Pension contributions worth 29% of salary for pre 2013 public servants

Sarenco said:
Why would you take account of PRDs when calculating the cost of pensions paid to retired public sector workers?

Why would anybody reference the social fund?

Neither PRDs nor the social fund have anything whatsoever to do with the current cost of pensions paid to public sector workers. Surely that's obvious?

The article suggests that the cost of these pensions to the exchquer will increase by €1billion - or close to 25% - in only four years.

Yes, I find that amazing.
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The article is about more than the €1bn that you're so amazed by (HINT: Look at the thread title).

I think coyote's point in the post above yours, is that the 29% figure quoted is very misleading, in circumstances where the PRD (which is progressive in nature) is not factored in, either as part of the employee contribution or by deducting it from the salary figure against which you're calculating your %. The PRD has, after all, been converted into a superannuation contribution from the start of 2019.
 
Itchy said:
I think that would be one for Paschal.

Are you in favour of appropriate fiscal policy or not?

The bottom line is, provision should be made for future liabilities as they accrue. This is just as appropriate for the private sector as for the public sector. Currently it is the State's version of the endowment mortgage!
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There should be no defined benefit pensions and everyone should provide their own pension, funded by them on their own or with a contribution by their employer.

The State pension (OAP) should operate in the same manner; you pay PRSI and it goes into your pension fund. If you can’t afford that then the State pays into a pension fund for you.

We can’t keep mortgaging our children and grandchildren’s futures to pay for our unsustainable pensions. It is immoral.
 
Purple said:
The State pension (OAP) should operate in the same manner; you pay PRSI and it goes into your pension fund. If you can’t afford that then the State pays into a pension fund for you.
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Who would manage the fund? Would it be done on a market basis? What would the fees be? What would happen if the fund massively underperformed over the years?

These questions are very hard ones and usually ignored by enthusiasts for privatising everything.

You can indeed have massive state pension funds managed on an arms-length basis (common in some parts of Europe) but the state will always have to prop them up if they underperform due to poor management or high fees.

The contributory state pension is administratively very cheap to provide compared to many DC schemes.
 
torblednam said:
The article is about more than the €1bn that you're so amazed by (HINT: Look at the thread title).

I think coyote's point in the post above yours, is that the 29% figure quoted is very misleading, in circumstances where the PRD (which is progressive in nature) is not factored in, either as part of the employee contribution or by deducting it from the salary figure against which you're calculating your %. The PRD has, after all, been converted into a superannuation contribution from the start of 2019.
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The problem I have with the PRD And public servants Pension contributions is it not saved and invested to provide for there future pension, same applies to public servants hired after 1995 with there Employers PRSI contributions which would be around 10.75 ,

The problem for all of us is with the Government and all parties have no problem taking this money public/private sector and giving it back again in pay rise,and Benefits to others leaving nothing to future fund pensions for the people who it was taken from,

When the Government and the Unions sat Down to negotiation the last pay agreement the had a look to see how much money was available to pay any Increase ,
The money available included employees own pension contributions there PRD contribution And there PRSI contributions there employers contribution to pay there own future pension,

In other words some of there own pay increase came from money which should have have being invested to pay there future pensions, This problem exists for both private sector workers and public sector workers where there money is taken for there future pensions and being spent,


The future pension Issue for private sector workers and the spending of there contributions is a bigger problem,
 
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@RETIRED2017

This is not really true. The state spends money on productive infrastructure which allows for future economic growth which, in turn, can be taxed.

If the state was investing nothing you would have a point but, the last time I checked, the state was investing something like 6% of GNI*.

This is not to defend pay-as-you-go. But if you privatised pensions you would have:
a) the state collecting billions in workers' wages and investing them on financial markets
b) the state then borrowing billions from financial markets to pay for infrastructure to be used by workers
 
NoRegretsCoyote said:
Who would manage the fund? Would it be done on a market basis? What would the fees be? What would happen if the fund massively underperformed over the years?

These questions are very hard ones and usually ignored by enthusiasts for privatising everything.

You can indeed have massive state pension funds managed on an arms-length basis (common in some parts of Europe) but the state will always have to prop them up if they underperform due to poor management or high fees.

