# Construction Pension Scheme - is it any use?



## Hoagy (3 Nov 2007)

Can anyone tell me how the construction industry pension scheme compares to other pension schemes?  The basics are:
It’s compulsory for everyone in the industry, transferable between employers
It’s based on a weekly pension stamp of € 51.27 (€29.78 ER,€21.49EE)
There’s a sick pay element (€34.38/day), there’s a death benefit (€63.5K plus your fund)
As far as I know the maximum  level of pension at present is about €4K per annum.
That seems to me to be woefully inadequate.
For example, the hourly rate for electricians is €21.49, an annual basic salary of €43582,
So the pension contribution element of the total (€44.60) is just over 5% of income.

In my own case I have contributions from 1970 till 1991.  When I inquired I was told I
will get a pension of €500 per annum. Can’t wait.
It’s an ongoing cause of trouble -  many employers in our trade don’t join the scheme, mostly with the agreement of their workers. So much so that there is an organisation called [broken link removed] which exists to try and force compliance. 
At the minute there are thousands of foreign workers employed in construction.  They are all contributing to a scheme that probably none of them will ever benefit from.

It seems to me that if the scheme wasn’t the only one on offer they would have to improve the benefits.


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## LDFerguson (5 Nov 2007)

My primary criticism of the CWPS is that contributions are standardised for all members.  In other words, whether you're earning €20,000 or €200,000, your contribution rate is the same.  

It's also obligatory for all construction industry employers to sign up for this scheme, whether or not they want to.  A construction industry employer, for example, cannot simply put a PRSA scheme in place for their employees, like most others.  This seems anti-competitive to me.  

I'd recommend that if you can afford to, you consider making Additional Voluntary Contributions (AVCs) to boost your pension benefits, either through the CWPS AVC arrangement or through an AVC PRSA of your own choosing.


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## MMilken (5 Nov 2007)

LDFerguson said:


> It's also obligatory for all construction industry employers to sign up for this scheme, whether or not they want to. A construction industry employer, for example, cannot simply put a PRSA scheme in place for their employees, like most others. This seems anti-competitive to me.


 
As I understand it, they can BUT they would have to show that the benefits from the PRSA at least match or exceed the benefits under the CWPS and nobody wants to make such a guarantee.


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## LDFerguson (6 Nov 2007)

Yes - there are several reasons why it is practically impossible for an employer to be able to guarantee that the benefits provided under an alternative arrangement are equal to those provided by the CWPS, not least of which is the fact that the risk benefits would be difficult for a small employer to source.  So why don't the CIF de-couple the pension scheme and the risk benefits?  Flat rate contribution levels irrespective of salary is madness in my opinion.


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## coolhandluke (6 Nov 2007)

then you have the employers deducting the employees contributions and not paying them into the pension scheme !.


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## MMilken (6 Nov 2007)

That should not overly concern the employee - but in the long run it may make the scheme (even more!) insolvent.

The employee's pension is defined, so whether or not his/her contribution goes in should not - in theory - affect his/her pension.


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## LDFerguson (6 Nov 2007)

But if an employer is breaking the law in this manner, it should raise certain questions in an employee's mind about what other corners s/he's cutting.


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## MMilken (7 Nov 2007)

Well I think we can leave that philosophy and psychology debate for shooting the breeze!


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## LDFerguson (7 Nov 2007)

MMilken said:


> Well I think we can leave that philosophy and psychology debate for shooting the breeze!


 
If an employer is deducting contributions from an employee's salary and not passing them on to the scheme, it's illegal.  I can't see any scope for psychological or philisophical debate on that one.


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## MMilken (7 Nov 2007)

The OP did not suggest that this was happening
It is a DB Scheme so such happenings should not affect the member's pension


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## Hoagy (7 Nov 2007)

MMilken said:


> The OP did not suggest that this was happening
> It is a DB Scheme so such happenings should not affect the member's pension


 
I was just trying to find out how the scheme compares to other pensions.

