# Minister Varadkar says current State pension is unsustainable...



## Sarenco (18 Jul 2016)

...but will increase in line with inflation in the coming years!

http://www.irishtimes.com/business/...ate-pension-scheme-is-unsustainable-1.2726038

So he's acknowledging there's problem but he's not proposing to tackle it.


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## odyssey06 (18 Jul 2016)

That's terrible. Expecting the Minister for Social Protection to do something about a looming Social Protection issue. You're as bad as the people who expected the Minister for Health to do something about hospitals.


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## rob oyle (18 Jul 2016)

I wish a Minister would come out and say something along the lines of: 'if you weren't born by 1960, you won't get a State pension as you understand it today'. There'll be a lot of wringing of hands and upset in the decades to come because no one saw it coming, even though there is absolutely no shortage of reporting on the matter.


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## rob oyle (18 Jul 2016)

On Radio 1 now.


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## Nordkapp (18 Jul 2016)

Consultation doc and submission pack are located [broken link removed]

Right-hand-side of the page, well mid right, (laughable webpage design)


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## Boyd (18 Jul 2016)

"I know there's a problem but can't solve it immediately, so I'll make it worse instead".


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## Gordon Gekko (18 Jul 2016)

What sort of fund would one require to deliver a pension of €12,000 per annum...probably €400,000 give or take?

What's the average salary...€40,000 maybe?

PRSI is levied at a total rate of 14.75% per annum. That's €6,000 per annum over (say) a 40 year career.

Surely the State Pension is deliverable with some simple long-term planning (e.g. creating a fund with the proceeds of the bank share sales and investing it)?


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## Sarenco (18 Jul 2016)

We had a fund with that objective once upon a time.  Largely gone now unfortunately.

You're absolutely right though - this is a manageable problem. 

However, it needs difficult political/societal decisions to be taken ASAP.  The longer it's left to foster the bigger the problem becomes.

Some potential options outlined in this article:
http://www.irishtimes.com/business/...on-five-ways-the-benefit-may-be-cut-1.2597941


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## Gordon Gekko (18 Jul 2016)

The current government (a shambles) doesn't lend itself to making tough decisions. Instead of introducing gombeen tax cuts, we'd be far better served by reconstituting the National Pension Reserve Fund with the proceeds from the sale of AIB etc, undertaking to contribute a fixed sum to the fund per annum, and investing the total proceeds in the same manner as the Norwegians and others do.


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## Sarenco (18 Jul 2016)

And the next time there's a crisis?  

We tried that approach - the truth is it didn't work.


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## rob oyle (18 Jul 2016)

RTE Radio 1 decided to have Willie O'Dea and a guy from SIPTU on to talk about the issue - Willie O'Dea's position (and I presume that of FF) is that 'something' needed to be done about the issue. With that kind of clarity I know we're not going to twiddle our fingers until the storm hits. He also said that the retirement age of 68 was too high - I'm guessing it won't be in any future FF manifesto to bring the retirement age down but we will see.


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## Gordon Gekko (18 Jul 2016)

Sarenco said:


> And the next time there's a crisis?
> 
> We tried that approach - the truth is it didn't work.



To be fair, my understanding is that if you take what's still in the Pension Reserve Fund, the ISIF, and the market value of the State's holding in the banks, the total is greater than what was originally in the Pension Reserve Fund.

One could argue that the Pension Reserve Fund should be ring-fenced, but the fact is that we needed it in those dark times.


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## Sarenco (18 Jul 2016)

Gordon Gekko said:


> To be fair, my understanding is that if you take what's still in the Pension Reserve Fund, the ISIF, and the market value of the State's holding in the banks, the total is greater than what was originally in the Pension Reserve Fund.



Really?  That surprises me - I'd love to see some figures.

There is a pretty compelling argument against investing in risk assets while carrying significant amounts of debt.  That's really what we would be doing by reconstituting the NPRF.


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## Gordon Gekko (18 Jul 2016)

Sarenco said:


> Really?  That surprises me - I'd love to see some figures.
> 
> There is a pretty compelling argument against investing in risk assets while carrying significant amounts of debt.  That's really what we would be doing by reconstituting the NPRF.



It was stated by a senior NTMA person at something I attended recently.

Re borrowing to invest, I agree in general, but not when you can raise debt at close to zero percent.


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## Sarenco (18 Jul 2016)

Gordon Gekko said:


> It was stated by a senior NTMA person at something I attended recently.