The contributory state pension is administratively very cheap to provide compared to many DC schemes.
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All valid questions; there is no easy solution. My starting point is that we have to stop mortgaging our children's future to pay for things we cannot afford today. We already stick them with the cost of the crash. We are still borrowing from them to pay wages, welfare and pensions today. We need to stop.
 
NoRegretsCoyote said:
@RETIRED2017

This is not really true. The state spends money on productive infrastructure which allows for future economic growth which, in turn, can be taxed.

If the state was investing nothing you would have a point but, the last time I checked, the state was investing something like 6% of GNI*.

This is not to defend pay-as-you-go. But if you privatised pensions you would have:
a) the state collecting billions in workers' wages and investing them on financial markets
b) the state then borrowing billions from financial markets to pay for infrastructure to be used by workers
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The state already collects billions from workers public/ private in so call pension contributions let it be through public servants pension contributions PRD and PRSI public/private sector, most is used to pay benefits away higher than other EU states ,what I am looking for is some to be invested for the people in the public/private sector so they know it will be there when they retire ,
Eaten bread is soon forgotten , The thinking on hear . seems to be a state already suffering from obesity the cure is to make it morbidly obese for its long term health,
most of the profits from private money invested to build our toll roads goes to Spain,

A lot of the problems we have to day is because we are trying to grow faster than is good for us ,trying to make up for pay to go system,public servants pensions are a good example of this madness,If the pensions had to be funded already everyone would know the cost of doing so,

Are you saying Government investments to provide pensions for retiring private/public sector workers by the state,is already being managed so the first post is all hot air,

I can think of a few projects the government are involved in which will use up the 6%GNI where will result in assets worth about 2%of GNI the day they are finished,
don't get on to me for over stating the 2% please,
 
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The projected shortfall is up to €20 billion a year by 2070.
That's 40% of what we take from all forms of taxation. Even index linked it is still a massive shortfall.
By 2050 it is €15 billion.
The reality is that we need to significantly increase social security payments from everyone with an income. We need to bring more people into the tax net and readjust our system so that contributions from low and middle income earners get closer to the EU average. In other words we need to broaden our tax base. Property tax, utility charges etc are all part of that picture. None of it will happen though as it is not populist.
 
Purple said:
The projected shortfall is up to €20 billion a year by 2070.
That's 40% of what we take from all forms of taxation. Even index linked it is still a massive shortfall.
By 2050 it is €15 billion.
The reality is that we need to significantly increase social security payments from everyone with an income. We need to bring more people into the tax net and readjust our system so that contributions from low and middle income earners get closer to the EU average. In other words we need to broaden our tax base. Property tax, utility charges etc are all part of that picture. None of it will happen though as it is not populist.
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Purple
The problem is if they do what you are suggesing it will get all squandered best to leave it where it is unless we embrace forward funding,

Taxpayers giving more money to a government unable to manage they unexpected extra tax they are getting for all of there taxpayers futures ?,
 
Purple said:
The projected shortfall is up to €20 billion a year by 2070.
That's 40% of what we take from all forms of taxation. Even index linked it is still a massive shortfall.
By 2050 it is €15 billion.
The reality is that we need to significantly increase social security payments from everyone with an income. We need to bring more people into the tax net and readjust our system so that contributions from low and middle income earners get closer to the EU average. In other words we need to broaden our tax base. Property tax, utility charges etc are all part of that picture. None of it will happen though as it is not populist.
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No one should be too dogmatic about these numbers. These projections are very sensitive to small changes to assumptions in productivity, migration rates, etc. (I used to work on this many years ago).

There are lots of policy responses. In Japan people are working longer and more women have entered the workforce.

You can increase taxes or just let pensions increase below inflation in due course. By global standards, a 70-year old in Ireland with only state pension and other benefits has a very good standard of living.
 
Purple said:
The projected shortfall is up to €20 billion a year by 2070.
That's 40% of what we take from all forms of taxation. Even index linked it is still a massive shortfall.
By 2050 it is €15 billion.
The reality is that we need to significantly increase social security payments from everyone with an income. We need to bring more people into the tax net and readjust our system so that contributions from low and middle income earners get closer to the EU average. In other words we need to broaden our tax base. Property tax, utility charges etc are all part of that picture. None of it will happen though as it is not populist.
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I disagree with increasing taxes on everyone with an income. Our existing welfare system is too generous. We have people who point blank refuse to accept any responsibility for their life choices. I am working since the age of 13 and have to work until I am 68 (at the moment) before I can retire. Assuming I continue working I will have been working for 55 yrs and will be entitled to a State Pension (although how much that will be remains to be seen).

