Brendan Burgess
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Do these figures take account of the emptying of the €25b National Pension Reserve Fund to cover our short-term debts,
and the loss of investment growth in this fund over time?
I (and probably most other public sector employees) allow themselves a little grin at all the talk of raiding and robbing in relation to the very modest levy on private sector pensions (which affects me too btw), when compared against the real pension levy - the fairly savage immediate, direct and ongoing cut to salary of 5%-8%. The real pension levy hit low-earning staff who earn no public sector pension above the standard contributory pension.
So really, stop whinging - it's a tax, like many other taxes. It's not nice, but it's necessary.
With due respect, who decides what is relevant? Is there some economic convention or analytic convention that sets out what is relevant what is not? If so, was this same convention applied when coming up with the €100b future cost of public sector pensions?This is not relevant. We say that the budget deficit this year is €5 billion. We don't say that the true cost is €20 billion, because of the lost investment growth we could have got had we invested the €5 billion.
My point is private pension funds dropped in value anywhere from 20% to 100% while one sector was protected.
I do not consider A drop of 25% to 75% in a person's pension and then a tax levy on the remainder a whinge, especially when many have no way of making the values up as they near retirement while PS pensions funds are protected with guarantees.
What particular funds dropped 20% or 100%? And if they did drop, how quickly did they pick up again?
And what particular 'guarantees' are you referring to, in relation to public sector pensions? Are they really guaranteed, or are they at the whim of current and future governments?
Neither party has shown any appetite in tackling public spending excesses like the hundreds of allowances masquerading as core pay. Both have supported the cocooning of 15 per cent of the workforce with an unjustifiable pay premium over the private sector and continue to gift the highest pay rates in Europe.
What is a 'DB'? Is there any chance that we could get something more concrete to base the analysis on, given that the published industry return figures are so completely different to your anecdotal experience?One of my DBs for a start and and was would up...........no pick up there and I have friends with varying degrees of pensions shortfalls.
Could you point me to the text of this guarantee please?Yes, guaranteed by the taxpayer.........and to quote Eddie Hobbs.....
Yes, we agree that there is little value in the Public Sector vs real world debate againI don't want this to escalate into a PS v real world debate or off topic so probably agree to differ.
What is a 'DB'? Is there any chance that we could get something more concrete to base the analysis on, given that the published industry return figures are so completely different to your anecdotal experience?
Of course. Silly me.Defined Benefit..................
I'm not being disrespectful, but it absolutely is anecdotal, until you can provide further details. What is the back story? There could be any number of reasons for problems in DB schemes, including underfunding, or a high-risk investment strategy that didn't pay off, or difficulties in the employer's business or whatever. A 20% loss in one year might well be followed by a 15% gain or maybe even a 25% gain the next year. Sorry, but more information is needed.anecdotal.......... I wish
Brendan Burgess said: ↑
With due respect, who decides what is relevant? Is there some economic convention or analytic convention that sets out what is relevant what is not? If so, was this same convention applied when coming up with the €100b future cost of public sector pensions?This is not relevant. We say that the budget deficit this year is €5 billion. We don't say that the true cost is €20 billion, because of the lost investment growth we could have got had we invested the €5 billion.
was this same convention applied when coming up with the €100b future cost of public sector pensions?
Thanks for your measured response.
It would important that ALL pension benefits, including tax relief is on the table for any review of pensions. I suspect that some people would like to see a review of 'all pension benefits that apply to other people but not me'. Such reviews aren't a great basis for sound public policy, so if we are going to have a review or strategy, we need to have everything on the table.
This is factually untrue. Tax will NOT be due on all amounts drawn down. The 25% lump sum will avoid tax. The annual tax free allowance will avoid tax on a chunk of the annual income. The lower tax rate will allow for a reduced tax rate on another chunk of the annual income. The investment growth of the tax-free contributions will come into play also. The tax relief is an awful lot more than a deferral, and even if it were just that, the cash flow/timing implications would be a major issue which need to be on the table for any review.
