Public sector pay

[Observer]

Observer,

You are correct that all public service pensions have been contributory since 1994 (for new entrants).

OK, but not many people seem to realise this. Or perhaps want to realise this?

This however misses the point that the Civil Service Superannuation Scheme is a Defined Benefit;

DB schemes are quite common in the private sector, although admittedly their popularity is in decline. The banks, insurance companies among others tend to have (quite good!) DB schemes.

Unfunded (pensions paid out of the exchequer)

a) Isn't the National Pensions Reserve Fund specifically designed to fund public sector pensions?
b) The historical unfunded status of the Civil Service Scheme is hardly an extra benefit to the members of the scheme! If anything it is a cashflow benefit to the Exchequer as, until the National Pensions Reserve Fund was founded, it allowed the state the flexibility NOT to provide for its future pension liability to its members. Presumably on the basis that the state could not go bankrupt or otherwise default on its liabilities. Hmmmmm.

and is Index linked to wage of the grade from which the Employee retired.

Again not unknown in better employments in the private sector.

These are far better conditions than occur in the private sector (and indeed the commercial semi state sector).

Not so. The conditions match the better (usually the bigger, longer established) private sector employments. Likewise commercial semi-states such as ESB, Eircom, An Post which have schemes that are a virtual carbon copy of the Civil Service Scheme. Personally, I don't see anything wrong with the state offering its employees benefits that are in line with the better private sector employers rather than the worst.

 

[MOB]

Hi Observer,

This is not a topic on which I have much knowledge. However, I hope you won't mind if I politely request that you back up some of your assertions. Perhaps wrongly, I had always been of the view that the public sector had a pensions deal which was simply unavailable to the private sector:

Specifically, in relation to index linking of pensions to the wage of the grade from which the Employee retired, you state:

"Again not unknown in better employments in the private sector."

What employment in the private sector offers this sort of benefit? I must confess, I would be very surprised to hear that these sort of employment terms are being made available to anybody these days outside the state sector.

In particular, when you state that : "The banks, insurance companies among others tend to have (quite good!) DB schemes." are you aware of any of these schemes being index linked to the wage of the grade from which the employee retires? I have to say I would be quite surprised (though I will be happy to stand corrected)


My abiding impression has always been that - as a private sector worker - I would need to sock away an awful lot of dough to be able to come up with something even half as good as a public sector pension. If there are private sector employments out there which are substantially equivalent in pension terms to the state sector benefits, I will be very happy to stand corrected. Like yourself, I personally don't see anything wrong with the state offering its employees benefits that are in line with the better private sector employers. However, when a defined benefit pension funded by an employer goes bust, ,there is little or no recourse. That to me is a good reason for shifting from defined benefit to defined contribution schemes, and this is certainly the trend in the private sector. I know there are people who argue that this shift is just a way for employers to "dodge" their responsibilities, but I don't actually agree that pension planning is an employer's responsibility - in fact I find this attitude oddly paternalistic at a time when the trend in society generally is to lay emphasis on individual freedom.


Mind you, I do get control of the capital sum which funds my pension, whereas the retired public sector worker has to hope he\she lives long enough to get the full value of his\her pension, so I suppose to a certain extent we are comparing apples with oranges. But the salient point I wish to make is that I do not believe that the state sector pension arrangements are merely the equivalent of what one might call best practice in the private sector, and I would love to hear sufficient facts to cause me to change this view.

 

[ashambles]

The NPR is funded via tax (not magic - just tax) from the exchequer. In time maybe the interest will be enough to fund our armchair sector's pensions.

Let's see, right now public sector wages are going up around 9% per annum, that means they double every 8 years or so. The NPR guys are going to have to do well to beat that. By 2030 the public sector wage bill will grow from 15B to 120B unless greed is contained.

As for the snobby reference to "better" private sector employers. Of the 549 companies with funding certs from the pension board around 42% are underfunded[size=-1] ([broken link removed][/size]), maybe the NPR should bail them out as well. You will find that the worse employers you refer to include Intel, Dell, Pfizers, Microsoft, Apple etc.. How much of a civil servants pay packet comes from taxes (direct and indirect) taken from these inferior employers. Seems ungracious to be belittling them.

Also a 6% contribution is small, a DC needs roughly 15-20% to be adequate. A private sector worker could take a 20% salary hit to join the civil service and be financially better off.