Fair enough.  It just sounds odd.



Gordon Gekko said:


> Re borrowing to invest, I agree in general, but not when you can raise debt at close to zero percent.



The problem is you don't know what price you will be paying to roll over the debt during your investment horizon.


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## Gordon Gekko (18 Jul 2016)

Sarenco said:


> The problem is you don't know what price you will be paying to roll over the debt during your investment horizon.



But we can raise money at close to zero, and over the relevant timelines, diversified investors have never lost money...ever. What's the time period for an investor in the MSCI World Index not to have lost money...17 years?

Surely we as a nation can be a little bit more creative. We're proposing a gombeen giveaway of €2b per annum or thereabouts. We have ISIF. We have debt. We can raise money at close to zero over meaningful time horizons, over which globally diversified investors have never lost money.

Am I being naive?


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## Merowig (19 Jul 2016)

http://www.rte.ie/news/2016/0718/803134-pensions-retirement-varadkar/



> The consultation process will consider a number of options, and Mr Varadkar said he was anxious to build a consensus approach.
> 
> However, he noted that introducing a new universal scheme could take ten years.



What a joke!


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## Sarenco (19 Jul 2016)

Gordon Gekko said:


> To be fair, my understanding is that if you take what's still in the Pension Reserve Fund, the ISIF, and the market value of the State's holding in the banks, the total is greater than what was originally in the Pension Reserve Fund.



Hi Gordan

I had a bit of a dig to see if I could put some rough figures around this as a matter of curiosity.

Rounding to the nearest billion, ISIF has a current value of €8bn and the State's shareholdings in BOI and PTSB have a combined value of €2bn.  Valuing the State's shareholding in AIB is a bit more subjective but the most recent estimates seem to be around €9bn.  So that's €19bn in total.

At the end of 2008, the NPRF had a total value of just over €16bn so it does indeed seem likely that the combined value today of ISIF and the State's shareholdings in the banks exceeds the value of the NPRF at the time of the bailouts.

However, if the bailout hadn't happened and the NPRF remained invested as per its asset allocation at the end of 2008, without any further contributions from the State, then by my calculations the NPRF would have total value today of around €22bn.

Depends how you measure things I suppose!

Reconstituting the NPRF in some form may well be part of the answer to our looming problem.  However, I still think we will have to increase contributions and/or lower benefits to make the current system sustainable.


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## rob oyle (19 Jul 2016)

Sarenco said:


> Hi Gordan
> 
> I had a bit of a dig to see if I could put some rough figures around this as a matter of curiosity.
> 
> ...




Plus the small matter of €30bn additional national debt for Anglo/INBS...


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## Sarenco (20 Jul 2016)

Unless I missed it, I don't believe any of that sum came from the NPRF.  

Massive amount of money, for sure, but I don't think it really has anything to do with the topic under discussion.

What do you think is the best way to address the looming pension crisis?


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## rob oyle (20 Jul 2016)

Sarenco said:


> Unless I missed it, I don't believe any of that sum came from the NPRF.
> 
> Massive amount of money, for sure, but I don't think it really has anything to do with the topic under discussion.
> 
> What do you think is the best way to address the looming pension crisis?



True, but I suppose the argument could be made that if there had been more in the pension reserve fund, other source of capital/funding wouldn't have been considered.

As for what the best ways to address the crisis, it won't be a single item but I would consider continuing raising the state pension age each 7 years to 70 or more. Decoupling contributory and non-con pensions. PRSI funds should be separated from State annual income and put aside for the purpose it was created and then, under review, should be increased appropriately to meet future needs.
Automatic enrolment in private schemes would be a key point with compulsory minimum matched employer contributions. It obviously should be a long term plan but no politician today seems to be demanding such action from their party even though, you'd imagine, the younger members would hope/expect to still be politicking when the This post will be deleted if not edited to remove bad language hits the fan.


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## Gordon Gekko (20 Jul 2016)

The State pension age is already rising to 70.

Mandatory employer contributions would cripple small businesses.

My own view is there needs to be a sustained campaign to educate people around the misery they face in retirement if they don't plan.

Around means testing etc, imagine telling someone on €250k a year that his 4% and his employer's 10.75% will yield him nothing on the pension side...Ireland, a great place to be a waster, but an awful place to do your best in.


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## Branz (20 Jul 2016)

Sarenco said:


> What do you think is the best way to address the looming pension crisis?