In fact your second point isn't quite correct. The final pension amount depends on the number of weekly stamps credited to the member's account, so if an employer fails to stamp a card _and isn't caught_, the member's pension will be reduced.  You have to remember that guys might work for several different employers during a year.


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## LDFerguson (7 Nov 2007)

MMilken said:


> The OP did not suggest that this was happening
> It is a DB Scheme so such happenings should not affect the member's pension


 

Coolhandluke started referred to the practice later in the thread.
You already made that point yesterday.


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## MMilken (7 Nov 2007)

I did not know this was an "Is my employer possibly doing bad things?" forum, I thought it was a "Pensions" forum.


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## LDFerguson (7 Nov 2007)

It's a forum in which it is quite appropriate to discuss illegal practices by employers that can have an effect on people's *pensions*.


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## ubiquitous (7 Nov 2007)

Its impossible to discuss the CIF scheme in any meaningful way without taking into account the large rate of non-compliance with the scheme and the utter disrespect  in which the scheme is held by equally large numbers of employers and employees alike.


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## MMilken (7 Nov 2007)

Absolutely ubiq, the focus is on the pension scheme.

Opinions like "Well if (s)he is doing that then I wonder what else (s)he is doing" are not relevant.


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## LDFerguson (7 Nov 2007)

I think you need to read ubi's post again. 



> The employee's pension is defined, so whether or not his/her contribution goes in should not - in theory - affect his/her pension.


 
I also think you should clarify that this statement is both unhelpful to the thread and also factually wrong.


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## MMilken (7 Nov 2007)

LD it is factually correct.

Whether or not an employee contributes to a Defined Benefit Pension Scheme should not - in theory - affect his/her pension at retirement.

I presume you know how a DB Plan operates.


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## LDFerguson (7 Nov 2007)

Your mistake is that you are confusing the CIF scheme with a typical DB scheme.  In a DB scheme, your statement would be correct.  In the CIF arrangement, a member's benefits *will* be affected if their employer has failed to pass on contributions.  

In the context of this thread, your statement is wrong.


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## MMilken (7 Nov 2007)

Your mistake seems to be in understanding my statement.

*It's also obligatory for all construction industry employers to sign up for this scheme, whether or not they want to.*

The statement (in bold, above) of yours was wrong, but I got over it.


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## LDFerguson (7 Nov 2007)

The terms of the Registered Employment Agreement for the Construction Industry relating to Pensions, Assurance and Sick Pay were registered with the Labour Court on the 7th March, 1969, under the Industrial Relations Act 1946/69. Employers working in the Construction Industry to whom this Agreement applies, whether Construction Industry Federation (CIF) members or not, are obliged to make contractual arrangements with their manual employees, for the provision of Pensions, Sick Pay and Death Benefits, and these arrangements must provide that where employees change their employments within the Industry, there shall be full transferability of benefits without loss between employers and the industry.

As I said above, in practice the only scheme that fulfils this obligation is that operated by the CIF. So it is obligatory for all construction industry employers to sign up for this scheme, whether or not they want to. 

Your unwillingness to correct your erroneous statement that "The employee's pension is defined, so whether or not his/her contribution goes in should not - in theory - affect his/her pension" is frankly boring me now as it appears that your only interest is to have the last word on this thread. 

So as it's late, just this once I'll let you have the last word. Off you go...


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## MMilken (7 Nov 2007)

Thanks LD, big of you to admit your mistake.


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## Homer (17 Nov 2007)

You couldn't resist, could you?


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## RainyDay (22 Nov 2007)

ubiquitous said:


> the utter disrespect  in which the scheme is held by equally large numbers of employers and employees alike.



Can you advise how/where this disrespect has manifested itself?


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## eileen alana (27 Jan 2008)

My husband is a member of this pension scheme for the past ten years and also makes additional voluntary contributions to it. I am quite amazed at the negativity surrounding the scheme because I haven't read any bad press about it anywhere else. True, there are unscrupulous employers out there who are not complying with the scheme, however, members are kept updated on their contributions on a yearly basis and those updates will detail all contributions received. If it comes to light that employers are not complying, members can contact the Construction Industry Monitoring Agency (CIMA) (Tel - 01-8524101) who can enforce proceedings against an employer going back three years. Prior to those three years, the CIMA will recommend to members if they have any concerns regarding missed payments to contact the Pensions Ombudsman who can then proceed with the complaint.


