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

[RETIRED2017]

the reason you need to reference the social fund is because for the last 34 years public servants along with there employer paid PRSI A1 contributions of of around 18% of payroll , down to 14% of payroll + usc since 2010 like every other worker, because there work for the most part was secure there are no breaks in payroll payments,

Before 1994 we had Right-wing leaning Governments which required public servants D Stamp pay around 1.96%PRSI and there employer paid nothing towards there pension ,

D stamp workers Paid what was required of them by the Government of the day , There is no point in wasting time and newspaper space on things we are not going to change, which brings me to the point ,D stamp workers even at 1.96% prsi paid more over 40 years than lots of private sector workers and the self employer ,


All PAYE workers who went out to work once they had 10 years PRSI got the Full State contributory Pension, Public servants who paid 1.96% over 40 years paid more than someone in the private sector who gets a contributory pension after 10 years PRSI contributions,

All workers who went out to work once they had 10 years PRSI got what you could call a Defined Benefit pension of 12500 euro at present ,
The question is what % of the 29% salary do you take away to account of the 12500 state contributory pension,

 

[Purple]

The question is what % of the 29% salary do you take away to account of the 12500 state contributory pension,

The cost of funding a pension of €12,500 a year works out at €146.25 a week over 40 years.
A single person earning €90,000 pays a total of €7,671 in PRSI and USC so assuming that all of that went into a State pension pot (which isn't the case) they would just about fund their own State pension.
If funding for pensions only came from the PRSI pot, and taking into account that PRSI covers far more than just pensions, you'd have to be earning north of a quarter of a million a year to fund your own State pension.

 

[NoRegretsCoyote]

The cost of funding a pension of €12,500 a year works out at €146.25 a week over 40 years.
A single person earning €90,000 pays a total of €7,671 in PRSI and USC so assuming that all of that went into a State pension pot (which isn't the case) they would just about fund their own State pension.
If funding for pensions only came from the PRSI pot, and taking into account that PRSI covers far more than just pensions, you'd have to be earning north of a quarter of a million a year to fund your own State pension.

This is nonsense. If you are going to make those comparisons you have to assume a rate of return.

Assume you contribute €6k a year in PRSI (including employer contributions) and the Irish government's 30-year borrowing rate is about 1.5% as it is now. After 40 years you have a fund of €325k which, I've seen written on AAM, is about enough to fund a state pension contributory.

 

[Purple]

This is nonsense. If you are going to make those comparisons you have to assume a rate of return.

Assume you contribute €6k a year in PRSI (including employer contributions) and the Irish government's 30-year borrowing rate is about 1.5% as it is now. After 40 years you have a fund of €325k which, I've seen written on AAM, is about enough to fund a state pension contributory.

I was using the Pension Authority Pension Calculator.
The current State pension is €12,912 so what would the cost of funding a pension of €12,912, net of the State pension be?
In order to do that on their calculator you need to look for a pension of €25,824 since they deduct the State pension from what you ask for. They say that you need to put in €7,100 a year over 40 years.

 

[RETIRED2017]

The cost of funding a pension of €12,500 a year works out at €146.25 a week over 40 years.
A single person earning €90,000 pays a total of €7,671 in PRSI and USC so assuming that all of that went into a State pension pot (which isn't the case) they would just about fund their own State pension.

If funding for pensions only came from the PRSI pot, and taking into account that PRSI covers far more than just pensions, you'd have to be earning north of a quarter of a million a year to fund your own State pension.

14% of my annual wages invested in Pension funds since 1985 the 14% included enough to back fund me to age 25 ,aim was to give me a fund of two thirds of final salary including Lump sum, this was reviewed every so often to make sure target was met never had to increase % over my working life,

When I first Came to working age. I had two choices Work in Ireland if I could find an employer to employ me, or I could have gone to the UK, I already had a job offer over in the UK.