Bring back smoking, and further disprove the healthcare system 

GG:
_My own view is there needs to be a sustained campaign to educate people around the misery they face in retirement if they don't plan.

Around means testing etc, imagine telling someone on €250k a year that his 4% and his employer's 10.75% will yield him nothing on the pension side...Ireland, a great place to be a waster, but an awful place to do your best in.
_
That sums it up, once you add in all  without pension pots are victims


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## 44brendan (20 Jul 2016)

Gordon Gekko said:


> My own view is there needs to be a sustained campaign to educate people around the misery they face in retirement if they don't plan.


The biggest difficulty here is the number of pension schemes that are "opt in" rather than "opt out". I.e. Workers upon joining a firm are given the option of joining the pension plan. In such a scenario the vast majority of employees will put the issue on the long finger. They see the benefits of saving for a pension but also look at the fact that funds will be deducted from their salary now which will only benefit them in 20/30 years time. Human nature being what it is most will decide that they would prefer/need the funds now and have plenty of time to put aside funds for a pension. Old age seems a lifetime away when your young!
Most pension advisors would state that a simple change in schemes where the employee is automatically enrolled into the pension scheme upon taking up employment and must sign a opt out form including a "health warning" would result in a significantly higher level of personal pensions and resultant less demand on the public pension in retirement.


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## rob oyle (20 Jul 2016)

Gordon Gekko said:


> The State pension age is already rising to 70.
> 
> Mandatory employer contributions would cripple small businesses.
> 
> ...


For the record I'm pretty sure the state pension age is only going from 65 to 68, at least in what's announced anyway. I think it should go up at least another 2 years, once each 7 years as currently scheduled and then in line with lifespan advances, which are probably rising at a faster rate anyway!
(P.S. I see the Irish Times article says once every decade but I think that's too slow).

And ANY increase cripples small businesses, with lead in times this should be factored into their wage discussions with staff. Note I said mandatory MATCHED contributions so the employee has responsibility here too.

+1 on your final point but we've proven as a nation that these sort of pronouncements in public have generally met with little (political/societal) support.


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## Nordkapp (20 Jul 2016)

rob oyle said:


> For the record I'm pretty sure the state pension age is only going from 65 to 68, at least in what's announced anyway. I think it should go up at least another 2 years, once each 7 years as currently scheduled and then in line with lifespan advances, which are probably rising at a faster rate anyway!
> (P.S. I see the Irish Times article says once every decade but I think that's too slow).
> 
> And ANY increase cripples small businesses, with lead in times this should be factored into their wage discussions with staff. Note I said mandatory MATCHED contributions so the employee has responsibility here too.
> ...



Rob I think very few would agree with your view on raising the state pension age. It might suit the Government but the ordinary worker wouldn't buy it. Currently I have to retire at 65 but for me State pension is not available till 68. My employer won't allow me work on so what do you do with retirees who retire at 65 but cannot avail of the pension till 70.


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## Sarenco (20 Jul 2016)

Nordkapp said:


> My employer won't allow me work on so what do you do with retirees who retire at 65 but cannot avail of the pension till 70.



I think this is one of the key problems with simply increasing the retirement age as a solution to this issue (although I certainly agree that it has to form part of the mix of policy responses).

The harsh reality is a substantial number of individuals will not be in a position to work past 65 for a variety of reasons and will often be entitled to other social welfare benefits in the interim period before they are entitled to draw a State pension.  So the savings to the social fund by simply increasing the retirement age may not actually be as significant as it might first appear.


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## rob oyle (21 Jul 2016)

Nordkapp said:


> Rob I think very few would agree with your view on raising the state pension age. It might suit the Government but the ordinary worker wouldn't buy it. Currently I have to retire at 65 but for me State pension is not available till 68. My employer won't allow me work on so what do you do with retirees who retire at 65 but cannot avail of the pension till 70.



That's fair enough... but what would you suggest we do instead? The ordinary worker is paying for the pensioners now and that will be the case in years to come unless there's meaningful change.



Sarenco said:


> I think this is one of the key problems with simply increasing the retirement age as a solution to this issue (although I certainly agree that it has to form part of the mix of policy responses).
> 
> The harsh reality is a substantial number of individuals will not be in a position to work past 65 for a variety of reasons and will often be entitled to other social welfare benefits in the interim period before they are entitled to draw a State pension.  So the savings to the social fund by simply increasing the retirement age may not actually be as significant as it might first appear.



