a 20k employee pays little in pension levy (despite what they may think) so they'll need a pay rise of around 4% to get to a 1k pay rise. Payrises have an impact on pension costs and knowing the mindset of the people involved will certainly give rise to "relativity claims" and all the rest. This 566m deal will cost closer to 2B by the time it's finished.


----------



## Gordon Gekko

I feel sorry for the middle to high earning public servants. They were asked to take bigger cuts and now they're being asked to take smaller increases. Where's the fairness in that?!


----------



## venice

ashambles said:


> I was hoping to see more detail on the claim this would cost 566m over three years.



Why do you need more detail. Looks to me you have worked out yourself that's it's going to cost 2 Billion.

No idea where you got those figures from but there you go..


----------



## ashambles

venice said:


> Why do you need more detail. Looks to me you have worked out yourself that's it's going to cost 2 Billion.
> 
> No idea where you got those figures from but there you go..


Does this help?

Year 1
1000 * 300000 = 300m
Year 2
1000 * 300000 * 2 = 600m
Year 3
600m?

That would add up to 1.5B, as I stated before however there as costs are associated with payrises. So it's going to be higher than this, also I can't see year 3 costing the same as year 2.


----------



## Deiseblue

ashambles said:


> Does this help?
> 
> Year 1
> 1000 * 300000 = 300m
> Year 2
> 1000 * 300000 * 2 = 600m
> Year 3
> 600m?
> 
> That would add up to 1.5B, as I stated before however there as costs are associated with payrises. So it's going to be higher than this, also I can't see year 3 costing the same as year 2.



The mooted Agreement extends the Haddington Road Agreement until 2018 , by the end of 2017 Public Sector workers will have their Gross pay restored by an average of €2,000 .

There are approx. 280,000 Public Sector workers x €2,000 = € 560,000,000.

It should be noted that the State will recoup a substantial amount of that figure - PAYE , USC , PRSI & the Pension Levy.


----------



## Deiseblue

Gordon Gekko said:


> I feel sorry for the middle to high earning public servants. They were asked to take bigger cuts and now they're being asked to take smaller increases. Where's the fairness in that?!



The Government has confirmed that all Public Sector workers earning between €65,000  & just over €100,000 per annum will have the pay cuts imposed by the Haddington Road Agreement reversed by 2017.


----------



## Gordon Gekko

Deiseblue said:


> The Government has confirmed that all Public Sector workers earning between €65,000  & just over €100,000 per annum will have the pay cuts imposed by the Haddington Road Agreement reversed by 2017.



So where does this €1,000 stuff fit in with that?

Are you sure?

€2,000 will hardly get someone who was on €70,000 back to their original salary.


----------



## ashambles

Deiseblue said:


> New deal to be voted on ,costing 560 million over 3 years


and

http://www.irishtimes.com/news/irel...costing-566m-affordable-says-howlin-1.2231563

_The new public service pay restoration deal, which will see most public service staff receive €2,000 on a phased basis, will cost the State €566 million over three years._

The figures of 566m has been quoted as being the cumulative cost over three years, I think even Deiseblue is now agreeing it isn't the cost over three years but one year. So both the post  and article quoted above are incorrect.

Why this is important is during the Bertie & Begg era the government were not able to correctly predict the cost and sustainability of simple pay rises - as I said before it looks like we're back there again.


----------



## Jon Snow

ashambles said:


> and
> 
> http://www.irishtimes.com/news/irel...costing-566m-affordable-says-howlin-1.2231563
> 
> _The new public service pay restoration deal, which will see most public service staff receive €2,000 on a phased basis, will cost the State €566 million over three years._
> 
> The figures of 566m has been quoted as being the cumulative cost over three years, I think even Deiseblue is now agreeing it isn't the cost over three years but one year. So both the post  and article quoted above are incorrect.
> 
> Why this is important is during the Bertie & Begg era the government were not able to correctly predict the cost and sustainability of simple pay rises - as I said before it looks like we're back there again.



I don't understand the figure either TBH - if you say the gross pay cost is 2k x 280k workers that's 560m, but then there's the income tax, PRSI, PRD, pension contributions and USC on it, which is at least half of it, so the actual cost in additional payments to PS staff is at most 280m in a year. 

That doesn't include PS pensioners, not sure what their cost is and what the new deal means for them.

And then there's what effect that increase has on future entitlements, but seeing as 99% of serving PS workers are on a final salary pension, that's unknowable...


----------



## Deiseblue

ashambles said:


> and
> 
> http://www.irishtimes.com/news/irel...costing-566m-affordable-says-howlin-1.2231563
> 
> _The new public service pay restoration deal, which will see most public service staff receive €2,000 on a phased basis, will cost the State €566 million over three years._
> 
> The figures of 566m has been quoted as being the cumulative cost over three years, I think even Deiseblue is now agreeing it isn't the cost over three years but one year. So both the post  and article quoted above are incorrect.
> 
> Why this is important is during the Bertie & Begg era the government were not able to correctly predict the cost and sustainability of simple pay rises - as I said before it looks like we're back there again.



The new mooted agreement if accepted by Union members will become operative in 2015 thus replacing the Haddington Road Agreement and will terminate in three years time in 2018 .
The vast majority of Public Sector will have pay partially restored in 2 tranches in 2016 & in late 2017.
Subsequent to the termination of the Agreement in 2018 negotiations on further pay restoration will hopefully recommence.
In any event the the thought that this particular new agreement will cost the State some 2 billion euro is hugely off the mark , as pointed out the net cost to the State will be far less than € 560 million.


----------



## Deiseblue

Gordon Gekko said:


> So where does this €1,000 stuff fit in with that?
> 
> Are you sure?
> 
> €2,000 will hardly get someone who was on €70,000 back to their original salary.



All Public Sector workers next year will receive a flat rate increase of €1,000 per annum , workers earning over €65,000 will not receive the €1,000 in 2017 payable to those on lesser salaries but will have their pay restored to pre Haddington Road Agreement levels.


----------



## Purple

venice said:


> You just agreed with everything I said???


You give the impression that state employees are funding their pensions. Nothing could be further from the truth.
Am I misreading you?





venice said:


> Incorrect! Pre 1995 Public Sector employees of which there are many do not get the state pension


Pre 95 public sector employees get a state pension. It is tied to their rate of pay at the time they retire. Other than Judges they have the most heavily subsidised pensions in the country. They make a small contribution towards the cost but it's no much more than a token.



venice said:


> The real issue here is that 1 in 2 private sector employees do not pay into any pension unlike the public sector who all pay in a pension.
> This needs to be addressed.



No state employee funds their own pension. They all contribute but none of them come close to covering the cost.
With the removal of the employee PRSI ceiling high paid private sector employees cover their own state pension. All other state pensions, be they for state employees or general OAP's, are subsidised through general taxation.
The retirement age should be increased significantly and everyone who works should have to fund their own pension, be they private or public sector. All pensions should be defined contribution, be their private or public.


Does anyone have the stat's on how our state pension liabilities break down? What proportion is for state employees, what's for contributory and non-contributory pensions and what makes up the rest?


----------



## galway_blow_in

the government really have no choice but to bribe the public sector as if they don't , labour will be no use to FG when they go looking for a coalition partner after the next election , add to that , if the current government don't dole out goodies to the public sector , FF will promise to anyway like they have always done

all political parties in this state actively court the public sector vote and all prioritise it above all voter demographics with the exception of pensioners


----------



## Purple

Deiseblue said:


> In any event the the thought that this particular new agreement will cost the State some 2 billion euro is hugely off the mark , as pointed out the net cost to the State will be far less than € 560 million.



That’s a silly and disingenuous way of putting it.

Costs are always given as gross costs. Public sector employees don’t give their salary as a net figure. Otherwise they are not tax payers. Otherwise they don’t consume state services.

The cost of this will be the gross cost plus the interest we will have to pay on the money we are borrowing to fund it.

That’s all money that will not be spent paying down our debts or on children with special needs (the teachers will take that money instead) or on sorting out the A&E crisis (the nurses and doctors will take that instead).

The government should be ashamed of themselves. The Unions are just doing their job; parasites live off their host, it’s in their nature.


----------



## galway_blow_in

noproblem said:


> I find the tone of the posts very much anti PS. As for the so called called pay increases? Are they not a small part restoration of pay cuts, as agreed?.



and so what if they are " anti " PS ?

the PS is over paid in this country by international standards and I include wages to guards , nurses and teachers


----------



## galway_blow_in

Fella said:


> I work in the public sector , my experience was my wage was cut a lot with pension levy and other cuts and some small benefits we had taken away.
> There are loads of people working in the public sector on very low wages,  most of the Clerical officers would be struggling to get by on the money , but I find that there are just too many staff for each job and you can't get rid of non performing staff they are just transferred to another department and kept , the higher up are arguably paid too much.
> 
> Its not run like a private sector company I don't think its ever going to be either so its impossible to compare , problem is there are some really good workers who deserve a pay rise and loads of other non performing staff that should be and would be sacked in a private company that don't so meh its an argument that will go on forever .




clerical workers answer phones , post mail and use printers etc , were they working in the private sector , they would be on at least 30% less and forget about the same pension


----------



## galway_blow_in

Purple said:


> That’s a silly and disingenuous way of putting it.
> 
> Costs are always given as gross costs. Public sector employees don’t give their salary as a net figure. Otherwise they are not tax payers. Otherwise they don’t consume state services.
> 
> The cost of this will be the gross cost plus the interest we will have to pay on the money we are borrowing to fund it.
> 
> That’s all money that will not be spent paying down our debts or on children with special needs (the teachers will take that money instead) or on sorting out the A&E crisis (the nurses and doctors will take that instead).
> 
> The government should be ashamed of themselves. The Unions are just doing their job; parasites live off their host, it’s in their nature.




plenty of public servants quote their wages as a NET figure as it makes it look like they are on a lower amount , its a union coached tactic , guards also omit the numerous allowances they receive


----------



## Purple

galway_blow_in said:


> plenty of public servants quote their wages as a NET figure as it makes it look like they are on a lower amount , its a union coached tactic , guards also omit the numerous allowances they receive


The figure on your P60 is what matters. Plus the difference between contributions made nominal cost of funding your pension. 
If allowances are pensionable it is particularly dishonest not to include them.


----------



## Purple

Fella said:


> I work in the public sector , my experience was my wage was cut a lot with pension levy and other cuts and some small benefits we had taken away.
> There are loads of people working in the public sector on very low wages,  most of the Clerical officers would be struggling to get by on the money , but I find that there are just too many staff for each job and you can't get rid of non performing staff they are just transferred to another department and kept , the higher up are arguably paid too much.
> 
> Its not run like a private sector company I don't think its ever going to be either so its impossible to compare , problem is there are some really good workers who deserve a pay rise and loads of other non performing staff that should be and would be sacked in a private company that don't so meh its an argument that will go on forever .


Very honest post.
Wages should be set based on the employees value to the organisation. They should never be based on what the employee needs to make ends meet.
The responsibility to make sure that everyone has a minimum standard of living belongs to the state and so should be bourn by the people collectively. Such a social burden should never to imposed directly on an employer. If we want employers to contribute more then increase their taxes.


