"cuts to state pensions must be considered"

Dermot said:
It is often suggested that they have a better healthcare system in the UK than here when making comparisons about income but we spend a similar amount per head of population in public funding and more in the private system.
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I agree. A recent OECD report suggests that the UK and Ireland have similar outcomes in health. It's the same report that shows we have the worst value for money healthcare system in the developed world. http://www.oecd.org/eco/growth/46508904.pdf
 
What is particularly worrying about our current spending on public healthcare, in the context of this discussion, is that Ireland spends approximately 10 per cent of our national income on public healthcare, which is roughly 25 per cent more than the EU-15 average, while having a population with by far and away the youngest age profile.
 
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I agree and despite all the promises and redundancy payouts we have more administrators than we had 3 years ago. We have a lot to get right but I do not see the will and determination to put them right.
 
The Indo today reports that not only has that scheme been approved but on the same page they speculate that the Government is to cut or abolish the Public Sector pension levy prior to the General election !
 
Deiseblue said:
The Indo today reports that not only has that scheme been approved but on the same page they speculate that the Government is to cut or abolish the Public Sector pension levy prior to the General election !
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It’s depressing to see this government engaging in the same damaging populism as previous governments!
The abolition of the Public Sector Pension Levy will mean that proportion of the cost of providing Public Sector pensions will fall of the rest of the tax payers. In real terms it means an even bigger subsidy by the rest of the citizens and tax payers through income tax, VAT etc. These taxes are paid by everyone from the richest to the poorest. It is economically damaging and morally unjustifiable that money from the very poorest should be transferred to a relatively well paid and very protected section of the population.
A bit of social justice perhaps?
 
Deiseblue said:
The Indo today reports that not only has that scheme been approved but on the same page they speculate that the Government is to cut or abolish the Public Sector pension levy prior to the General election !
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That'll be Labour making sure they get re-elected
 
What appears to be envisaged in the Tánaiste's proposal is a form of auto-enrolment of private sector employees to some form of private pension scheme, with the option for employees to opt-out of the scheme. This does not seem to me to be much of an advance on the current position where employers are required to facilitate employees to make contributions to a standard PRSA where an occupational pension scheme is not available. Establishing and maintaining auto-enrolment to private pensions will be hugely expensive from an IT/administrative perspective and, IMO, will place a burden on small employers that is entirely disproportionate to the supposed benefits of the arrangement for their employees.

In any event, the proposal will have absolutely no impact whatsoever on the real elephant in the room - the unsustainability of the State's current pension promises, both to public sector workers and to private sector workers who qualify for a contributory old age pension. This is not a question of equity or fairness between different sectors of the economy - at its core the issue is affordability.

If today's press reports are correct (and I would take all press reports on this issue with a pinch of salt) and it is "likely" that public sector pension related deductions (PRDs) and/or public sector pension reductions (PSPRs) are to be reduced or abolished before the next general election then this will further exacerbate the sustainability problem.

As an aside, I wish the press would stop describing PRDs as a "pension levy" - you cannot levy an unfunded pension. I suspect this abuse of language was deliberately employed to give the impression that PRDs were somehow equivalent or comparable to the (private) pension levy. However, proportionately PRDs will only raise a tiny fraction of the amount that the government will ultimately expropriate from private retirement savings under the guise of the pension levy.
 
Another excellent post Sarenco.
Do you think this is a precursor to the contributory OAP being means tested and therefore, as everyone will have their own pension, effectively abolished so that all future funding can be channelled into un-funded Public Sector pensions?

Your point about the PRDs being dwarfed by the real Pension Levy is very pertinent.
 
Good post by Sarenco. it is patently clear that there is no affordability to continue funding PS pensions from current income. This was always a "mad scheme" and should have been properly addressed many years ago. The Government did go some way towards addressing the issue by applying the "pension levy" in recent years. However, I suspect that the associated funds raised were put in the general income pot and not set aside to cover the future pensions of the associated employees.
It is very reasonable to accept that all employees should be contributing towards their future pensions and the proposed elimination of this "temporary arrangement" for the PS will undo the considerable effort it took to put it in place! It is totally naive for any PS employee to assert that they have no obligation to contribute towards the very good DB pension that they will receive. I am sure that most will accept the principle that the historic arrangement was unsustainable and that they are paying a relatively low contribution towards a very good future pension!
 
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44Brendan.
Just because it is a new year will you please stop talking sense!

What odds do you give me on any Term Elected Government being a Long Term Thinker?.
 
44brendan said:
It is totally naive for any PS employee to assert that they have no obligation to contribute towards the very good DB pension that they will receive
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To be fair, public sector employees do contribute to their pensions. However, I wonder would the contributions even cover the tax-free lumpsums recevied, never mind the pension itself.
 

Note that if the contributory OAP is abolished, then the PRSI contributions would also be reduced.

Nobody has suggested abolishing the OAP.

Reforming it, yes. Abolishing it, no.
 

Note that most PS have always paid pension conts of 6.5% of wages.

The media would suggest or imply that PS don't pay pension conts, but of course they are incorrect.

Now, you can argue that the 6.5% cont rate is too low, and I probably agree with you.

On top of the 6.5%, since 2009 or 2010, PS pay the PRD of 10% on wages from 20k-60k, with 10.5% over 60k.

So that's a 16.5% cont rate for most workers.
 
I stand corrected Protocol! I would also agree that in line with many private sector employments there should of course be a fair contribution by the State towards PS pensions.
The issue of whether these funds are adequate and also whether they should be put aside to cater for future pensions (in line with most pension funds) is another discussion. I have no idea what the norm is amongst most governments in funding future PS pensions. It would be interesting to find comparisons.
It would be unfair to infer that the PS were not contributing adequately unless a comparison with the average EU country was available and we were fully aware of where the irish PS stood!
 
Protocol said:
So that's a 16.5% cont rate for most workers.
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This is not correct. The average public sector salary (per the CSO) is €47,788 and is currently subject to a PRD of €3,028 (6.3 per cent). Accordingly, it is not accurate to say that a PRD of 10 per cent is applied to the remuneration of most public sector workers. Also, this has to be seen in the context of the fact that the average public sector salary is 48 per cent higher than the average private sector salary (per the CSO).

As regards the 6.5 per cent contribution, it is worth noting that all post-1995 public sector workers pay an integrated contribution that includes full rate PRSI (generally 4 per cent) and may qualify for the old age contributory pension. In addition to their pension benefits, public sector workers are also entitled to receive 1.5 times their final salary on retirement or on death in service and their surviving spouse is entitled to receive half their pension. In other words, the 6.5 per cent contribution is really very modest in the context of the generous benefits accrued.
 
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Purple said:
So the 6.5% is in fact 2.5%.
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Public sector workers hired after 1995, that earn at least €352 per week, pay PRSI at a rate of 4 per cent on their gross remuneration. Stripping out this PRSI element from the integrated 6.5 per cent contribution leaves you with 2.5 per cent. However, when you include the cost to the State of the tax free retirement lump sum and the surviving spouse's pension, even this modest contribution looks largely illusory.
 
I agree that even 6.5% is Lilliputian in scale but your post shows that the contribution is nowhere near 6.5%.
Does anyone know what the cost would be of funding the average PS pension and what that translates into contribution wise?
 
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