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

[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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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.