----------



## ashambles

So according to the nothing if not inconsistent Deiseblue
_New deal to be voted on ,costing 560 million over 3 years_​
and it will also cost 560m over 1 year (290k public servants btw)
_There are approx. 280,000 Public Sector workers x €2,000 = € 560,000,000._​
and it will also be far cheaper - over three years?
_as pointed out the net cost to the State will be far less than € 560 million._​

I'd a look at the text of the agreement (somebody had to - [broken link removed]), from that I believe the 3 years are really just two years, the agreement kicks in next year and covers 2016 and 2017. It also does seem that they're excluding the payrises over 65k which were already factored in - which is reasonable enough.

So now we're looking at 2 years and 300m + 300m + maybe 200m. So around 700-800m.  If they are indeed using net of tax figures - an unwelcome first in my experience of listening to announcements on pay rises, then that 800m could probably net down to around 566m - using an average tax rate of around 30%. 

Howlin was effectively saying 300m+600m+600m=600m. It shouldn't need someone to dig into their figures and see they probably really mean two years, they're excluding some costs already factored in, and they're taking a guess at a net of tax figure. Governments don't talk about pay net of tax when discussing increases or cuts, for tax they consider themselves as normal employers. If we can use net figures here, the next time there's a 2.5% rise we'll need to check do they mean 5%.


----------



## venice

Purple said:


> You give the impression that state employees are funding their pensions



Where are you getting that impression from?



Purple said:


> Pre 95 public sector employees get a state pension



No they don’t. They pay a Class B PRSI stamp and so are not entitled to a state pension.


I feel we both agree that the current situation is unsustainable however where we disagree is that the best place to start is with the people who do not pay any pension contributions at all.

Less than half of workers aged 20 to 69 have a pension.

In other words 900,000 workers in the private sector have no pension.

Rant all you like about public sector pensions but this is the real elephant in the room.


----------



## Purple

venice said:


> Where are you getting that impression from?
> 
> 
> 
> No they don’t. They pay a Class B PRSI stamp and so are not entitled to a state pension.


The state funds their pension. What do you call it?




venice said:


> I feel we both agree that the current situation is unsustainable however where we disagree is that the best place to start is with the people who do not pay any pension contributions at all.
> 
> Less than half of workers aged 20 to 69 have a pension.
> 
> In other words 900,000 workers in the private sector have no pension.
> 
> Rant all you like about public sector pensions but this is the real elephant in the room.


I'd like to see the breakdown of the future liabilities but it's like being nuked twice; does it matter which one killed you? Both are part of the same unsustainable problem. The state pension is too high and people get it too early. We can't afford any of it.


----------



## Deiseblue

Ashambles , inconsistent - not in this case anyway 

The Lansdowne Road Agreement replaces the Haddington Road Agreement in the same way that the HRA replaced the Croke Park Agreement .

If agreed to by the various Union's memberships ( quite a big if , by the way ) the Agreement will run for three years from this year until 2018.

Over the course of the Agreement the vast majority of public sector workers will see their pay restored in 2 tranches - € 1,000 euros in both 2016 & 2017 - the State have based their calculations on these figures & given the fact that there are approx 280,000 Public Sector workers it is easy to see how the figures grosses out at 560,000,000 a large chunk of which will be recouped as detailed in other posts above.
Your calculation that any new Agreement will cost the State 2 billion euros is fanciful in the extreme.


----------



## DrMoriarty

Some illustrative figure are provided in the press release accompanying the document linked to above (which will only become an 'Agreement' if/when it is voted into force by ballots in the trade unions...):
http://www.per.gov.ie/statement-by-...the-government-and-the-public-service-unions/


----------



## venice

Purple said:


> The state funds their pension. What do you call it?




Employees whom contribute to Qualified Pay Related Social Insurance (PRSI) are entitled to a contributory retirement pension (if they have retired by age 65) or an old age pension (payable from age 66).

Public servants who pay Class B contributions are not entitled to the above.  

To pretend otherwise is mischievous and misleading.


----------



## Purple

venice said:


> Employees whom contribute to Qualified Pay Related Social Insurance (PRSI) are entitled to a contributory retirement pension (if they have retired by age 65) or an old age pension (payable from age 66).
> 
> Public servants who pay Class B contributions are not entitled to the above.
> 
> To pretend otherwise is mischievous and misleading.


So what do you call a pension that is funded by the state but is not a state pension?
It's all part of the state's pension liability and is all paid for through taxation. It all comes out of the same pot.

It walks like a duck, looks like a duck and quacks like a duck but it is not a duck. What is this creature called?


----------



## Purple

Deiseblue said:


> Ashambles , inconsistent - not in this case anyway
> 
> The Lansdowne Road Agreement replaces the Haddington Road Agreement in the same way that the HRA replaced the Croke Park Agreement .
> 
> If agreed to by the various Union's memberships ( quite a big if , by the way ) the Agreement will run for three years from this year until 2018.
> 
> Over the course of the Agreement the vast majority of public sector workers will see their pay restored in 2 tranches - € 1,000 euros in both 2016 & 2017 - the State have based their calculations on these figures & given the fact that there are approx 280,000 Public Sector workers it is easy to see how the figures grosses out at 560,000,000 a large chunk of which will be recouped as detailed in other posts above.
> Your calculation that any new Agreement will cost the State 2 billion euros is fanciful in the extreme.


Ignoring the pay increases that will be given to higher paid public sector employees the figures you have given mean that it will cost €280'000'000 in the first year and each year afterwards plus another €280'000'000 in year two and each year afterwards so it's €280'000'000 in year one and €560'000'000 in year two and each year afterwards. It is not a one off cost, it is a yearly recurring cost.


----------



## venice

Purple said:


> So what do you call a pension that is funded by the state but is not a state pension?




Here ye are, now go educate yourself.

Your welcome.

http://www.citizensinformation.ie/e...etired_people/state_pension_contributory.html


----------



## Purple

venice said:


> Here ye are, now go educate yourself.
> 
> Your welcome.
> 
> http://www.citizensinformation.ie/e...etired_people/state_pension_contributory.html


So it's a state funded pension but not the state funded pension. Got it.
So where does the money come from to pay for it?

And while you're at it; how many angels can dance on the head of a pin?


----------



## venice

Purple said:


> Got it



About time. 

You should change your name to green


----------



## Purple

venice said:


> About time.
> 
> You should change your name to green


Are you familiar with the concept of irony?


----------



## venice

yes?


----------



## Purple

Not overly so it seems.

You still haven't answered my previous questions;


Purple said:


> So what do you call a pension that is funded by the state but is not a state pension?



or to put it another way;



Purple said:


> It walks like a duck, looks like a duck and quacks like a duck but it is not a duck. What is this creature called?






Purple said:


> And while you're at it; how many angels can dance on the head of a pin?


----------



## venice

Purple said:


> It walks like a duck, looks like a duck and quacks like a duck but it is not a duck. What is this creature called?



A donkey?



Purple said:


> And while you're at it; how many angels can dance on the head of a pin?



12?



Purple said:


> So what do you call a pension that is funded by the state but is not a state pension?



An old age pension, paid at the age of 66 soon to be increased to 67 and then 68, which you are entitled to by paying a Class A stamp for a minimum of 10 years and not to be confused by a pension that a pre 1995 employee gets who does not pay a full stamp, Class B prsi.

Also not to be confused with Ducks, Donkeys or Angels.


----------



## Deiseblue

DrMoriarty said:


> Some illustrative figure are provided in the press release accompanying the document linked to above (which will only become an 'Agreement' if/when it is voted into force by ballots in the trade unions...):
> http://www.per.gov.ie/statement-by-...the-government-and-the-public-service-unions/



Thanks for that , an excellent summary - a Gross cost of €566,000,000 over three years with an ongoing commitment to an orderly winding down of the FEMPI legislation & a further commitment outside of this mooted Agreement to abolishing the pension deductions again in an orderly manner , I didn't realise that the pay restoration amounts came in three tranches in 2016 , 2017 & 2018 .

Good to note that the Government is also standing over the commitments they gave in the Haddington Road Agreement.


----------



## Sunny

venice said:


> Employees whom contribute to Qualified Pay Related Social Insurance (PRSI) are entitled to a contributory retirement pension (if they have retired by age 65) or an old age pension (payable from age 66).
> 
> Public servants who pay Class B contributions are not entitled to the above.
> 
> To pretend otherwise is mischievous and misleading.



Without wanting to get in the middle of your little love in with Purple, I think it might be you that is being mischievous and misleading by claiming that civil servants pre 1995 are somehow worse off because they don't get to claim the State pension. Post 1995 employees simply pay a higher level of PRSI and therefore are entitled to the State Pension. Their occupational pension is then adjusted by this amount. Pre 1995 employees don't have their pension adjusted as they are not entitled to the State pension. They both end up with pretty much the same so not sure why you are bringing pre 1995 civil servants into it?


----------



## Purple

venice said:


> A donkey?


No, that's the person who thinks it's not a duck.





venice said:


> 12?


I refer to my previous question about irony.





venice said:


> An old age pension, paid at the age of 66 soon to be increased to 67 and then 68, which you are entitled to by paying a Class A stamp for a minimum of 10 years and not to be confused by a pension that a pre 1995 employee gets who does not pay a full stamp, Class B prsi.


Ok, so in effect it's the same thing; a pension funded and paid by the state.
You can be as obtuse as you like but it doesn't change the facts.


----------



## Purple

Sunny said:


> Without wanting to get in the middle of your little love in with Purple, I think it might be you that is being mischievous and misleading by claiming that civil servants pre 1995 are somehow worse off because they don't get to claim the State pension. Post 1995 employees simply pay a higher level of PRSI and therefore are entitled to the State Pension. Their occupational pension is then adjusted by this amount. Pre 1995 employees don't have their pension adjusted as they are not entitled to the State pension. They both end up with pretty much the same so not sure why you are bringing pre 1995 civil servants into it?


I was enjoying myself and now you've ruined it!


----------



## venice

Sunny said:


> I think it might be you that is being mischievous and misleading by claiming that civil servants pre 1995 are somehow worse off because they don't get to claim the State pension.



Sunny Sunny Sunny please tell me where I claimed that civil servants pre 1995 are worse off because they don't get to claim the State pension.



Sunny said:


> Pre 1995 employees don't have their pension adjusted as they are not entitled to the State pension.



This is the point I am trying to get through to Green, but he cant seem to get it.
This part here that you have rightly stated:



Sunny said:


> they are not entitled to the State pension


----------



## thedaddyman

2 other things to bear in mind on the recent agreement

Firstly public sector workers will also benefit from any reduction in USC's
Secondly, many will still get increments

The latter point get's overlooked. Under Haddington Road, Public sector workers continued to get pay rises, except they were called increments and that will have recovered some of the salary they lost under the original agreement, if not all of it.

In fairness, they also agreed to work longer hours in many cases and I also know increments were frozen for a number of months and for higher salaries for the duration of the agreement.
Maybe I am daming the public sector in error and if so, my apologies. However it is all about the numbers so therefore let me ask a question that perhaps one of our Public Sector posters could answer

If I was a Executive Office Standard Scale on Band 3 of my payscale 4 years ago on a salary of €34360 per annum (figure is from the Impact trade union site- General Service Grades full PRSI), what would my salary be now before and after tax and how would that compare pre Haddington Road and the pension levy?