I was thinking that - but isn't that an issue with the schemes in question, rather than the macro position? And with increased life expectancy doesn't the number of healthy years increase too (i.e. more people can work more years)?


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## PaddyW (21 Jul 2016)

44brendan said:


> The biggest difficulty here is the number of pension schemes that are "opt in" rather than "opt out". I.e. Workers upon joining a firm are given the option of joining the pension plan. In such a scenario the vast majority of employees will put the issue on the long finger. They see the benefits of saving for a pension but also look at the fact that funds will be deducted from their salary now which will only benefit them in 20/30 years time. Human nature being what it is most will decide that they would prefer/need the funds now and have plenty of time to put aside funds for a pension. Old age seems a lifetime away when your young!
> Most pension advisors would state that a simple change in schemes where the employee is automatically enrolled into the pension scheme upon taking up employment and must sign a opt out form including a "health warning" would result in a significantly higher level of personal pensions and resultant less demand on the public pension in retirement.



One thing that always strikes me is why they never teach some basics of finance and financial planning in schools. Basic things like budgeting and planning for retirement. I know it is touched upon in some subjects, but not enough, in my opinion. Could do wonders for peoples' thinking.


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## 44brendan (21 Jul 2016)

rob oyle said:


> I was thinking that - but isn't that an issue with the schemes in question, rather than the macro position? And with increased life expectancy doesn't the number of healthy years increase too (i.e. more people can work more years)?


There has also been a major change in working years since retirement at 65 was input as the norm. Given that 3rd level is now more the norm than the exception for most occupations the entry age to the workplace is nearing 24/25. When I started work it was 18! Taking into account also the increase in lifespan and healthcare improvements 65 is now the new 55. There is no reason why anyone who is in good health should need to retire at 65. There is a need for a rethink on the current process of working full time from age 24/25 to age 65 and then just retiring and spending the rest of one's life waiting for death (ok I know it's not quite like that!!). There is plenty of scope to scale back work from early 60's and health permitting work on to at least 70. This could be a few days a week or job sharing or working part time from home etc. There are very many people of retirement age who while having no desire to keep on a full time employment with all of the stresses and strains would welcome an opportunity to continue work on a part time basis and maintaining a lower income level. The State could but some incentive system in place for employer to introduce this practice. It would not necessarily result in a promotion block for younger employees as those staying could be moved from their current positions and would be on reduced level of salaries.


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## Sarenco (21 Jul 2016)

44brendan said:


> There is no reason why anyone who is in good health should need to retire at 65.



I suppose it depends on the occupation - I don't think I'd fancy digging ditches in my dotage!

I think we also have to acknowledge that our ability to innovate or think creatively generally declines with age.  I think it's pretty well established that creative output climaxes around our late 30s or early 40s, and then undergoes a slow decline as we age. A person's best work tends to appear at roughly the same age as their output peaks.

Youth unemployment (or under-employment) is a significant issue in most developed economies.  If older workers continue to occupy positions that could otherwise be filled by younger workers, we could be denying these younger workers an opportunity to contribute at a time when their creative productivity is at its peak.  At a societal level, we could therefore be exacerbating, rather than alleviating, the core problem by simply retaining older workers in the workforce for ever longer time periods.

One area we could possibly look at is abandoning the idea of a fixed retirement age altogether so that workers could chose to draw a reduced State pension at 65 or an enhanced pension at a later age (with the age related reductions/enhancements calculated on an actuarial basis). 

However, this is really just tinkering around the edges of the problem.  Ultimately, we will have to accept that retaining the State pension at its current level will be unsustainable in the future.  The only question remaining in my mind is whether the necessary adjustment is started now or whether the entire adjustment is left to borne by future retirees.


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## Brendan Burgess (21 Jul 2016)

*Indexing of welfare payments favoured by Varadkar*
*"Indexing social welfare payments is favoured by Minister for Social Protection Leo Varadkar who said it will protect the less well-off and he hopes to bring in legislation to that effect.*

*...*

*He hopes to secure cross-party support for legislation to that effect and bring it through the Oireachtas, the minister said."*

And the shocking thing is that he may well get cross-party support for it. Not one TD will oppose this ridiculous proposal.


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## Gordon Gekko (21 Jul 2016)

Hi Brendan

Does wage inflation not provide a natural hedge?

i.e. the 4% that they're collecting from most of us is growing, so is it the worst thing in the world to provide OAPs with a degree of certainty?