Through working hard, going to college, getting a professional qualification all paid for by myself with no state aid and investing to have a pension outside of a State pension. Any state pension I do get will be taxed so heavily I probably will end up only getting perhaps 20% after all taxes and charges. So for working 55 yrs I will get less of my state pension after tax than somebody who has never worked a day in their life!

I don't have an issue with those who genuinely need state help but I see it with my own eyes every single day where people are abusing the system and when or if caught face no real sanctions.

So I am trying to do the right thing and not be a burden on the State and I am trying to provide for myself in the future, we should then broaden our tax base which no doubt people on social welfare will be exempt, people in social housing will be exempt etc. If you can work and refuse to work because you can't hold down a job for whatever reason then fine, give these people food stamps, give a credit to their ESB account and a roof over their heads give then €10 a week to spend as they choose. if they need electrical goods then purchase it for them and deduct it from there €10 pocket money.

Exactly at what point do people actually say "sorry enough is enough". To say I am the squeezed middle income is a joke at this point. I have been squeezed so much my eyes are actually bulging at this point.

Rant over!
 
The Horseman said:
I disagree with increasing taxes on everyone with an income.
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I said increase social security payments, not taxes. By European standards the taxes paid by high earners are too high and the taxes paid by low and middle earners are too low. Too much of our taxes are levied on labour (wealth generation) and our welfare rates are far too high to be sustainable.

I think everyone who works should pay some tax (just like they did 20 years ago) and everyone should certainly pay social insurance on all of their personal income (just like they did 20 years ago).
I also think the marginal tax rate, including social insurance, should never exceed 45%.
 
The Horseman said:
I said I will probably end up with only 20% who knows what the tax rates will be in 20yrs time. I suspect they wont be decreasing.
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Don't worry; there probably won't be a State pension for anyone who isn't a State employee.
 
Purple said:
I said increase social security payments, not taxes. By European standards the taxes paid by high earners are too high and the taxes paid by low and middle earners are too low. Too much of our taxes are levied on labour (wealth generation) and our welfare rates are far too high to be sustainable.

I think everyone who works should pay some tax (just like they did 20 years ago) and everyone should certainly pay social insurance on all of their personal income (just like they did 20 years ago).
I also think the marginal tax rate, including social insurance, should never exceed 45%.
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How do you fund an increase in social security payments if you don't increase taxes. I must be missing something.

With our so called progressive tax system you can be sure we will end up paying more tax not less. The property tax is a prime example of this. Your property tax is levied on the value of your house and has nothing to do with the size of your house. So two properties within a mile of each other could be charged different amounts simply because of the value of your property.

I definitely agree our welfare rates are too high to be sustainable but nobody is actually willing to say it. Look at the recent presidential elections in Ireland where Peter Casey was attacked for mentioning the brand new houses that were unoccupied, or Owen Keegan of Dublin City Council who suggested people are gaming the housing system as they are better on the HAP then they would be in a property offered by the Council (because it is not in their desired area). There were calls for him to resign for saying this.

We have those who will defend the indefensible.
 
The Horseman said:
How do you fund an increase in social security payments if you don't increase taxes. I must be missing something.
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Yea; increase social security payments, make everyone pay the same percentage of their income in social insurance (i.e. pay it from the first euro earned) and reduce the higher marginal tax rate so that low and middle income earners start paying their fair share of income taxes. We can't keep expecting the rich to pay for everything, it ssimply isn't fair.
 
NoRegretsCoyote said:
No one should be too dogmatic about these numbers. These projections are very sensitive to small changes to assumptions in productivity, migration rates, etc. (I used to work on this many years ago).

There are lots of policy responses. In Japan people are working longer and more women have entered the workforce.

You can increase taxes or just let pensions increase below inflation in due course. By global standards, a 70-year old in Ireland with only state pension and other benefits has a very good standard of living.
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I agree with all of that. This is a big problem but it is a long term problem. Smallish changes now will make a big difference later. The changes to public sector pensions will have a very significant impact.
We need similar reforms to other State pension provisions.
 
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