----------



## Purple

Deiseblue said:


> Thanks for that , an excellent summary - a Gross cost of €566,000,000 over three years with an ongoing commitment to an orderly winding down of the FEMPI legislation & a further commitment outside of this mooted Agreement to abolishing the pension deductions again in an orderly manner.
> 
> Good to note that the Government is also standing over the commitments they gave in the Haddington Road Agreement.


It is an excellent link. I thought that these costs were the increases as agreed under the Haddington Road agreement but they are in addition to those increases. The total cost is €566,000,000 plus the €278,000,000 which they were already getting or €844,000,000.
The recurring yearly cost to the people of Ireland of these two agreements is over a quarter of a billion Euro.

The minister also notes that, _"Separate from this Agreement with the Public Sector Unions, it is my intention to fulfil my commitment to begin the orderly restoration of public sector pension reductions made in recent years."_
Given that pensions are 50% of salary at retirement it will be a significant figure.


----------



## Purple

Can anyone tell me what the difference is, in any real way, between the state pension and a state pension?


----------



## Sunny

venice said:


> Sunny Sunny Sunny please tell me where I claimed that civil servants pre 1995 are worse off because they don't get to claim the State pension.
> 
> 
> 
> This is the point I am trying to get through to Green, but he cant seem to get it.
> This part here that you have rightly stated:



Like Purple, I don't get your point. They are not entitled to the contributory pension because they don't contribute. But they still recieve a Occupational pension that is higher than public sector workers who contribute to and receive the contributory pension. Either way, one public sector employee is the same as another public sector employee. What difference does it make to the cost of public sector pensions whether they receive the money from the Dept of Social Welfare or from their State employer?


----------



## venice

Sunny said:


> Like Purple, I don't get your point.



Ok, to clarify,

Earlier on in the thread Purple said the following:



Purple said:


> We all get a state pension but other than that Private sector employees don't get a pension unless they pay for it themselves.



I pointed out that this was factually incorrect, that's all.

My point is he is wrong in what he is stating.


----------



## ashambles

Purple said:


> It is an excellent link. I thought that these costs were the increases as agreed under the Haddington Road agreement but they are in addition to those increases. The total cost is €566,000,000 plus the €278,000,000 which they were already getting or €844,000,000.
> The recurring yearly cost to the people of Ireland of these two agreements is over a quarter of a billion Euro.



No, it's worse than that I think. The recurring cost from 2018 onwards seem to be 844m in total.

The document says "The agreement has additional costs of €566 million over a 3 year period as set out below." but looking at the figures they should be saying something like "will eventually cost 566m in a full year from 2018".

They're saying in my view

Cost of changes in 2016 = 267m
Cost of changes in 2017 = 290m + the changes in 2016
Cost of changes in 2018 = 287m + the changes in 2016 & 2017

The complete cumulative cost over these three years will be 1688m.


----------



## Jon Snow

ashambles said:


> No, it's worse than that I think. The recurring cost from 2018 onwards seem to be 844m in total.
> 
> The document says "The agreement has additional costs of €566 million over a 3 year period as set out below." but looking at the figures they should be saying something like "will eventually cost 566m in a full year from 2018".
> 
> They're saying in my view
> 
> Cost of changes in 2016 = 267m
> Cost of changes in 2017 = 290m + the changes in 2016
> Cost of changes in 2018 = 287m + the changes in 2016 & 2017
> 
> The complete cumulative cost over these three years will be 1688m.



The elephant in the room that your posts on this thread conveniently fail to consider, is what the alternative is?


----------



## ashambles

Jon Snow said:


> The elephant in the room that your posts on this thread conveniently fail to consider, is what the alternative is?


You don't see an alternative to a government telling us "The agreement has additional costs of €566 million over a 3 year period" when the costs are 1688m?

My alternative would be the government telling us the costs are 1688m, and not needing a hunt by the likes of us to uncover that figure.


----------



## Deiseblue

ashambles said:


> No, it's worse than that I think. The recurring cost from 2018 onwards seem to be 844m in total.
> 
> The document says "The agreement has additional costs of €566 million over a 3 year period as set out below." but looking at the figures they should be saying something like "will eventually cost 566m in a full year from 2018".
> 
> They're saying in my view
> 
> Cost of changes in 2016 = 267m
> Cost of changes in 2017 = 290m + the changes in 2016
> Cost of changes in 2018 = 287m + the changes in 2016 & 2017
> 
> The complete cumulative cost over these three years will be 1688m.



What you have failed to build into your computation is that the majority of the funding of the pay restoration over the three years comes from an incremental reduction in the pension levy thus ensuring someone on € 30,000 receives € 1,003 in 2016 , € 567 in 2017 ( not an accumulated figure of €1,570 ) & finally a sum of € 600 in 2018 ( not an accumulated figure of €2170 ).

The reality therefore is that based on the way the Government have approached matters is that somebody on €30,000 will accumulate pay restoration of € 2,170 - if salaries were to be increased then your figures would make some sense but because the restoration is being done majorly by reducing the levy your figures most certainly do not.

You didn't seriously believe that the Government understated the cost to the state by something in excess of € 1.1 billion over three years did you ?

If you look at someone earning € 30,000 they receive the biggest restoration of € 2,107 over three years , if you extrapolate that figure over 280,000 workers you arrive at a total figure of some € 590,000,000 so Minister Howlin's figure of € 566,000,000 makes absolute sense.


----------



## noproblem

galway_blow_in said:


> and so what if they are " anti " PS ?
> 
> the PS is over paid in this country by international standards and I include wages to guards , nurses and teachers



No need to be take it out on PS workers just because you failed to get a job in the Public Service.


----------



## mosii

Hi ,just wondering ,,do public sector pensioners get a rise as well in jan, and going forward ,as part of this deal


----------



## Jon Snow

noproblem said:


> No need to be take it out on PS workers just because you failed to get a job in the Public Service.



As a PS worker myself, I find this an incredibly smug and unhelpful reply everytime I see it trotted out on a forum somewhere...


----------



## galway_blow_in

noproblem said:


> No need to be take it out on PS workers just because you failed to get a job in the Public Service.



you are right of course


----------



## Purple

mosii said:


> Hi ,just wondering ,,do public sector pensioners get a rise as well in jan, and going forward ,as part of this deal


Yes


----------



## mosii

Thanks for reply,


----------



## ashambles

Deiseblue said:


> if salaries were to be increased then your figures would make some sense but because the restoration is being done majorly by reducing the levy your figures most certainly do not.
> 
> You didn't seriously believe that the Government understated the cost to the state by something in excess of € 1.1 billion over three years did you ?


Are you saying an increase in the cost of paying the public service is not an increase because it's a reduction in the PRD.

I can't understand why this isn't obvious, but the cost increases regardless of whether it's a pay rise or a reduction in PRD, the money comes from the same place and goes to the same place. Where do you think money to reduce the PRD comes from? Where do you think money to increase salaries comes from? 

And yes it does appear that the cost that's claimed to be 566m is understated by over 1B for the three year period as described by Howlin.


----------



## Deiseblue

Of course I am not saying that the increase is not an increase because it's a reduction in the Pension Levy.
What I am saying is that you have totally failed to appreciate the Government's strategy in restoring pay .
The option of restoring pay by way of reducing the pension levy means that that it does not increase salary incrementally as you have suggested - on the basis that you suggest someone on € 30,000 would receive in :
2016 € 31,000
2017 €31,567
2018 € 32,107

In other words they would have seen their pay restored to the extent of € 4,674 - God , they should be so lucky !

Instead they will receive in :
2016 € 31,003
2017 € 30, 567
2018 € 30,600

A total pay restoration of €2,170 as per Minister Howlin's figures .

A simple perusal of the mooted Agreement itself will verify the above , Minister Howlin's calculations have not been challenged by anyone in the media or indeed IBEC.

Surely even the most obtuse financial journalist or economist would not have missed on understatement of €1.1 billion ?


----------



## Sarenco

I wish people would stop using the phrase "pension levy" when referring to pension related deductions (PRDs).  Absolutely nothing is levied - PRDs are and always were a mechanism to reduce the PS pay bill without impacting pension entitlements.

What I find truly terrifying is that the annual gross cash flow required to meet PS pensions were projected by the C&AG to increase by *500%* from €2.9 billion for 2009 to €14.7 billion in 2058 in constant 2008 price terms.  When you consider the additional healthcare costs associated with an ageing population, I really don't see how anybody could regard this as even remotely sustainable.


----------



## Jon Snow

ashambles said:


> You don't see an alternative to a government telling us "The agreement has additional costs of €566 million over a 3 year period" when the costs are 1688m?
> 
> My alternative would be the government telling us the costs are 1688m, and not needing a hunt by the likes of us to uncover that figure.



Maybe I wasn't clear, what I meant was that you appear to be ignoring the context of this agreement.

Regardless of the cost of the new agreement (so regardless of whether you're right or wrong on the numbers aspect of your posts), it needs to be considered from the perspective that without an agreement it's likely the FEMPI legislation would be open to legal challenge, and any unilateral action by the Govt to extend pay reductions etc... in the absence of an agreement would result in industrial action across the entire PS.


----------



## ashambles

Deiseblue said:


> Instead they will receive in :
> 2016 € 31,003
> 2017 € 30, 567
> 2018 € 30,600
> 
> A simple perusal of the mooted Agreement itself will verify the above


So pay goes up AND down over the three years, the basic mechanism is described below from the document. Each change there seems to be a permanent increase. Where for instance is the decrease you think will cause 31,003 to fall to 30,567?

2016
 On 1 January the exemption threshold for payment of Pension Related
Deduction (PRD) will increase from €15,000 per annum to €24,750 per annum.
 On I January annualised salaries up to €24,000 are increased by 2.5%.
 On 1 January annualised salaries from €24,001 up to €31,000 are increased by 1%.
 On 1 September the exemption threshold for payment of Pension Related Deduction (PRD) will increase further from €24,750 per annum to €28,750 per annum.
2017
 On 1 September annualised salaries up to €65,000 are increased by €1,000.


----------



## venice

Purple said:


> Can you answer the questions I asked you in my previous post or is that the best you can do?



Already have. The fact that you won't accept the answer is your problem.

Or is the fact that you can't accept that you are wrong?


----------



## Sophrosyne

rob oyle said:


> Thing is though (and the above points would broadly reflect my own view), if you were to look at it the other way, who says money is being borrowed to pay increases? What if all capital investment was stopped (completely) and pay increases were given and overall expenditure was reduced? Would we be any better? Obviously not. So you bring back in the capital expenditure and suddenly, you're borrowing to fund *this *expenditure and not the pay rises!
> 
> What I'm saying is why would a pay increase be viewed as using borrowed money (the 3% or so that the State needs to borrow) when other spending, such as the replacement of staff in key areas or capital expenditure, would be viewed as an investment by the State?



Good point, lost in the fog!


----------



## Deiseblue

The Government strategy to reduce the pension levy is quite attractive from their point of view - whilst the worker would benefit there would be no actual increase in the pay bill.

Thus avoiding the incremental salary restoration that Ashambles suggested - €4,674 over 3 years for a worker currently on €30,000 - a staggering 15.58% restoration in pay , restoring pay to pre Croke Park Agreement levels .