Gordon


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## Brendan Burgess (21 Jul 2016)

If it's certainty you want, the best thing to do is to cut pensions and other social welfare to a level which might be affordable in the long-term. 

I love the theory of paying good pensions and social welfare. But we simply can't afford them. At the moment we can borrow to pay them, but we won't be able to do that indefinitely. 

The thread started with the Minister saying that the state pension is unsustainable. But a week later he wants to change the legislation to make it even more so in the long term.

Brendan


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## KOW (21 Jul 2016)

Surely we should be focusing on a basic pension for all citizens in their old age .In my humble opinion this basic pension should be the same for all. If a person wants a better pension they will have to pay for it.
Lets look at say an ex-minister on a pension of say 100k. I would need to have 3 million to buy such a pension. Lets look at a Garda Super. probably 180k tax free lump upon retirement   and 60k a year pension. This is what is strangling the country.As one poster above  mentioned education is key to all this. Presently at leaving cert extra points are awarded to students who take up  honours Maths.
The very same students have absolutely no idea how much net income they would earn if they took up employment. Lets forget about the angle of the dangle and all that and educate young people on relevant material around practical issues that will affect them
them right up to pension age. (probably 90 years of age by the time they get there the way its going )


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## Merowig (23 Jul 2016)

Sarenco said:


> I suppose it depends on the occupation - I don't think I'd fancy digging ditches in my dotage!
> 
> I think we also have to acknowledge that our ability to innovate or think creatively generally declines with age.  I think it's pretty well established that creative output climaxes around our late 30s or early 40s, and then undergoes a slow decline as we age. A person's best work tends to appear at roughly the same age as their output peaks.


Creativity is not necessary in many jobs though.




> Youth unemployment (or under-employment) is a significant issue in most developed economies.  If older workers continue to occupy positions that could otherwise be filled by younger workers, we could be denying these younger workers an opportunity to contribute at a time when their creative productivity is at its peak.  At a societal level, we could therefore be exacerbating, rather than alleviating, the core problem by simply retaining older workers in the workforce for ever longer time periods.


But as less people are born / entering the work force so one could imagine that increasing the retirement age will also help in tackling this problem.



> Ultimately, we will have to accept that retaining the State pension at its current level will be unsustainable in the future.  The only question remaining in my mind is whether the necessary adjustment is started now or whether the entire adjustment is left to borne by future retirees.




It looks like politicians would like to push this decision far into the future.


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## Deiseblue (25 Jul 2016)

Brendan Burgess said:


> *Indexing of welfare payments favoured by Varadkar*
> *"Indexing social welfare payments is favoured by Minister for Social Protection Leo Varadkar who said it will protect the less well-off and he hopes to bring in legislation to that effect.*
> 
> *...*
> ...



Less a Damascene conversion than a conversion on the road to the Taoiseach's office perhaps
Whatever happened to the Leo despised by all on the left & hugely distrusted by Trade Unions ?
In any event - welcome aboard Brother !


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## T McGibney (25 Jul 2016)

Deiseblue said:


> Less a Damascene conversion than a conversion on the road to the Taoiseach's office perhaps
> Whatever happened to the Leo despised by all on the left & hugely distrusted by Trade Unions ?
> In any event - welcome aboard Brother !



Bribing the grey vote with their grandchildren's money is always the easiest route to success in the moral cesspool that is Irish politics.


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## Deiseblue (25 Jul 2016)

I understood that Brother - sorry Minister Varadkar's comments related to Social Welfare payments as opposed to the OAP ?


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## T McGibney (25 Jul 2016)

Possibly, but it's been interpreted otherwise above.


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## Gerry Canning (25 Jul 2016)

Brendan Burgess said:


> *Indexing of welfare payments favoured by Varadkar*
> *"Indexing social welfare payments is favoured by Minister for Social Protection Leo Varadkar who said it will protect the less well-off and he hopes to bring in legislation to that effect.*
> 
> *...*
> ...



This is not a ridiculous proposal .
It is a simple proposal that should have the support of anyone who believes we all should have a minimum living amount..
The issue (well highlighted in the posts on pensions) is that little attempt is being made into how we fund such a sensible proposal.
Given our (trust ?) in politicians we rightly fear that a proposal like this will be  funded by borrowings until @ some stage the edifice falls under the weight of avoidable debts, and these debts end up being  borne by our childrens children.
I just hope , this is not just another easy promise.