I was basing this on your comments about "career averaging should be introduced immediately for all such pensions (whether in payment or otherwise). Alternatively, a pro-rata reduction of all such pensions may be more equitable/easier to administer". Your proposals would involve a walking away from existing contractual commitments.
Not really. Most of those studies have shown that average salaries in the public sector are higher than average salaries in the private sector. If I noted that average salaries in Google are higher than average salaries in Greyhound, no-one would be hugely surprised. Most people understand the difference in roles, skill levels, qualifications and experience. But somehow, when the Irish Indo or other DOB-owned media reports another survey that average salaries in public sector are higher than average salaries in the private sector, common sense seems to go out the window.
The ESRI survey that looked at this issue did a fairly crude level of job matching, based on keywords iirc. If you want to do proper job-matching, the kind of job-matching that MNCs do when analysing their own salary levels, that might provide some more interesting results.
That amendment referred to future salary levels iirc, and had nothing to do with previously earned pensions.
I (and probably most other public sector employees) allow themselves a little grin at all the talk of raiding and robbing in relation to the very modest levy on private sector pensions (which affects me too btw), when compared against the real pension levy - the fairly savage immediate, direct and ongoing cut to salary of 5%-8%. The real pension levy hit low-earning staff who earn no public sector pension above the standard contributory pension. So really, stop whinging - it's a tax, like many other taxes. It's not nice, but it's necessary.
Hi RainyDay
It's not a value judgement, it's maths. It's hard to explain, but I will try.
How much is a pint of milk in Tesco's today? Say €1. I don't think that anyone will argue: "It's not only €1 as you could have invested the €1 and over the next 20 years it would have grown to €5, so the price of the milk is €5."
The government put €65 billion into the banks from different sources. That was the cost: €65 billion. I would not argue that they could have invested €50 billion 10 years earlier which would be worth €65 billion when they put it into the banks, so it only cost €50 billion. And likewise one cannot argue, that the €65 billion is really €200 billion when you add the interest over the next 30 years.
That is a good question, and I don't know the answer for sure. But it's an actuarial valuation. I assume that this means that if the governments over the last 50 years (and, as you say, not just the current government) had been prudent, and had fully funded future pension liabilities, we would need a pot of €100 billion today from which to pay future pensions. In other words, the actual cash paid out in future will be around €150 billion, but €100 billion invested now will meet those liabilities. I would be delighted to be wrong on this. That €100 billion is the cash to be paid out, in which case the present value of that future liability would be much less.
Under the Haddington Road Agreement this has now been reduced by 16% to €98bn since 2009 http://www.per.gov.ie/public-service-pensions-accrued-liability/. It should also be pointed out that public service pensioners have since March 2009 had their pensions reduced by the Public Service Pension Reduction. The levy currently applies to pensions over EUR 12,000 and the deduction rates range from 6% to 20%. http://www.per.gov.ie/faq-documents/http://www.audgen.gov.ie/documents/vfmreports/68_Central_Gov_Pensions.pdf
I am attaching a link to a special report prepared by the Auditor General in 2009 on public sector pension liabilities. The report includes an estimate of the present day value of such liabilities at €108 billion (net of the then NPRF and other small public sector pension funds) at the end of 2008, rising to €116 billion at the end of 2009.
Under the Haddington Road Agreement this has now been reduced by 16% to €98bn since 2009 http://www.per.gov.ie/public-service-pensions-accrued-liability/. It should also be pointed out that public service pensioners have since March 2009 had their pensions reduced by the Public Service Pension Reduction. The levy currently applies to pensions over EUR 12,000 and the deduction rates range from 6% to 20%. http://www.per.gov.ie/faq-documents/
I believe one of the major accountancy firms carried out a similar exercise around about the same time showing the projected shortfall in the social fund (in respect of contributory OAPs) that was equally sobering. I'll see if I can dig it out but if anybody can post it in the meantime, I would be most appreciative.
Prior to any further changes in the State Pension, I think we would have the absolute right to insist that we be given the option of receiving a once off lump sum payment (to reflect contributions to date) transferred into an appropriate pension vehicle and thereafter, being removed from the scheme.
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