----------



## Duke of Marmalade

Sophrosyne said:


> Good point, lost in the fog!


If at the end of the month I am overdrawn I think it is legitimate to say I borrowed for the holiday rather than my daily necessities.
Similarly it is legitimate to ascribe the budget deficit to the most discretionary spend and that is the case here.


----------



## Firefly

Sarenco said:


> What I find truly terrifying is that the annual gross cash flow required to meet PS pensions were projected by the C&AG to increase by *500%* from €2.9 billion for 2009 to €14.7 billion in 2058 in constant 2008 price terms.  When you consider the additional healthcare costs associated with an ageing population, I really don't see how anybody could regard this as even remotely sustainable.



I agree totally and will be making sure I get my money out of the country well in advance of this point in time...


----------



## ashambles

Deiseblue said:


> Instead they will receive in :
> 2016 € 31,003
> 2017 € 30, 567
> 2018 € 30,600


You claim that some public servants as a result of this proposal (drawn up by public servants and unions) will see a drop in income in 2017 versus 2016. Can you explain with reference to the document how that will occur? Some public service workers may be worried by your interpretation. I suspect you're completely wrong but it'd be better to have it explained than leave it hanging in the thread.


----------



## venice

Purple said:


> I'm not confusing anything.



OK, Ill try this from a different hopefully less confusing angle for you. Answer the following.

How do I qualify for the Contributory State Pension?

At what age do I receive it at?


----------



## Purple

venice said:


> OK, Ill try this from a different hopefully less confusing angle for you. Answer the following.
> 
> How do I qualify for the Contributory State Pension?
> 
> At what age do I receive it at?


Can you answer the question?


Purple said:


> I asked you what a pension paid and funded by the state is called if it is not a state pension. You have not answered that.



You are now talking about the contributory state pension which is a specific thing. You even posted a link to it.
That's not what I was talking about. I'm talking about the state pension which, obviously, encompasses all pensions the state pays.
You are saying that the state pensions that are paid to public servants are not state pensions. I'm asking you what you call them. You still have not answered that question.


----------



## thedaddyman

Deiseblue said:


> The Government strategy to reduce the pension levy is quite attractive from their point of view - whilst the worker would benefit there would be no actual increase in the pay bill.
> 
> Thus avoiding the incremental salary restoration that Ashambles suggested - €4,674 over 3 years for a worker currently on €30,000 - a staggering 15.58% restoration in pay , restoring pay to pre Croke Park Agreement levels .



Correct at a high level but it also overlooks the fact that is reduces income coming into the state via tax (which the pension levy was). The Govt then has 3 choices

reduce spending and use the savings made to make up the shortfall as a result of reducing the levy
Increase taxes elsewhere to replace the levy
Ignore the cost of funding the public sector pension bill and leave someone else in the future try and sort out the mess
I fear it will be the latter


----------



## Protocol

People seem to be getting bogged down.

"State Pensions" consist of the following:

(1) State Pension Contributory - based on PRSI conts
(2) State Pension non-contributory - means-tested

Not everybody over 66 will get a State Pension, for various reasons.


Public Service pensions are paid to retired workers from the public service.


----------



## Brendan Burgess

Guys 

I have deleted the personal attacks. Please stop accusing each other of being "childish" or asking stupid questions such as "were you bullied at school?" 

Stay on topic and stay respectful of each other. 

Brendan


----------



## Purple

Protocol said:


> People seem to be getting bogged down.
> 
> "State Pensions" consist of the following:
> 
> (1) State Pension Contributory - based on PRSI conts
> (2) State Pension non-contributory - means-tested
> 
> Not everybody over 66 will get a State Pension, for various reasons.
> 
> 
> Public Service pensions are paid to retired workers from the public service.


Thanks Protocol, that answers my question; the State funded pension paid to retired public servants is called a Public Service Pension.
As it's paid by the state and is un-funded it is, in effect, a State pension. It's just called something else... or am I missing something that makes it materially different in any practical way?

What we can be sure of is that they all add up to constitute the majority of the state's future pension liability and, other that very high earning private sector tax payers who pay very large amounts of PRSI, just about nobody is covering anything close to the full cost of the pension they will receive from the state.


----------



## venice

Protocol said:


> Not everybody over 66 will get a State Pension, for various reasons.



Thanks Protocol for clarification.


----------



## Purple

venice said:


> Thanks Protocol for clarification.


As you still haven't answered the question I take it that you now accept that they are all state pensions and, particularly in the context of this thread, effectively the same thing.


----------



## venice

Oh Purple let go, it’s over you were wrong accept it and move on. It’s getting boring now.

I understand you are trying to save face but please stop ruining the thread for others!


----------



## Duke of Marmalade

The issue of funding state pensions is an illusory accountancy one and that is why very few countries actually operate one.

The real issue is that in our society we need a transfer of wealth from those who earn it to those who can no longer earn it including retirees, whether private sector or public service.  Whether that transfer comes from general taxation or from the state having a large proportion of the capital base of the country (i.e. has "funded" the pensions) is largely irrelevant.  In a sense they both are largely the same its just that "funding" would imply the formal accounting of the process.  Thus it can be argued that through its capital investment policy the state is building up a national base of infrastructure and capital and for which it implicitly charges a rent through general taxation.

So it is that today, both workers and pensioners are much better off generally than they were 50 years ago.  Of course technology driven productivity played a big part.

In 40 years time our social economy will be able to support the current relativities between earners and pensioners or it will not.  No amount of the state accumulating a vast fund of the nation's wealth will justify pensioners living in luxury whilst the workers starve.  The earmarking of these national assets for a certain section of the population is an illusion and that goes even if the assets are foreign investments.

Of course, it is essential that the state maintains an appropriate level of capital investment so that we may hope that there will continue to be more and more to share amongst everyone.

These argument raged when Charlie proposed his Pension Reserve Fund, folk like me argued the illusory nature of this fund and indeed pointed out that it was silly to have debt on the one hand and a rainy day chest on the other.  I wonder how that geared investment policy worked out in the end.

The basic fact is that the dynamics of saving and funding are completely different at the national level than they are at the individual or company level.


----------



## Purple

venice said:


> Oh Purple let go, it’s over you were wrong accept it and move on. It’s getting boring now.
> 
> I understand you are trying to save face but please stop ruining the thread for others!


You still haven't answered my question; if a pension is funded and paid by the state how is it not a state pension.
You have stated that it is not a state pension so what is it?
Why will you not answer that straightforward question?


----------



## Purple

Very true Duke but as our population ages and lives longer the proportion of earners to pensioners will continue to change. The question is how do we pay for it.
Bismarck brought in a universal old age state pension in Germany in the 1880's. At that time the average person started work in their mid teens. They get their pension at 70 and, on average, only drew it for about a year. That meant that they worked for over 50 years and got a pension for less than two. That's a ratio of over 25 to 1.
We now start work in our 20's, retire at 65 and live into our late 70's. The ratio is now less than 4 to 1.
What will it be in 20 or 30 years?


----------



## Firefly

Duke of Marmalade said:


> The basic fact is that the dynamics of saving and funding are completely different at the national level than they are at the individual or company level.



Hi Duke,

I would be interested in hearing more about your thoughts on this. I've always believed that just like a family shouldn't do the weekly shop on the Visa and only pay the minimum interest payments, a country should not borrow to meet day-to-day expenditure. Fine if the government wants to borrow for a capital investment (just like a private individual might borrow to buy a house / car / education etc).

Firefly.


----------



## 44brendan

Duke of Marmalade said:


> These argument raged when Charlie proposed his Pension Reserve Fund, folk like me argued the illusory nature of this fund and indeed pointed out that it was silly to have debt on the one hand and a rainy day chest on the other. I wonder how that geared investment policy worked out in the end.


That is a very fair point! I have always wanted to educate myself on the core principles of Government Debt and while I have picked up some of them I feel that overall many mysteries remain!
My difficulty with the point made by you is that it was highly unlikely that the funds used to create a pension reserve would have been used to reduce debt had they not been set aside for that purpose. Most likely they would have been re-allocated to other Capital/expenditure areas. I.e. The level of debt would have remained unaltered by the decision. It is fairly clear that as the spend on pension funding increases (Both PS and General OAP) this will stretch the current budget to the extent that the shortfall will also increase and therefore the borrowing requirements. My point is that if we continue running a significant and increasing deficit our ability to borrow to fund the shortfall is bound to reach some limitation. The validity of your argument would stand up, if we understood that there was an ultimate borrowing limit and by using funds to reduce debt rather than setting them aside to cover future pension requirements we were in fact increasing the availability to borrow these funds in the future.
The set-aside principle is used by virtually all firms to cover future calls on the funds. I.e. profits are hit by a certain level of charge each year and the funds set-aside to meet an accumulating pension fund. This fund is not available to the firm to cover other expenditure and thus they will be both borrowing and saving in a period.
So why is it different for Governments


----------



## Firefly

It's not often I agree with the bould David McWilliams, but he's bang on here...

[broken link removed]

Firefly.


----------



## Purple

Firefly said:


> It's not often I agree with the bould David McWilliams, but he's bang on here...
> 
> [broken link removed]
> 
> Firefly.


The New Zealand model seems fair, reasonable and good for the country as a whole but the vested interest groups have been removed from the equation. That's why it will never happen here. In fact we are going in the opposite direction.


----------



## Duke of Marmalade

44brendan said:


> So why is it different for Governments


Let's take a simple example of a self employed person.  That person has a wide range of life/financial choices.  At one extreme she can spend it as fast as she can get it, at the other extreme she can live as frugally as possible and save for a very comfortable retirement, or somewhere in between.

Now the management of a national economy should be to maximise economic output not just today but on a sustainable basis into the future.  If it decided to take the view of Frugal Woman and really go for this austerity gig and put aside oodles for tomorrow's pensions, that would be a disaster for the economy both now and into the future and would entirely fail in its objective.

The aim should be to maximise economic output in 40 years time.  That is the best way to meet the demands of those who will be dependent on the state or indeed dependent on their assets.  Realistically the plan must be much more short term but a delicate balance between capital and current spending is the holy grail.

I am not saying (_Purple) _that we have nothing to worry about and I am not denying the demographic projections.  But "funding" for this situation is a total illusion.  Yes, we should start managing expectations, like pushing out slowly the OAP starting age, but in the end of the day when 40 years transpire and let's say we do have a pension Armageddon, we will not regret the absence of funding we will regret that for whatever reason our economy was unable to meet the demographic challenge.


----------



## Purple

Duke of Marmalade said:


> I am not saying (_Purple) _that we have nothing to worry about and I am not denying the demographic projections. But "funding" for this situation is a total illusion. Yes, we should start managing expectations, like pushing out slowly the OAP starting age, but in the end of the day when 40 years transpire and let's say we do have a pension Armageddon, we will not regret the absence of funding we will regret that for whatever reason our economy was unable to meet the demographic challenge.


"Funding" is perhaps the wrong phrase, or way of looking at it. Maybe we should say that we need to make sure that our future pension liability does not exceed a certain proportion of the governments revenue.