 

[RainyDay]

As for the snobby reference to "better" private sector employers. Of the 549 companies with funding certs from the pension board around 42% are underfunded ([broken link removed], maybe the NPR should bail them out as well. You will find that the worse employers you refer to include Intel, Dell, Pfizers, Microsoft, Apple etc.. How much of a civil servants pay packet comes from taxes (direct and indirect) taken from these inferior employers. Seems ungracious to be belittling them.
.

I'm getting 'Document not found' from your picosearch link. Can you correct this?

 

[guest 23]

Having just read through the recent comments re prison officers in particular I can see how the wage issue develops by "chinese whisper" the pay has jumped from 60 - 70 -80 k depending on the respondant.
Firstly the starting salary in the job is 25k plus allowances 34k. ( all this information is available from the Dept of Justice, freedom of information documentation, on line) true there all lots who earn plenty more and they are generally the headline grabbers who are sadly nearly institutionalised in the job itself. The problem at the moment is that the working week can be 54 hours and that the minister is looking to increase this for everyone, not everybody works overtime so therefore this proves to be complusory overtime dictated by management and at a time that is also stated by management. Now some people I am sure don't mind working all the hours God sends but the people I know want maximum time off to spend with their families etc .... I hope this sheds some humanity on the job

 

[Purple]

Hi guest23, a more telling figure would be the average pay and the average working week.
By giving the starting pay and then saying, "the working week can be 54 hours" you may give the wrong impression. I take your point that people should not be forced to work overtime like that but you must accept that the current situation is untenable.

 

[guest 23]

Hi Purple,

I totall agree that the present situation cannot continue and the general concenus is that the officers agree on this statement but the media being the way it is likes to make villians of someone.
Just to go back to a previous point also, the average working week is 46 - 54 hours, this is reflective with the starting salary scale in my previous post and this does not incorporate any overtime, any overtime can be done over and beyond the above hours..... just time to fit in some shut eye! if only the working week was governed by the associated Act.

 

[Purple]

Hi guest23,

Quote:
"the average working week is 46 - 54 hours, this is reflective with the starting salary scale in my previous post and this does not incorporate any overtime"

Are you saying that prison officers are rostered for a basic working week of 46-54 (averaged over the year) without any overtime payments? I'm not saying you are wrong but the idea that anyone in the public sector works 7-15 hours over the 39 hour basic for free is amazing.

 

[ashambles]

According to the CSO in Dec 04 the average weekly rate for prison officers was 1124.28, so that's 58462 p/a. Throw in this year's pay increases, it should be over 60k now. I'd be wary of figures other than the CSO's, since groups can easily leave out substantial allowances (e.g. ASTI figures for teachers used omit the degree + HDip allowance, seems to be up to 5400 these days. For anyone interested www.asti.ie is an excellent resource, I'd recommend the FAQ where it seems "How do I avoid work?" is the most frequently asked question - there are at least 10 types of leave).

I've no problem with prison officers getting paid well and at a higher rate than the other public sectors. It's the cross the board increases that are the problem. This is an issue for the private sector worker - for a start taxes will be increased eventually (fine if they intend to improve services) and also every increase in average salaries damages existing DC pension savings (particularly in a low interest economic environment).

The overspends on road projects are already dwarved by the ongoing cost of our public sector - 15B last year. Governments will probably always waste surplus cash, but it's preferable to see the money wasted on one one off capital projects than creating an ongoing cost in which case the money doesn't just get wasted once but will be wasted again at an increasing rate every year.

 

[guest 23]

Yes Purple the largest working week on the roster presently is 54.5 hours and that is with zero overtime, amazing I know! One wonders how you could manage to fit in anything else

The last poster there gave some good CSO figures and I am presuming that the averages are overtime inclusive which still at 58k is miles and miles off the headline grabbers.....

 

[Purple]

I'm still not clear on this guest23,
Are you saying that the largest working week on the roster is 54.5 hours with no overtime and that the prison officer who works these hours does so every week of the year (less 21 days holidays and national holidays) or are you saying that a week of 54.5 hours can be worked with no overtime because much shorter weeks are roistered at other times so it balances out over the year at 39 odd hours a week?
If the former is the case then the prison officers are an oppressed group of workers who deserve all the help and sympathy that the public can give them.
If the latter is the case then I think you are attempting to misrepresent the situation with the aid of selective statistics (lies, damn lies etc).