I chose to work in Ireland for all of my working life, The day he employed me he created an liability to this state and he paid for this through a stamp back then ,

Before he employed me he had to make sure ,my work earned enough to pay my own wages along with enough to pay the state Liability enough to cover Insurance and so forth,
then I had to make profit by hiring me, he cut a cheque for me every week, he cut another cheque my part of the retirement liability along with his own and sent it to the Government for over 47 years if I was on 90K he would have cut a cheque for around 17250,That is over 19% or close to one fifth of gross wages before income tax,

that is a long way from your 7671 euro, But then again I am worth every cent of it in retirement, To the best of my knowledge it comes to around 13K from 25/3/2019,when you include the double week at Christmas,

If I chosen to work in the UK all of my life I would not have any work related entitlements in Ireland,

I have to go now my retired Public servant friends are ringing me to go out for something to eat ,You would think they would know it is ash Wednesday,

 

[Purple]

Social insurance deductions pay for far more than contributory State pensions.
It covers;
· Jobseeker's Benefit
· Illness Benefit
· Maternity Benefit
· Paternity Benefit
· Adoptive Benefit
· Health and Safety Benefit
· Invalidity Pension
· Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension
· Guardian's Payment (Contributory)
· State Pension (Contributory)
· Treatment Benefit
· Occupational Injuries Benefit
· Carer's Benefit

It's called social insurance, not pension deductions.

 

[RETIRED2017]

Social insurance deductions pay for far more than contributory State pensions.
It covers;
· Jobseeker's Benefit
· Illness Benefit
· Maternity Benefit
· Paternity Benefit
· Adoptive Benefit
· Health and Safety Benefit
· Invalidity Pension
· Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension
· Guardian's Payment (Contributory)
· State Pension (Contributory)
· Treatment Benefit
· Occupational Injuries Benefit
· Carer's Benefit

It's called social insurance, not pension deductions.

The surprising thing is all of the retired ministers never had to pay for any of the above, They paid a D stamp 1.96% with no employer contributions,comes to a grand total of 1200 euro in total on a wage of 90K before the TROIKA came to town,

When the realised the TROIKA were coming to town the started paying USC on top of there 1200euro they now pay 4071 euro USC for a grand total of 5271 euro or over 5% against almost 20% for there most ardent supporters,

If you know any of there supporters , PLease don't tell them the could start voting for the likes of SF and such like, not good, not good at all,please don't tell,

The funny thing it was the Ministers who never paid any of the above, came up with the name Social insurance,and it seamed to have worked a treat,

 

[Purple]

The surprising thing is all of the retired ministers never had to pay for any of the above, They paid a D stamp 1.96% with no employer contributions,comes to a grand total of 1200 euro in total on a wage of 90K before the TROIKA came to town,

When the realised the TROIKA were coming to town the started paying USC on top of there 1200euro they now pay 4071 euro USC for a grand total of 5271 euro or over 5% against almost 20% for there most ardent supporters,

If you know any of there supporters , PLease don't tell them the could start voting for the likes of SF and such like, not good, not good at all,please don't tell,

The funny thing it was the Ministers who never paid any of the above, came up with the name Social insurance,and it seamed to have worked a treat,

Yea, great, I take it that you now accept that you and your employer didn't contribute all that money to your State pension?

 

[NoRegretsCoyote]

I first made PRSI contributions at 18.

I'll be eligible for a state pension at 68.

You could look at it as me lending to the state for a very long time.

Investment growth over a half-century is pretty big, such is the beauty of compound interest.

 

[RETIRED2017]

Yea, great, I take it that you now accept that you and your employer didn't contribute all that money to your State pension?

My employer paid for most of my state pension and another chunk of my private pension,hope you don't allow others to take yours , not fair your employer paying all this money in and you leaving it behind you,

Just remember Farmers and the self employed people along with others are leaving you and your employer to shoulder the biggest share on the list you posted,

 

[RETIRED2017]

I first made PRSI contributions at 18.

I'll be eligible for a state pension at 68.

You could look at it as me lending to the state for a very long time.

Investment growth over a half-century is pretty big, such is the beauty of compound interest.

And others want to leave it behind for others to enjoy , Funny the people who Believe They're Capitalists Are they Opposite of Capitalists,

 

[RETIRED2017]

I first made PRSI contributions at 18.

I'll be eligible for a state pension at 68.

You could look at it as me lending to the state for a very long time.

Investment growth over a half-century is pretty big, such is the beauty of compound interest.