----------



## Duke of Marmalade

Purple said:


> "Funding" is perhaps the wrong phrase, or way of looking at it. Maybe we should say that we need to make sure that our future pension liability does not exceed a certain proportion of the governments revenue.


Okay, maybe.  We need to start managing expectations.  That has already begun, with pushing out the OAP age and also, crucially, moving new PS on to average salary.  I think the more correct target is that dependency expenditure should be targeted to not exceed a certain percentage of GNP.  It is not really the government revenue that is the decider but the capacity of the economy to provide the government with revenue.


----------



## Sarenco

We certainly have to start managing expectations but there is also a question of equity between generations at issue.  Is it really fair to say to today's 20-somethings that they will simply have to lower their expectations while their parents look forward to a retirement of relative luxury?

It is inevitable that the percentage of GNP expended on dependency spending will increase due to our changing demographics.  

On the question of funding, I would just note that the major sovereign pension funds that continue to exist (such as those operated by Norway and New Zealand) have substantial allocations to equities, which would have higher-expected returns over the long term than the liabilities associated with the debt (bonds) of the relevant sovereigns.


----------



## Jon Snow

Firefly said:


> It's not often I agree with the bould David McWilliams, but he's bang on here...
> 
> [broken link removed]
> 
> Firefly.



David should check his own mathematical achievement standard...!! 

"Did you know that the average child in secondary school in New Zealand has a mathematical achievement standard that is twice as high as the average child in school in Ireland?

Yes twice as high. In New Zealand, according to a study from Stanford University, 16 per cent of 16-year-olds are performing at an ‘‘advanced level of maths proficiency’’. In Ireland, the corresponding figure is 7.9 per cent."

Having twice the proportion performing at a high level does NOT mean the average student is performing twice as well...

Interesting article though - I'd love if we had the NZ model.


----------



## Sophrosyne

Jon Snow said:


> Interesting article though - I'd love if we had the NZ model.



No system is perfect.


----------



## Purple

Sarenco said:


> We certainly have to start managing expectations but there is also a question of equity between generations at issue. Is it really fair to say to today's 20-somethings that they will simply have to lower their expectations while their parents look forward to a retirement of relative luxury?


 The 20-somethings can expect to live longer and so spend longer retired. That means the same amount of money has to be stretched over a longer period. That's probably a fairer way of looking at it.


----------



## Bronte

Just when Ireland is seemingly getting out of recession they go back and do the same thing again and pay money they cannot afford, and worse, money that is borrowed.  Wouldn't it be better to spend it on the disabled cuts they made last year which were pretty shocking.  Do the civil servants need this money.

Must be an election, bribery to the fore.  Has nobody learnt anything.

How about a stimulus package to go house building, brings employment, brings down rents, houses people, brings in taxes.  Solves lots of problems.


----------



## Sarenco

Purple said:


> The 20-somethings can expect to live longer and so spend longer retired. *That means the same amount of money has to be stretched over a longer period*. That's probably a fairer way of looking at it.


 
The problem is it won't be the same amount of money, it will be many multiples of the amount currently spent on public sector pensions in today's money terms. 

The C&AG projected that the annual gross cash flow required to meet PS pensions will have to increase by 500% from €2.9 billion for 2009 to €14.7 billion in 2058 in constant 2008 price terms.


----------



## Delboy

Bronte said:


> Just when Ireland is seemingly getting out of recession they go back and do the same thing again and pay money they cannot afford, and worse, money that is borrowed.  Wouldn't it be better to spend it on the disabled cuts they made last year which were pretty shocking.  Do the civil servants need this money.
> 
> Must be an election, bribery to the fore.  Has nobody learnt anything.
> 
> How about a stimulus package to go house building, brings employment, brings down rents, houses people, brings in taxes.  Solves lots of problems.


The TUI are rejecting this as Lecturers have an extra 2 hours class time per week (and they claim this means an extra 4 hours in prep time). They want those hours removed AND a pay rise (Lecturers in the TUI work contracts of 18 or 20 hour class time per week, roughly 33 weeks per year and their Union boss last night said they are stressed out and cannot cope any longer)
Maybe things have changed but I recall my days in college, and I can assure you there was no 2 hours prep time for every 1 hour class time. It didn't take that long to photocopy notes for each days class!!!

The nirvana here is explicitly to return to Bubble era wages and conditions. So no, some folk have learned nothing.


----------



## Deiseblue

ashambles said:


> You claim that some public servants as a result of this proposal (drawn up by public servants and unions) will see a drop in income in 2017 versus 2016. Can you explain with reference to the document how that will occur? Some public service workers may be worried by your interpretation. I suspect you're completely wrong but it'd be better to have it explained than leave it hanging in the thread.



I would simply refer them to post # 87 in this thread by DrMoriarty the link which sets out the payments that Public Sector workers can expect to receive in 2016 , 2017 & 2018 .
The mooted Agreement runs for 3 years but the pay increases are phased in over an 18 month period.
In the first year 2016 workers on €30,000 will gross € 1,003 , a further €1,167 will become payable from September of 2017 , € 567 of which will be paid in 2017 & the balance of €600 will be paid in 2018.
As the cumulative gross increase of €2,170 is made up of a combination of pension levy cuts ( which do not increase the gross salary ) & increase in gross salaries of €1,300 for those on €30,000 ( 300 on 1/1/16 & 1000 on 1/9/2017 .
In effect if further % percentage increases are negotiated from 2018 they will be on a base gross salary of €31,300 not the inflated figure posited by  you of €34,674 .
As public sector workers may be worried about your interpretation perhaps you would confirm that you did not key in the fact that some of the restoration is by way of pension levy reduction into your calculations.


----------



## 44brendan

Delboy said:


> The TUI are rejecting this as Lecturers have an extra 2 hours class time per week (and they claim this means an extra 4 hours in prep time).


This is a fair assessment of prep/lecture ration where a relatively new course is being delivered. However, the additional 2 hours class time are unlikely to relate to new material being delivered. Most likely delivery will be repetitive lectures where material is already well prepared for delivery. Obviously the lecturers themselves will try to put forward a case where workload appears to be at a maximum level. But this would be standard practice in any pay negotiations!


----------



## ashambles

Deiseblue said:


> Instead they will receive in :
> 2016 € 31,003
> 2017 € 30,567
> 2018 € 30,600


I'm confused by your claim that pay will be reduced in 2017. Clearly your 2017 figure is less than your 2016 figure? Also you'll note your 2018 figure is less than 2016.  

Seemingly when you posted the figures above, you did at that point agree that there's a difference between the cost over three years versus cost in year three, since you were trying to get the costs over three years to add up to around 2k.

PER seem to have made an error when describing a 2k over 3 year deal for 300,000 workers as "The agreement has additional costs of €566 million over a 3 year period.." 

To explain the PER figure, so far you've claimed it's due to it being net of tax,  next because there's some pay cut being implemented in 2017, and now it being because pay rises via reduction in PRD are not pay rises. Isn't the simplest explanation that the description of the cost by PER is incorrect?


----------



## Purple

Sarenco said:


> The problem is it won't be the same amount of money, it will be many multiples of the amount currently spent on public sector pensions in today's money terms.
> 
> The C&AG projected that the annual gross cash flow required to meet PS pensions will have to increase by 500% from €2.9 billion for 2009 to €14.7 billion in 2058 in constant 2008 price terms.


I'm saying that in order to keep expenditure the same then pension payments have to drop proportionately. Using the figures you quote that would mean they drop by 80%.


----------



## Sarenco

Purple said:


> I'm saying that in order to keep expenditure the same then pension payments have to drop proportionately. Using the figures you quote that would mean they drop by 80%.



Ah, understood.  Yes, entitlements will have to be reduced very significantly if we are to maintain an equivalent level of expenditure in real terms in the future.  I believe it would be better if this was dealt with on a phased basis - starting now.


----------



## Sophrosyne

Therefore, a pension of say, €25,000 would have to drop to €5,000?


----------



## Purple

Sophrosyne said:


> Therefore, a pension of say, €25,000 would have to drop to €5,000?


If we maintain the same level of expenditure then yes. That means we need a different solution. I would suggest that everyone funds their own private defined benefit pension in order to compensate. If it's done over a long period of time that should minimise the pain.
I'm open to correction on the figures.


----------



## Purple

Sophrosyne said:


> No system is perfect.


We have the same problem here. Pensioners are effectively untouchable in this country, as can be seen in how little they were impacted by the recession. I don't understand why this is so. There is no justification for helping people who have had their entire lives to make provision for their retirement at the expense of children born into socially deprived areas.


----------



## Jon Snow

Purple said:


> If we maintain the same level of expenditure then yes. That means we need a different solution. I would suggest that everyone funds their own private defined benefit pension in order to compensate. If it's done over a long period of time that should minimise the pain.
> I'm open to correction on the figures.



That's a great idea, except that we have a Welfare State - Irish people whinge about the dole "only" being nearly €200 a week. How do we get to a stage where the State pension is barely enough to cover a full Sky package and some ciggies...?!


----------



## Purple

Jon Snow said:


> That's a great idea, except that we have a Welfare State - Irish people whinge about the dole "only" being nearly €200 a week. How do we get to a stage where the State pension is barely enough to cover a full Sky package and some ciggies...?!


Slowly!
The solution is for everyone to fund their own pension, something like the unfortunately named IRA scheme in the USA.


----------



## Deiseblue

ashambles said:


> I'm confused by your claim that pay will be reduced in 2017. Clearly your 2017 figure is less than your 2016 figure? Also you'll note your 2018 figure is less than 2016.
> 
> Seemingly when you posted the figures above, you did at that point agree that there's a difference between the cost over three years versus cost in year three, since you were trying to get the costs over three years to add up to around 2k.
> 
> PER seem to have made an error when describing a 2k over 3 year deal for 300,000 workers as "The agreement has additional costs of €566 million over a 3 year period.."
> 
> To explain the PER figure, so far you've claimed it's due to it being net of tax,  next because there's some pay cut being implemented in 2017, and now it being because pay rises via reduction in PRD are not pay rises. Isn't the simplest explanation that the description of the cost by PER is incorrect?


Nope , my figures tie in exactly with the link contained in # 87 , the increase in September 2017 totals €1,167 but obviously there is a crossover into 2018 which is why 567 will be paid in 2017 & the balance of 600 in 2018.
I take it that you now agree that someone on €30,000 will not not benefit to the tune of €4,674 as posited by your argument by the end of the mooted agreement?
I remain in the camp of the Government,the Unions , economists & the media  in accepting the costs as detailed by Minister , I will eat my hat if someone on 30k per annum has their salary restored to a gross figure of 34,674 by 2018 - a staggering 15.58 %.


----------



## Sophrosyne

Purple said:


> We have the same problem here. Pensioners are effectively untouchable in this country, as can be seen in how little they were impacted by the recession. I don't understand why this is so. There is no justification for helping people who have had their entire lives to make provision for their retirement at the expense of children born into socially deprived areas.



The reason for my post about New Zealand was that despite setting up the New Zealand Superannuation Fund in 2001, they have similar problems regarding the funding of future pensions _and _they did not have to contend with anything like Ireland's fiscal crisis.

I don't think you can judge the past by today's standards.

When we were young, my generation funded pensions through cripplingly high taxes.

Most of the pensioners we were funding lived in poverty or close to it for most of their lives.