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## T McGibney (25 Jul 2016)

Gerry Canning said:


> we rightly fear that a proposal like this will be  funded by borrowings



Fear? It's fact, Gerry.

We're going to have a massive public debt millstone around our collective necks for the rest of all our lives. Every political promise for the next 50 years will be directly or indirecly funded by borrowings. This either hasn't yet dawned on our political class, or more likely they're lying through their teeth and laughing at us while we vote for them.


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## Gerry Canning (25 Jul 2016)

T Mc Gibney,

I fear you will be proven correct.The fact is for the future !
But bear in mind we voted them in and maybe just maybe they will accept Mr Haugheys words {we are living beyond our means} before we lose control of things.   
Glass is still half full ?


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## 44brendan (25 Jul 2016)

Gerry Canning said:


> It is a simple proposal that should have the support of anyone who believes we all should have a minimum living amount


Something I have noted over the last 3/4 years is the gradual rush of all politicians towards the left. The assumption that everyone is entitled to a certain standard of living with no necessity to seek work if unemployed or pay towards anything!! The Group Think now is that those of us who work all our lives, pay our taxes and save diligently for our retirement should not be financially better off in  our retirement than our neighbor who never worked a day in his life (yes an extreme example!!).
Leftist policies are effectively based on the assumption of all take and no give. I.e. The greedy rich and corporates should be taxed to the hilt to pay for those less fortunate. Unfortunately this assumption has never effectively worked out in practice and I am disappointed by the recent "conversion" of Leo Varadaker to the brotherhood of the disenfranchised. The policies of "free sweets for all" worked well in our mock primary school elections and one would have thought that mature adults would have more sense when it came to voting in our Government but seemingly not.


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## Gerry Canning (25 Jul 2016)

44 Brendan.
I disagree with your (assumptions).particulary the (entitlement ) bit.
No one is realistically wanting to have anyone who consciously never works nor ever wishes to work whould be treated as the rest of us.
I do not think it is (leftish) to in older age give even those who have (wasted) their life @ least nuff to live on.
Again realistically, the non contributory pension will be the first to not get increases if things turn bad, the workers on their contributory pensions will be protected to some degree. Those of us who have other pensions will be better off.

Leftish policies are not (on the assumption of all take and no give) but it is sold that way by lazy lefties and rampant righties!


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## MrEarl (25 Jul 2016)

Sarenco said:


> .....Reconstituting the NPRF in some form may well be part of the answer to our looming problem.  However, I still think we will have to increase contributions and/or lower benefits to make the current system sustainable.



I agree that reconstituting the NPRF is part of the solution, however the funds contained within need to kept under a serious lock and key - never again, can this fund be used for a particular government's own agenda, it doesn't matter if it's to save the banks or save the whales.

The current arrangements for both the civil servants and the beneficiaries of the state pension are crazy and the growing liability on the State has to be capped immediately.  People are living longer and whether we like it or not, the State can't afford to give them the pensions promissed for the full duration of their lives.

Granted, no one is going to want to hear this and I'm sure there are people reading this right now thinking they will go on strike if the State even tries to change the current arrangements, but this is too big a problem - so if we need to have a few strikes to help deal with the problem then so be it.

I would propose that a specific monetary cap be put on all pensions, be they civil servants pensions, or state pensions.  Obviously, I don't just propose to pluck a figure out of thin air, but specific calculations would have to be done to actuarial standards, to help ensure that there is logic to support everyone's individual cap.

Compulsory private pension schemes for all has to be part of the solution here, so ultimately we have everyone saving for their own retirement alongside their capped amount.

In the future, more and more focus on the private pension schemes has to be the way, with all new workers (be they private or public sector) compelled to save for their retirement.  

Those unemployed would have an appropriate amount deducted from their benefits each week, to also go into some form of individual pension scheme (managed by the private sector, not the State).


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## 44brendan (26 Jul 2016)

MrEarl said:


> I would propose that a specific monetary cap be put on all pensions, be they civil servants pensions, or state pensions.