My advice to you is to build up a private pension aim to retire at 65 enjoy your retirement between 65 and 68 ,I retired a few years before state pension the sweetest time of my life, Do the same if you can, There is a very good pension tax breaks if you are in a position to take advantage of,
Out of interest if the state cont pension kicked in at 65 /66 would you have retired at that age,I was only out of the workforce on layoff for approx 6 months over 48 years paying into the system (47.8 years)
Enjoyed my working life , now enjoying my well earned Retirement ,

 

[RETIRED2017]

I was using the Pension Authority Pension Calculator.
The current State pension is €12,912 so what would the cost of funding a pension of €12,912, net of the State pension be?
In order to do that on their calculator you need to look for a pension of €25,824 since they deduct the State pension from what you ask for. They say that you need to put in €7,100 a year over 40 years.

There are advisors taking good money off people using the same calculator, have a look at real returns since 1980 ,It is very Important you get up to speed on pension returns you will not feel the time going until retirement and there are great tax breaks outs there if you are in a position to take advantage of and are well informed,

 

[Purple]

Retired,
Tax relief on pension contributions is deferred taxation. It is not a "tax break". You pay tax when you get the money. It would be absurd to pay income tax on the way in and the way out. That would be double taxation.

You still haven't acknowledged that you, and your employer, came nowhere near to funding your State (PRSI) pension... or were you and your employer paying over €20,000 a year in PRSI on your wages?

 

[NoRegretsCoyote]

Retired,
Tax relief on pension contributions is deferred taxation. It is not a "tax break". You pay tax when you get the money. It would be absurd to pay income tax on the way in and the way out. That would be double taxation.

Kind of. This would only be true if there was a flat tax on all income.

Ireland's income tax system is highly progressive. Your financial needs are generally higher when working than when retired. Many people when working take advantage of tax reliefs at 41% and then pay tax on the proceeds in retirement (if at all) at 20%.

 

[Purple]

Kind of. This would only be true if there was a flat tax on all income.

Ireland's income tax system is highly progressive. Your financial needs are generally higher when working than when retired. Many people when working take advantage of tax reliefs at 41% and then pay tax on the proceeds in retirement (if at all) at 20%.

Fair point, but it is still deferred taxation. Income tax is paid on income. If you are putting the money into a pension fund then it is not income.

 

[RETIRED2017]

Retired,
Tax relief on pension contributions is deferred taxation. It is not a "tax break". You pay tax when you get the money. It would be absurd to pay income tax on the way in and the way out. That would be double taxation.

You still haven't acknowledged that you, and your employer, came nowhere near to funding your State (PRSI) pension... or were you and your employer paying over €20,000 a year in PRSI on your wages?

It is frightening you Don't understand how beneficial deferral taxation is for your generation,

the tax break is invested not squandered and will benefit future generations,

, I have posted on hear about the government not investing the money the are taking off public servants they are using it as part of there pay as you go system they should not be allowed to do so .by the workers who pay in. and all taxpayers who will finish up picking up the tab,

As far as I am concerned tax breaks should only be given where the money is Invested at arms length and contributions invested for retirement ,

With the pay as you go system we have in Ireland you should be glad come taxation is being invested to benefit future generations,

Getting back to seeing Around 19%% of my payroll taken through PRSI, you have made up your mind to ignore it, compound interest is your only man, there ia a clue ,

I pay tax on my income in retirement glad to do so,

Purple I know you cant be good at Everything I understand,

 

[NoRegretsCoyote]

Fair point, but it is still deferred taxation. Income tax is paid on income. If you are putting the money into a pension fund then it is not income.

You can take advantage of tax relief at 41% for a long time on pension contributions.

Say you end up with a €17k private pension and €13k SPC. This is generally thought of as a pretty comfortable retirement income.

At the age of 70 you pay about a 9% average tax rate. Or about 15% if you exclude the tax-free SPC.


My point is that there is not very much tax being paid at all: either on the way in, when invested, or in payment.

 

[RETIRED2017]

https://www.independent.ie/business...st-from-tax-reliefs-on-pensions-37874590.html

Private sector workers in DC schemes get an average of 7% employer contribution.

The biggest problem is the failure of governments taken pension contributions from public servants, and not investing it
As far as I am concerned Tax breaks should only be given on contributions Invested at arms length same as private sector pension contributions,

Is there any point in giving tax breaks on contributions Which cannot be traced back to funding future pensions, Squandered with no return most of it,
This is not fair on younger public servants,

 

[Leo]

The biggest problem is the failure of governments taken pension contributions from public servants, and not investing it

That's not how governments work!