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## LDFerguson (28 Jan 2008)

eileen alana said:


> My husband is a member of this pension scheme for the past ten years and also makes additional voluntary contributions to it. I am quite amazed at the negativity surrounding the scheme because I haven't read any bad press about it anywhere else. True, there are unscrupulous employers out there who are not complying with the scheme, however, members are kept updated on their contributions on a yearly basis and those updates will detail all contributions received. If it comes to light that employers are not complying, members can contact the Construction Industry Monitoring Agency (CIMA) (Tel - 01-8524101) who can enforce proceedings against an employer going back three years. Prior to those three years, the CIMA will recommend to members if they have any concerns regarding missed payments to contact the Pensions Ombudsman who can then proceed with the complaint.


 
Hi Eileen, 

If an employer is not making the contributions, the employees will not get the statements.  Many of them won't be aware of what you outline above.  

I also think that in 2008, a scheme which makes the same level of contribution for all members and offers the same benefits to all members is seriously outdated.  Whether your husband earns €20,000 or €80,000, the standard contributions (ignoring his AVCs) are the same.


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## eileen alana (28 Jan 2008)

LDFerguson said:


> Hi Eileen,
> 
> If an employer is not making the contributions, the employees will not get the statements. Many of them won't be aware of what you outline above.
> 
> I also think that in 2008, a scheme which makes the same level of contribution for all members and offers the same benefits to all members is seriously outdated. Whether your husband earns €20,000 or €80,000, the standard contributions (ignoring his AVCs) are the same.


 

Hi LDFerguson,

In relation to your first point, this forum helps to create awareness among construction workers regarding their pension entitlements.
For any building worker who may be concerned that they are not registered in the scheme, the CIMA have a website  where workers can check if they are enrolled in the construction pension and also to check their contribution history http://www.monagency.ie/ 

Your second point is your own personal opinion. Since January 2007, the REA (The Registered Employment Agreement) provides that 7% of the average Construction Industry wage is returned for weekly pension contribution. This is broken down to 4.2% employer and 2.8% worker. Thereafter, workers are free to make Additional Voluntary Contributions.

Some useful websites for anyone who may be interested
[broken link removed]

http://www.irishconstruction.com/in...spId/7DD97220-F9E9-DF8A-35C735006FA6FC9C.html


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## LDFerguson (28 Jan 2008)

Hi Eileen, 

I would have no fear that anyone who is astute enough to be browsing this forum is not getting their entitlments.  It's the ones who don't that I would consider to be more at risk.  

Yes, these are my personal opinions, but would you not agree that a worker would benefit by having a scheme with 


employer contributions of a percentage of his actual salary, rather than a percentage of the average construction industry wage?
flexibility for an employer to increase the employer contribution above a certain level if required?


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## eileen alana (28 Jan 2008)

LDFerguson said:


> Hi Eileen,
> 
> I would have no fear that anyone who is astute enough to be browsing this forum is not getting their entitlments. It's the ones who don't that I would consider to be more at risk.
> 
> ...


Yes, your are right, there are many who are not aware of their entitlements and others still who don't seem interested to find out. 

Yes, I think it should be a percentage of a person's salary, however, given the low uptake of private sector pensions in this country, it is better than having no pension at all and as I stated above the AVC option is there.


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## LDFerguson (28 Jan 2008)

eileen alana said:


> Yes, I think it should be a percentage of a person's salary, however, given the low uptake of private sector pensions in this country, it is better than having no pension at all and as I stated above the AVC option is there.


 
I agree fully with you on this point.  While personally I am an advocate of the "soft-compulsory" pensions-for-all option (i.e. you get automatically enrolled in a pension scheme but can opt out if you want), I certainly think that some form of pension is far better than none at all.  

Regards, Liam


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