PS pensions would need to be amended to Defined Contribution for all new employees. This is not essentially off-topic as the approach to funding pensions from current funding effectively lumps all PS and State Pensions together to be paid from annual income. There are very few remaining private sector employees on DB pensions for obvious reasons. The underlying problem here is not one of whether all should be guaranteed a certain income on retirement but rather the availability of funding in future years to pay this income. I saw some figures recently estimating that the total cost of contributory & non-contributory pensions (exc PS) is expected to reach 7.5 bln by 2016 (an increase of 52% on current level). This is simply not affordable from current expenditure so realistically changes will need to happen and happen quickly. The question is whether the current Government has the willingness to do what is necessary or will action be postponed in order to appease the opposition and the independents. This is not a Party issue and is definitely an issue for an all party Dail committee to take on sooner rather than later.


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## MrEarl (26 Jul 2016)

44brendan said:


> .....This is not a Party issue and is definitely an issue for an all party Dail committee to take on sooner rather than later.



Agree 100%

If Leo can get all parties involved and come out of it with any sort of a solution, he'll be claiming it as his greatest political success to date (and in truth, he might just be right !)


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## KOW (1 Aug 2016)

Figures released to Sinn Fein finance spokesperson Pearse Doherty show that the top 500 civil service pensions cost the tax payer over 50 million per year. Thats 500 persons on a pension of over 100,000 euro per year payed by us. Dig deeper and take a look of the amount of people on pensions of 70-80-90k a year payed by the state. Madness.Basic pension for all at 65 not 68. Work save or pay if one wants a better one.


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## MrEarl (2 Aug 2016)

This nonsense will continue, as long we as allow it.

Everyone needs to put a rocket under their local politicans.


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## Sarenco (16 Aug 2016)

David Begg joins the chorus of voices saying the current contributory State pension is unlikely to be maintained at its current level - 



And yet FF is demanding a €5 per week increase...

Responsible as always.


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## Sarenco (17 Aug 2016)

Good summary of the politics of the State pension issue:-

http://www.businesspost.ie/comment-pensions-will-be-a-leadership-test-for-leo-varadkar/


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## Gerry Canning (17 Aug 2016)

The Neri institute (who are considered left leaning, from my distillation of their blog )
Reckon that k15 per annum gives an ok financial retirement , and that a couple on k30 will have a comfortable retirement.
Since Contrib old age pension for couple = k23 per annum , even the average of 60 per week that is said that private workers have in their pension pots = k3 per annum
, means total average of k23 + 3 = k26 ie a fair pension.
.
So if from now on , workers save a little bit more to increase the 60 to say 90 , we can let OAP rest @ k23 ie let inflation (reduce ) the state pension.
From my looking @ it , it looks eminently sortable.


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## Sarenco (17 Aug 2016)

Gerry Canning said:


> The Neri institute (who are considered left leaning, from my distillation of their blog )
> Reckon that k15 per annum gives an ok financial retirement , and that a couple on k30 will have a comfortable retirement.



I wonder does that figure assume zero rent/mortgage payments in retirement?

I certainly agree with you that this problem could be solved if we started to take relatively modest steps in the right direction.  My problem is that some politicians are calling for increases in the OAP which will actually exacerbate the problem.


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## MrEarl (17 Aug 2016)

Hi,

The key question is not if this can be sorted Gerry, but how do we ensure there is an equitable solution for all ?

Several issues need attention....

The State cannot afford to fund its pension commitments to all civil servants etc, no more than it can afford to cover the contributory pension in it's current form, into the future.  In the private sector, companies have been closing down DB schemes and moving over to DC schemes, cutting their contributions into DC schemes etc.  Massive numbers of state employees will try to prevent change, but simply put change must happen for the financial good of the country and it must happen quickly.

Every person living and working in Ireland must be instructed on the basics of how a pension works, how they are funded and how those funds are invested, what significant outgoings will need to be covered in retirement and old age (accomodation, nursing care / health care and food being three key costs).  A lot of people still don't understand the basics and in particular, don't realise how big a problem this is going to be for them when they get old.  As part of this, the educational system needs to help with regards to teaching future generations about the importance of retirement planning, saving early etc.  I don't care if they introduce a new module and cover other basic financial stuff like how to manage a household budget, run your bank account and manage your debts, or just amend the old "Commerce" subject etc.  but either way, education is vital and our educators are responsible for helping out here.

A radical and generous transitional arrangement needs to be put in place, to help get everyone into a pension and contributing regularly.  Rather than give X amount away in cuts to the USC etc. in the next Budget, I would far rather see a significant financial incentive offered to get everyone paying into their pensions, or those without a pension starting one.  It needs to be fair so it does not favour the wealthy, but it also needs to be practical and simple to understand.