Membership of pension schemes really only became widespread from the 1980s.


----------



## Duke of Marmalade

Purple said:


> ...It has to do with borrowing money to give pay increases when we are just about solvent as a nation...


I went back to the beginning of this thread for this theme which loomed large in the next 8 pages of posts.

I looked up the projections made for Budget 15, and remember the outlook has improved since then.  The projection for 2016 was an overall deficit of €1.8bn.  But crucially before interest on the Debt the primary *surplus* was projected to be €1.9bn.

Now, it was perfectly justifiable to ask the PS to endure emergency (unprecedented) cuts to their take home pay when deficits were double digit - the government was simply spending more than it got in revenue.

But to ask these emergency measures to remain in place when we are in primary surplus seems to me outrageous, one thing to tell the PS that we can't afford to pay them, another thing to say we can now afford ito pay you but these emergency measures can now be used to pay down the debt.

I think the interest on the debt and the paying down of the debt should be shouldered fairly by all and the PS should not be specifically targeted in this regard.


----------



## ashambles

Deiseblue said:


> I take it that you now agree that someone on €30,000 will not not benefit to the tune of €4,674 as posited by your argument by the end of the mooted agreement?


I never said someone on 30k will have a 34k salary at the end, or benefit by 4k in a single year. This is a 2k pay rise over 3 years using a mixture of rises.

Let's simplify by saying that there's only one rise at the start of the 3 years - a straightforward pay rise of 1000 euro. Would you agree that the cost of that rise per employee is 3000 over 3 years, and that at the end a person who was on 20k is on 21k ? 

PER's wording would describe that as costing 1000 euro over three years. But it's 500 euro over 6 months, 1000 over 1 year,  2000 over 2 years etc..


----------



## Sarenco

Duke of Marmalade said:


> I went back to the beginning of this thread for this theme which loomed large in the next 8 pages of posts.
> 
> I looked up the projections made for Budget 15, and remember the outlook has improved since then.  The projection for 2016 was an overall deficit of €1.8bn.  But crucially before interest on the Debt the primary *surplus* was projected to be €1.9bn.
> 
> Now, it was perfectly justifiable to ask the PS to endure emergency (unprecedented) cuts to their take home pay when deficits were double digit - the government was simply spending more than it got in revenue.
> 
> But to ask these emergency measures to remain in place when we are in primary surplus seems to me outrageous, one thing to tell the PS that we can't afford to pay them, another thing to say we can now afford ito pay you but these emergency measures can now be used to pay down the debt.
> 
> I think the interest on the debt and the paying down of the debt should be shouldered fairly by all and the PS should not be specifically targeted in this regard.


 
Fair enough but does that not rather assume that public sector pay was appropriate prior to the implementation of the emergency measures?  While it doesn't tell you the full story, the CSO's latest statistics show that average public sector pay rates are 48% higher than private sector pay rates - there is no observable public sector pay premium in the UK, for example.  In a similar vein, the European Commission has found that the ratio of average public pay to per capita GNP in Ireland are among the highest in the OECD.


----------



## Duke of Marmalade

Sarenco said:


> Fair enough but does that not rather assume that public sector pay was appropriate prior to the implementation of the emergency measures?  While it doesn't tell you the full story, the CSO's latest statistics show that average public sector pay rates are 48% higher than private sector pay rates - there is no observable public sector pay premium in the UK, for example.  In a similar vein, the European Commission has found that the ratio of average public pay to per capita GNP in Ireland are among the highest in the OECD.


Okay, fair point.  (Jayz we're getting very civilised round here).  I felt the whiskered ones did not play particularly hardball on this round.  They must still feel guilty with how they mugged Bertie.


----------



## Sarenco

Duke of Marmalade said:


> Okay, fair point.  (Jayz we're getting very civilised round here).  I felt the whiskered ones did not play particularly hardball on this round.  They must still feel guilty with how they mugged Bertie.


 
Ha!  I'd agree with that but I suspect it had more to do with sympathy for a fellow comrade across the negotiating table than guilt over their past results.


----------



## Deiseblue

ashambles said:


> I never said someone on 30k will have a 34k salary at the end, or benefit by 4k in a single year. This is a 2k pay rise over 3 years using a mixture of rises.
> 
> Let's simplify by saying that there's only one rise at the start of the 3 years - a straightforward pay rise of 1000 euro. Would you agree that the cost of that rise per employee is 3000 over 3 years, and that at the end a person who was on 20k is on 21k ?
> 
> PER's wording would describe that as costing 1000 euro over three years. But it's 500 euro over 6 months, 1000 over 1 year,  2000 over 2 years etc..



You have stated that the total cost of this three year package will be €1,688,000,000 or an average of €6028 per public sector worker .
As those earning least are to benefit more , am I to presume that those currently earning €30,000 are to see their pay restored by something in the region of €7,000 ?
Just as well I didn't use your original guesstimate of 2 billion euro !


----------



## Firefly

Duke of Marmalade said:


> I looked up the projections made for Budget 15, and remember the outlook has improved since then.  The projection for 2016 was an overall deficit of €1.8bn.  But crucially before interest on the Debt the primary *surplus* was projected to be €1.9bn.
> 
> Now, it was perfectly justifiable to ask the PS to endure emergency (unprecedented) cuts to their take home pay when deficits were double digit - the government was simply spending more than it got in revenue.



Hi Duke, I can see where you are coming from, but the interest has to be paid and is just as relevant (perhaps even more so than other expenses). There are no doubt countless families out there who would be flying if they didn't have to pay the interest on their mortgages , but that doesn't mean that their funding requirements change.


----------



## Purple

Deiseblue said:


> You have stated that the total cost of this three year package will be €1,688,000,000 or an average of €6028 per public sector worker .
> As those earning least are to benefit more , am I to presume that those currently earning €30,000 are to see their pay restored by something in the region of €7,000 ?
> Just as well I didn't use your original guesstimate of 2 billion euro !


Ashambles is counting up the combined cost. You are looking at the extra cost per year and not the extra cost taking this years cost as the starting figure.


----------



## michaelm

The Lansdowne Road deal is a poor one for the PS, not least given that it's part of a strategy to buy the election.  The unions should reject it and demand an end to FEMPI and in particular to the pension levy.  This is unlikely to happen because the unions are spineless and untouched by the draconian cuts FEMPI inflicted.

My net pay, for example, is down more than €600/month since the end of 2008 (more than €40k net in total over the period to date) . . yet the government want to buy my vote with a tweak to the pension levy (special PS tax unrelated to pensions) thresholds next year worth maybe €7/week net to me (perhaps I can afford Netflix after all) and the promise of a a €1000 gross increase (another €7/week net) in September 2017 . . and (inexplicably) lobbed into the agreement is recognition of various initiatives specifically including Irish Water.


----------



## Firefly

I'm hearing now that the USC is going to be cut....We're not even out of the woods and we can't help but go deeper into debt with these


----------



## Sunny

michaelm said:


> My net pay, for example, is down more than €600/month since the end of 2008 (more than €40k net in total over the period to date) . . yet the government want to buy my vote with a tweak to the pension levy (special PS tax unrelated to pensions) thresholds next year worth maybe €7/week net to me (perhaps I can afford Netflix after all) and the promise of a a €1000 gross increase (another €7/week net) in September 2017 . . and (inexplicably) lobbed into the agreement is recognition of various initiatives specifically including Irish Water.



Do you want to explain how your net pay is down more than €600 a month since 2008 from pay cuts?


----------



## Jon Snow

Sunny said:


> Do you want to explain how your net pay is down more than €600 a month since 2008 from pay cuts?


He didnt say it's all due to pay cuts..?


----------



## Sunny

Jon Snow said:


> He didnt say it's all due to pay cuts..?



Well considering that this discussion is to do with restoring public sector pay cuts, I don't see why anything else matters and he was using it as an example why the deal was bad.


----------



## michaelm

Yes, for clarity, not all due to PS pay cuts . . 4k straight forward pay cut, 4k additional pay cut in the guise of a pension levy, extra hours are effectively a pay cut but I didn't account for that or other tinkering with T&Cs . . the rest is USC, which of course is paid by all so not related to the Lansdowne Road deal.

So to simplify, I've had an 8k cut in gross wages since end 2008 thanks to the Financial Emergency Measures in the Public Interest legislation; the new 'deal' proposes to give me back 1k in Jan 2016 and another 1k in Sep 2017.  I think that this is paltry and should be rejected by the unions.   If the Government want to talk up everything they can't concurrently stand over financial emergency legislation.

The pension Levy has a sting in its tail as it is not deductible from gross income for assessment purposes in relation to applications for Medical/GP Visit Cards.  This stipulation was added to the HSE assessment guidelines in 2009.  It therefore excludes a tranche of modestly paid public servants who would otherwise qualify.


----------



## Sarenco

Of course the great thing about pension related deductions (PRDs) is that they are ignored for the purposes of calculating pensionable income even though they are not subject to income tax.  Nice.

As regards the impact of PRDs on modestly paid public sector employees, I would point out that a gross annual income of €20,000 would currently be subject to PRDs totalling €250 (or less than 50 cent per week).  It's hardly draconian.


----------



## Duke of Marmalade

Sarenco said:


> Of course the great thing about pension related deductions (PRDs) is that they are ignored for the purposes of calculating pensionable income even though they are not subject to income tax.  Nice.
> 
> As regards the impact of PRDs on modestly paid public sector employees, I would point out that a gross annual income of €20,000 would currently be subject to PRDs totalling €250 (or less than 50 cent per week).  It's hardly draconian.


New Math?


----------



## Sarenco

Ah, less than €5 per week.  Senior moment.


----------



## Jon Snow

I must say, I find it deliciously ironic how this thread was a flurry of activity all week, with the substantial majority of posts coming during normal working hours... then as soon as the weekend kicks in, poof!, everyone has better things to do than argue about our unproductive PS workers...! 

I look forward to everyone using their precious working time productively again this coming week.


----------



## Jon Snow

Shouldn't be long now.....


----------



## Purple

Sarenco said:


> Of course the great thing about pension related deductions (PRDs) is that they are ignored for the purposes of calculating pensionable income even though they are not subject to income tax.  Nice.
> 
> As regards the impact of PRDs on modestly paid public sector employees, I would point out that a gross annual income of €20,000 would currently be subject to PRDs totalling €250 (or less than 50 cent per week).  It's hardly draconian.


Pension contributions to DB pensions are taxed at the marginal rate and then a second time when the pension is drawn down. Why is it that the relatively small contributions that state employees make to their state pension is not treated in the same way?
(I was working over the weekend so didn't get a chance to look at this )


----------



## Duke of Marmalade

Seems to be some confusion here.  There is no diff in the tax treatment of pensions between the two sectors.

Pension contributions or levies are deducted from gross salary before caculation of tax (though not USC or PRSI, I think)
Pension contributions or levies are *not* deducted when calculating "pensionable salary"

On the tax asymmetry it is as follows:

Pension contributions/levies enjoy tax relief at the marginal rate but not relief from USC/PRSI
Pension payments are taxed at the marginal rate and suffer USC (but not PRSI) but also enjoy any personal credits and any standard rate band available as well as an entitlement to a tax free lump sum.  For middle income earners this is generally an asymmetry in favour of making contributions.  For high earners and particularly for any top up AVCs the asymmetry acts the other way and people should think twice before pumping into AVCs coming to retirement.