Speaking of understanding, the pensions industry also needs to do a lot more to make their products and services easier to understand.  Every pension provider should have a "Pensions for Dummies" section on their website, that takes a visitor through all of the basics in simple English, with links to subsequent sections to guide people towards the type of pension they might need.  The concept of having a qualified person sell a pension is all well and good, but people need access to information from their homes, at times that suit them and without feeling under any pressure to sign up to a policy with a particular provider or too embarrissed to admit that they don't understand some of the language being used etc.

The idea of just cutting those part time works entirely from potentially collecting a State pension when they get old, or pushing the entitlement age out another few years, once a decade is simply not satisfactory or equitable, without significant action in other areas at the same time.

The list goes on... but hopefully Leo V. is reading and this has given him a few ideas


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## Gerry Canning (18 Aug 2016)

Mr Earl ,
Agree , you talk sense ie, that's your first mistake !  ; because vested interests , politics and general short termism gets in senses way.!

Most things get really sorted by incremental change so if Leo V would enact change bit by bit , year on year , we will get there.


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## Sarenco (18 Aug 2016)

Gerry Canning said:


> Most things get really sorted by incremental change so *if* Leo V would enact change bit by bit , year on year , we will get there.



That's a very big "if" Gerry. 

While acknowledging the problem - the unsustainability of State pensions at their current level - there is absolutely no indication that Minister Varadkar has any intention of actually doing anything about it.


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## MrEarl (18 Aug 2016)

Gerry Canning said:


> Mr Earl ,
> Agree , you talk sense ie, that's your first mistake !  ; because vested interests , politics and general short termism gets in senses way.!
> 
> Most things get really sorted by incremental change so if Leo V would enact change bit by bit , year on year , we will get there.




To be honest, I think that would be the wrong approach.....

All it needs is for FG to get a bit of drop in support, for Leo to bottle it etc and the tasks never get completed.  Furthermore, while no one is going to be happy with changes (which have appear to have a negative impact on them), if everything gets done at the same time there will be some sentiment of equality and fairness across the population.


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## Gerry Canning (19 Aug 2016)

Big Bangs , normally cause disruption.

Leo,s pals were able to sneak in a nasty bit of stealing from pension pots , small nuff , not to create waves.Even though it was thievery! they got away with it.

So can Leo and pals not quietly enact little changes that cumulatively end up sorting things .


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## Sarenco (19 Aug 2016)

Gerry Canning said:


> Leo,s pals were able to sneak in a nasty bit of stealing from pension pots , small nuff , not to create waves.Even though it was thievery! they got away with it.



The private pension levy was well flagged in the relevant FG manifesto - it may well have been outrageous but it certainly wasn't sneaked in.

I don't know how you could possibly consider the appropriation of over €2billion by the State from private savings to constitute "small nuff".  It was a very significant measure by any standards.

The idea of trying to tackle this problem incrementally outside the parameters of a long term plan makes no absolutely no sense.  This problem cannot be endlessly kicked down the road - it needs to be addressed with a degree of urgency, having regard for the interests of all age cohorts.


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## MrEarl (19 Aug 2016)

Gerry Canning said:


> Big Bangs , normally cause disruption.



Then we take it on the chin... short term pain for long term gain has to be the approach here because the entire problem needs fixing now and the longer even part of it is left unattended, the greater the overall cost will be.




Gerry Canning said:


> Leo,s pals were able to sneak in a nasty bit of stealing from pension pots , small nuff , not to create waves.Even though it was thievery! they got away with it.....



They got away with it for the same reason as most Irish governments get away with most other things..... because we roll over just about every time (we bitch'n'moan in the pubs, but do nothing else).  The water charges were probably the first time in decades that we as a nation ever did anything proactive to stand up for ourselves and even then, most of the protests probably had less than 1% of the population in attendance.


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## Gerry Canning (22 Aug 2016)

Earl & Sarenco.

Can,t disagree with you both on what was and should be done .
On sneaky from pension pots, who reads manifestos? ,as you say {outrageous}

Still am of the (stubborn!) opinion that incremental change in the absence of general agreement is the only way we can tweak things.
If the water -charges created such a kermuffle , pensions are nuclear !


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## MrEarl (22 Aug 2016)

Gerry Canning said:


> .... *pensions are nuclear !*



All the more reason to just have them go off in one year, rather then over several years


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