_Jon Snow_, as a pensioner myself I am open for business every day


----------



## Jon Snow

Duke of Marmalade said:


> Seems to be some confusion here.  There is no diff in the tax treatment of pensions between the two sectors.
> 
> Pension contributions or levies are deducted from gross salary before caculation of tax (though not USC or PRSI, I think)
> Pension contributions or levies are *not* deducted when calculating "pensionable salary"
> 
> On the tax asymmetry it is as follows:
> 
> Pension contributions/levies enjoy tax relief at the marginal rate but not relief from USC/PRSI
> Pension payments are taxed at the marginal rate and suffer USC (but not PRSI) but also enjoy any personal credits and any standard rate band available as well as an entitlement to a tax free lump sum.  For middle income earners this is generally an asymmetry in favour of making contributions.  For high earners and particularly for any top up AVCs the asymmetry acts the other way and people should think twice before pumping into AVCs coming to retirement.
> 
> _Jon Snow_, as a pensioner myself I am open for business every day



Except the PRD, or pension levy as its colloquially referred to by PS workers, isn't a pension contribution. It's just a deduction from gross pay.

There are people paying it who aren't in the pension scheme, and have no pension entitlements accruing.


----------



## Duke of Marmalade

Jon Snow said:


> Except the PRD, or pension levy as its colloquially referred to by PS workers, isn't a pension contribution. It's just a deduction from gross pay.
> 
> There are people paying it who aren't in the pension scheme, and have no pension entitlements accruing.


Yes, and I know junior doctors pay lots of PRD on their overtime which again is not pensionable.


----------



## Purple

Jon Snow said:


> Except the PRD, or pension levy as its colloquially referred to by PS workers, isn't a pension contribution. It's just a deduction from gross pay.
> 
> There are people paying it who aren't in the pension scheme, and have no pension entitlements accruing.


It's a crude and unfair deduction. It is a pay cut that was structured in such a way as to not hit people getting a public service state pension which was very unfair.
I agree that it was necessary to cut pay and claw back some of the excessive pay increases that were handed out during the Bertie years but it should have been a pay cut so that pensions were also cut. That way the cuts could have been lower but as they would have been spread out over both working and retired public servants the net gain to the state would have been the same.
I also think that over time everyone should fund their own pension but that wasn't the purpose of the pension levy; it was just a way of cutting pay without hitting the wealthiest demographic in the country.


----------



## ardmacha

Coming late to this thread I see that it contains much of usual nonsense associated with this subject. 
Public servants are *employees* and the proper relationship of the State is to expect them to work to best standards and to pay them the going rate for the job. Best standards are appropriate performance and not crude notions of "productivity". Just as a driving instructor for my son will be paid more than when I learned to drive, that person's "productivity" is training learners to pass today's test. Likewise a teacher or lecturer is currently productive by teaching a modern curriculum using modern It, and not by adding in spurious hours and the risible pretension that classes do not have to be prepared. 

Any suggestions along the lines of that the recovery should be spread in tax cuts or the like rather than pay restoration is conflating apples and turnips and is basically corrupt. 
The thrust of the present government's policy has been corrupt, as they have directed policies to keep certain groups onside, while screwing others, completely on a political basis and deliberately without reference to the rate for the job. So Haddington Road cuts were designed so that teachers would not be much affected, but better qualified lecturers would be. Clerks would not be much affected, but people with accounting skills would be. The consequence of this is doctors leaving the country, universities declining in ranking, and all of this cheer led by the likes of McWilliams, who knows perfectly well that this makes no sense, but who is playing to the gallery. 

There is little hope for this country, arbitrary increases were followed by arbitrary cuts, that neither reflected the previous increases nor the employment market. You might expect after the recession that some sort of plan would emerge, but it is the opposite and the media and discussion boards like this are encouraging this dysfunction.


----------



## Purple

ardmacha, I agree with you but in order to achieve what you are talking about the public sector would have to be a meritocracy where people were paid and promoted only on ability. That would mean no collective bargaining and individual contracts. I can't see that being accepted by the bearded brethren!


----------



## Firefly

A "One for everyone in the audience" approach to pay rises (and cuts). They must really look forward to the Late Late Show every Friday night. Probably watch it again on rte+1


----------



## Jon Snow

Firefly said:


> A "One for everyone in the audience" approach to pay rises (and cuts). They must really look forward to the Late Late Show every Friday night. Probably watch it again on rte+1



Genuine question: what do other countries do? Who should we be trying to emulate, or do people here have unrealistic expectations?


----------



## ardmacha

Purple said:


> ardmacha, I agree with you but in order to achieve what you are talking about the public sector would have to be a meritocracy where people were paid and promoted only on ability. That would mean no collective bargaining and individual contracts. I can't see that being accepted by the bearded brethren!



Firstly, the PS covers a huge range of different types of activity. Promotion processes in the Naval Service, TCD, St Vincents Hospital etc may differ and may well be largely based on ability. But in general the question of the unions accepting a meritocracy is unknown as it has never really been tried. The one thing any worker requires if pressurised to work better is that his or her boss is under similar pressure and that his or her boss is not creating work through incompetence. In the PS there are some initiatives to make the foot soldiers work "harder", but fewer initiatives to make their bosses organise things to work smarter. Ultimately the politicos do not want a meritocracy as this would mean that there could not be stunts pulled to fiddle about with PS pay in line with the electoral cycle. The whole thing needs to be removed from politicians and placed in a competent technical process, but of course turkeys do not vote for Xmas, so the politicians don't want it and the media prefer fact free ranting rather than a process which would largely make ranting impossible.


----------



## Deiseblue

The only examples I can think of of large employers moving from Union & Management negotiated incremental based contracts to pay for performance & individual contracts are the major Banks.
This move unfortunately facilitated the abjectly poor lending stratagems over the course of the boom years which ultimately led to disaster as workers & management were financially incentivised & motivated into taking unacceptable risks.
As the movement to individual contracts was voluntary it actually removed the concept of meritocracy from such Banks as those generating large profits ( based as we now know on shifting sands ) were rewarded with promotion whereas as who remained on the incremental based contracts were seen as " stick in the muds " who were not incentivised to the same extent in the lending or investment arenas & as such were more likely to consider & apply good lending practices & ethics.
The downside for the workers on individual contracts was that of course they benefitted financially during the good times but as disaster struck bonuses ceased & they remain on a relatively low base salary compared to incremental contracts , this has had huge consequences for workers approaching retirement as their pension is based on final salary & their ability to generate large cash sums to help with retirement ended some 8 years ago , another significant factor was that overtime was not paid under such contracts.
A further downside is that poor management , personal dislikes , favouritism & a variety of human foibles can play merry hell with such a system.
Personally I opted to remain with the old Union negotiated scheme thus removing myself from the demands of an increasing demanding & capricious management team ( they were not particularly fans of Union members either  )
Now I do appreciate that all the above took place in a rabidly capitalist environment but perhaps there is a lesson there for any Government envisaging changing from a system that they can effectively control by such blunt instruments as the FEMPI legislation to an  individual contract , pay for performance based system that they cannot control in such an arbitrary manner ?
Whilst an interesting debate the introduction of such a system into the Public Sector is , to say the least , extremely unlikely to happen.


----------



## Purple

Deiseblue said:


> The only examples I can think of of large employers moving from Union & Management negotiated incremental based contracts to pay for performance & individual contracts are the major Banks.
> This move unfortunately facilitated the abjectly poor lending stratagems over the course of the boom years which ultimately led to disaster as workers & management were financially incentivised & motivated into taking unacceptable risks.
> As the movement to individual contracts was voluntary it actually removed the concept of meritocracy from such Banks as those generating large profits ( based as we now know on shifting sands ) were rewarded with promotion whereas as who remained on the incremental based contracts were seen as " stick in the muds " who were not incentivised to the same extent in the lending or investment arenas & as such were more likely to consider & apply good lending practices & ethics.
> The downside for the workers on individual contracts was that of course they benefitted financially during the good times but as disaster struck bonuses ceased & they remain on a relatively low base salary compared to incremental contracts , this has had huge consequences for workers approaching retirement as their pension is based on final salary & their ability to generate large cash sums to help with retirement ended some 8 years ago , another significant factor was that overtime was not paid under such contracts.
> A further downside is that poor management , personal dislikes , favouritism & a variety of human foibles can play merry hell with such a system.
> Personally I opted to remain with the old Union negotiated scheme thus removing myself from the demands of an increasing demanding & capricious management team ( they were not particularly fans of Union members either  )
> Now I do appreciate that all the above took place in a rabidly capitalist environment but perhaps there is a lesson there for any Government envisaging changing from a system that they can effectively control by such blunt instruments as the FEMPI legislation to an  individual contract , pay for performance based system that they cannot control in such an arbitrary manner ?
> Whilst an interesting debate the introduction of such a system into the Public Sector is , to say the least , extremely unlikely to happen.


There are none as blind as those who will not see.


----------



## Purple

Jon Snow said:


> Genuine question: what do other countries do? Who should we be trying to emulate, or do people here have unrealistic expectations?


The New Zealand model seems to be the best available example. Nothing is perfect but they are a similar size to us and they have transformed their public services over the last few decades.


----------



## Gerry Canning

Poor old Public Servants.

They do get a bad press on pensions /wages etc.

Maybe they are a bit overpaid in upper echelons.
Maybe in cases ,their pension is by most measures too good.

Their present remuneration came out of the (fluffy) times,when they perceived themselves hard done by.They have taken cut backs in the recession.
I think it is always easy to say NO to any increase in remuneration.
It is too easy to say no and normally the nay-sayers are those who walked us into the mess (as per Deise Blue)

Maybe now the Private Workers can yowl they now need wages to get to Public Service heights!
And so the circle turns.


----------



## Purple

Gerry Canning said:


> Poor old Public Servants.
> 
> They do get a bad press on pensions /wages etc.
> 
> Maybe they are a bit overpaid in upper echelons.
> Maybe in cases ,their pension is by most measures too good.
> 
> Their present remuneration came out of the (fluffy) times,when they perceived themselves hard done by.They have taken cut backs in the recession.
> I think it is always easy to say NO to any increase in remuneration.
> It is too easy to say no and normally the nay-sayers are those who walked us into the mess (as per Deise Blue)
> 
> Maybe now the Private Workers can yowl they now need wages to get to Public Service heights!
> And so the circle turns.



That’s the problem with relativity Gerry, everyone gets paid the same so nobody gets paid what they are worth.
Nobody in the private sector should get a pay increase because of what someone else gets paid in the public sector. That's just daft.


----------



## Firefly

Jon Snow said:


> Genuine question: what do other countries do? Who should we be trying to emulate, or do people here have unrealistic expectations?



You know nothing Jon Snow (sorry, couldn't resist!)

The Nordic countries are always referred to in studies of good public service. Those looking for higher PS pay here usually point out that taxes are much higher in these countries and look at how good the services are. There's a difference between correlation and causation though...Alas, with all the pay increases and massive increase in expenditure in this country during the bubble, we saw very little (if any) real increase in services. Throwing money at the problem doesn't seem to work here. I think perhaps the issue is cultural. We have a great little country for sure and I wouldn't live anywhere else, but I've given up on us ever having public services approaching the best in class - culturally I just don't think we are made up like that. Therefore, rather than throwing good money after bad, I would just stop borrowing or else divert the money into infrastructure or the like. 

It's been thrown out there that salaries are not high enough and doctors are emigrating - this may be true for doctors, but how many of the other almost 300,000 public sector workers left their jobs since 2008? And if not, why not? If I am not happy with my pay and conditions, I look for work elsewhere (it seems logical). If so many in the PS didn't leave, then either they lack marketable skills or are happy with their T&Cs.


----------



## Firefly

ardmacha said:


> Just as a driving instructor for my son will be paid more than when I learned to drive, that person's "productivity" is training learners to pass today's test.



Hi ardmacha,

That's true but if you find the instructor to be lousey, you can easily go somewhere else




ardmacha said:


> Likewise a teacher or lecturer is currently productive by teaching a modern curriculum using modern It, and not by adding in spurious hours and the risible pretension that classes do not have to be prepared.



I totally agree on the hours thing...makes no sense to me and I couldn't care if a teacher spent the minimum time or 12 hours a day in the school. It's the quality of the teaching that should be the focus. But without any measure of this, the only way a teacher becomes and stays a good teacher is through a moral requirement they may have. It would be far easier to be a poor teacher, and sure you're going to get the same pay as someone working far harder anyway so what's the point?




ardmacha said:


> Any suggestions along the lines of that the recovery should be spread in tax cuts or the like rather than pay restoration is conflating apples and turnips and is basically corrupt.



Tax cuts put money most people's pockets. Pay rises put money into some people's pockets. I think tax rates and pay rises should stay as they are until we start running a surplus and can start to pay down our national debt.



ardmacha said:


> There is little hope for this country, arbitrary increases were followed by arbitrary cuts, that neither reflected the previous increases nor the employment market. You might expect after the recession that some sort of plan would emerge, but it is the opposite and the media and discussion boards like this are encouraging this dysfunction.



Excellent point, and as I said, this "One for everyone in the audience" approach to pay rises (and cuts) means that until the productive stop subsidizing the unproductive in our PS nothing will change.


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## ardmacha

Firefly said:


> The Nordic countries are always referred to in studies of good public service. Those looking for higher PS pay here usually point out that taxes are much higher in these countries and look at how good the services are. There's a difference between correlation and causation though...Alas, with all the pay increases and massive increase in expenditure in this country during the bubble, we saw very little (if any) real increase in services. Throwing money at the problem doesn't seem to work here.



Throwing money does not work because there is no measurement of whether it will work or not. Blaming culture is too easy, you need to being the measures and that will change the culture. 



Firefly said:


> It's been thrown out there that salaries are not high enough and doctors are emigrating - this may be true for doctors, but how many of the other almost 300,000 public sector workers left their jobs since 2008? And if not, why not? If I am not happy with my pay and conditions, I look for work elsewhere (it seems logical). If so many in the PS didn't leave, then either they lack marketable skills or are happy with their T&Cs.



There is a bit more to HR management than concluding all is well because everyone hasn't left and there is a large gap between being happy with conditions and leaving, especially as the government is a monopsony employer in many cases so leaving means emigrating. People are leaving from some jobs, the type of job where they cannot be easily replaced, but these jobs are less easily understood than doctors so the media doesn't talk about them. With the economy picking up the pace of leaving will increase. Most PS employment is a bit more than an assembly line, people work better when motivated, you want the person teaching your kids to be content and willing to do the drama and GAA after school, you want the nurse attending your granny to be in good humour and go the extra mile. 

It is all very fine to ignore things, but damage done over a decade takes two decades to repair.


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## Sophrosyne

Isn’t it marvellous that one sector, good, bad or indifferent feels vindicated in criticizing another sector, good, bad or indifferent?

As a consumer, I use both sectors. Both need to seriously buck up and move on!


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## Purple

Sophrosyne said:


> Isn’t it marvellous that one sector, good, bad or indifferent feels vindicated in criticizing another sector, good, bad or indifferent?
> 
> As a consumer, I use both sectors. Both need to seriously buck up and move on!


Can you expand on what you mean?


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## Gerry Canning

Purple said:


> That’s the problem with relativity Gerry, everyone gets paid the same so nobody gets paid what they are worth.
> Nobody in the private sector should get a pay increase because of what someone else gets paid in the public sector. That's just daft.


...................
Not quite (daft) .
Wages public/private have a habit of drifting up towards what someone else gets paid, it is a handy benchmark.
 . A lot in Public service think self-employed get a fortune, a lot in Private work think Public servants are all too well paid.
The argument appears to run in the lower/middle income cohorts, it has the net effect of lowering wages.
Most workers in Private work are not well paid,
Most workers in Public   work are not well paid. 
I think more pertinent is this .
Is anyone in Private Work worth more than K100 .
Is anyone in Public   Work worth more than k100.
There is NO doubt those in upper echelons are over -paid.

Or is the poor sap in a drain NOT worth more than k25.
Or is the poor clerk              NOT worth more than k25.


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## Purple

Gerry Canning said:


> ...................
> Not quite (daft) .
> Wages public/private have a habit of drifting up towards what someone else gets paid, it is a handy benchmark.
> . A lot in Public service think self-employed get a fortune, a lot in Private work think Public servants are all too well paid.
> The argument appears to run in the lower/middle income cohorts, it has the net effect of lowering wages.
> Most workers in Private work are not well paid,
> Most workers in Public   work are not well paid.
> I think more pertinent is this .
> Is anyone in Private Work worth more than K100 .
> Is anyone in Public   Work worth more than k100.
> There is NO doubt those in upper echelons are over -paid.
> 
> Or is the poor sap in a drain NOT worth more than k25.
> Or is the poor clerk              NOT worth more than k25.


The thing is that when benchmarked against other public sectors, or even against the private sector here, the upper echelons are under paid and those on the lower wages are over paid.
The real question is are there too many people in the upper echelons, what are they measured against and what's the sanction for not doing their job.


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## Gerry Canning

Not quite (yet again!)
 I think we can all accept that in the Private sector, the upper echelons are grossly overpaid.
 From memory one of the old Robber Barons said the owner should be paid no more than 7 times his lowest paid staff member.That keeps him level headed and he still owns the company wealth.

I am not so sure there are many (bosses) in the upper echelons in Private sector , a lot of middle management has been taken out.
Without the ears of middle management, the upper echelons become a tad infallible!.
I just don,t know about the Public Sector.There would seem to be a lot of middle management.

I think history shows us, in putting too much power into upper echelons, it results in eventual carnage for most companies.
That might be ok for Private Companies eg close down, sell the assets and move on.
That would, in Public service terms be a dictatorship ,and history again tells us they, dictatorships also foul up in time.


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## Purple

Every organisation needs real and measurable targets to meet.
In most SME's it's simple; make a profit and stay in business.
In larger companies and in the public sector it is harder to define and quantify the correct measurements but it is all the more important that it is done.
Every state body should establish a clear performance matrix, or KPI's, and publish the results.

If lean processes have resulted in clear improvements in services and reductions in cost then employees who contribute to those savings should be rewarded with a proportion of the savings. Those who did not contribute should not be rewarded.


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## Leper

A great thread, and I kept out of it.  In my old age I have learned that there are those who look at Public and Private Sectors and patting themselves on the back suggest that I'm fine, I've worked my butt off, I'm in clover and nobody else should be there.  Other than me, how dare anybody seek any kind of reward!

It's like the old Hollywood battle of Men -V- Women; the Plus -V- the Minus, the battles will never end.

For the record Civil Servants are working extra hours at nil rate of pay now and that is forever, not just for the length of Haddington Road or Lansdowne Road Agreements.  Consequently, their hourly rate has been reduced further. Remember a draconian pay cut was cast on the civil service before Haddington Road Agreement. The overtime and premium payments are not about to be restored to their former levels either.

Whatever way you look at the Civil Service, the staff there have been inflicted with draconian cuts. Civil Servants do not like wastage either.  A tiny bit of what was stolen from them is being restored.  Try taking a Mars Bar from a child and replacing it with a Jelly Tot.  The child will scream and dance. The unions of civil servants have fallen down on the job too.  In reality they have become management. Consequently, after over 40 years of being a member of trades unions, I have decided to resign my membership.  Trades Unions should behave like trades unions.

Like somebody said earlier, things are not gung-ho in the private sector either.  There is lots of wastage there too.  Whether we like it or not, it is still the customer that pays for the wastage.

I've just heard a report on morning radio that Irish nurses working in the UK haven't a notion of returning to the Auld Sod because they are so much more appreciated in the UK. The private hospitals and the HSE are spending lots on trying to recruit the nurses they spurned some years ago.  The nurses are not buying and I don't blame them.

Ireland is changing, but is it changing for the better? I think not.


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## Danmo

There won't be any 'big' payrises. For someone like me, on €40K (salary dropped from 43K plus addition of pension levy and USC), there will be a €1000 increase  in 2016 through a reduction of the pension levy and and a €1000 pay increase in 2017 as part of pay restoration. In other words, an extra €20 approx net a week by 2017. I won't be cracking the champagne open any time soon. Try reading the actual agreement. Details are available online. [broken link removed]


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## Leper

Danmo said:


> There won't be any 'big' payrises. For someone like me, on €40K (salary dropped from 43K plus addition of pension levy and USC), there will be a €1000 increase  in 2016 through a reduction of the pension levy and and a €1000 pay increase in 2017 as part of pay restoration. In other words, an extra €20 approx net a week by 2017. I won't be cracking the champagne open any time soon. Try reading the actual agreement. Details are available online. [broken link removed]



Sorry Danmo, your €20 to the good is in gross pay.  After deductions you'll be lucky to receive around €10.00.  I knew that would cheer you up.


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## PMU

Firefly said:


> The Nordic countries are always referred to in studies of good public service.


I'm always amazed that the Irish in particular swallow the guff that “if only we were like the Nordics and taxed higher, we'd have better public services”, as if having better (however judged) public services were the be all and the end of of society. It's the standard of living that counts. If you want to emulate a country that provides a better deal for its less well off we should emulate the USA, because the less well off in the USA have a higher standard of living than many middle income families in Europe. For example, 40% of Swedish households would rank as low income households in the USA. (Source: “EU vs USA”, Timbro Research,2004). If it comes down to a choice between a higher standard of living and better public services what would a rational person vote for? A higher stand of living of course. And high standards of living are associated with low tax regimes and pro growth economic policies.


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## RobFer

Purple said:


> That’s the problem with relativity Gerry, everyone gets paid the same so nobody gets paid what they are worth.
> Nobody in the private sector should get a pay increase because of what someone else gets paid in the public sector. That's just daft.



Its not true that ever one get paid the same as some get promoted and other don't, but the problem can be that in some positions opportunities for promotion are few. Increments are widely used in public sector. Germany uses them. France uses them. England uses them. Pay for performance is very hard to implement and its implementation costs may be substantial. There is no easy way to replace increments with pay for performance for a nurse or teacher but what you can do is increase the number of grades and decrease the range of salary bands.


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