 

[guest 23]

Purple,

Sorry I definately did not intend to misplead so I will clarify, the largest working week is 54.5 and it staggers from other working weeks ie 42, 46,48 ,51 Hours. There is a smaller working week and this is 36 hours and occurs approximately every 5, 6 or 7 weeks I am not definiate there on which so will say all three but it is definately not the norm. The working day is a 12 hour shift so you can see how 4 days obviously being 48 hours can quickly add up. But that is great if you want a maximum time on/off situation.

The annual leave is given in hours I think so not sure there but I am sure that is generally on par with similiar shift workers.

I am not leaving the point but the original claim I suppose I was trying to show was that overtime hours have to fit in after all this..... I know for sure that when you commit to come in on "overtime" it has to be for a minimum of 8 hours. I obviously know some people in the job hence a glimmer of information but I totally know where they are coming from when they say that alot of them do not want to hour any more hours

Clear as mud I suppose!

 

[Purple]

thanks for clarifying guest23. I didn't mean to imply you were telling porkies.

 

[Observer]

Hi Observer,

However, I hope you won't mind if I politely request that you back up some of your assertions.

Of course not!

In particular, when you state that : "The banks, insurance companies among others tend to have (quite good!) DB schemes." are you aware of any of these schemes being index linked to the wage of the grade from which the employee retires? I have to say I would be quite surprised (though I will be happy to stand corrected)

Well, AFAIK, and I also stand to be corrected, schoolmates of mine who joined the (big 4) banks around the time I joined the Civil Service (c. 1983) had remarkably similar pension schemes as I did. I seem to remember that pension/salary linkage was a feature of both. But I could be wrong......

My abiding impression has always been that - as a private sector worker - I would need to sock away an awful lot of dough to be able to come up with something even half as good as a public sector pension.

True, but all good schemes, public or private, are expensive.

I don't actually agree that pension planning is an employer's responsibility - in fact I find this attitude oddly paternalistic at a time when the trend in society generally is to lay emphasis on individual freedom.

Interesting point. I'd tend to agree, although more on the basis that (some) employers aren't to be trusted (eg Maxwell, Enron)

Mind you, I do get control of the capital sum which funds my pension, whereas the retired public sector worker has to hope he\she lives long enough to get the full value of his\her pension, so I suppose to a certain extent we are comparing apples with oranges. But the salient point I wish to make is that I do not believe that the state sector pension arrangements are merely the equivalent of what one might call best practice in the private sector, and I would love to hear sufficient facts to cause me to change this view.

As you say, apples and oranges. Yes, indexation is a valuable benefit in the Civil Service type scheme. But not enough to throw it wildly out of balance compared to a good 2/3 final salary DB scheme elsewhere.

 

[ajapale]

Hi Observer,

Yes, indexation is a valuable benefit in the Civil Service type scheme. But not enough to throw it wildly out of balance compared to a good 2/3 final salary DB scheme elsewhere.

I disagree, I know of several final salary DB schemes which are not indexed (to wages or inflation). I have spoken to some pensioners on these non indexed schemes who havent recieved even a token increase over the last three years. They see the value of their pension being eroded by inflation at the rate of 2-3% a year.

In conclusion non indexation (by wage or cost of living) does throw the comparison wildly out of balance.

ajapale

 

[ashambles]

Ahh, so the banks are the better employers, I suppose they were in the old days. On http://www.finfacts.com/Private/pfp/pfp.htm it mentions that AIB and BOI have ended DB schemes for new employees. AIB introduced DC in '98.
As Observer notes DBs are expensive, luckily for the fat cats in the public sector that can be paid for by the taxpayer or if need be closing a few hospital wards. Private sector companies find it useful to remain profitable - even the better ones.

 

[Observer]

Hi Observer,



I disagree, I know of several final salary DB schemes which are not indexed (to wages or inflation)..........In conclusion non indexation (by wage or cost of living) does throw the comparison wildly out of balance.

ajapale

You're quite right - a non indexed DB scheme is indeed a poor scheme. A very poor scheme in fact. BUT (and apologies if I did not make it quite clear) I was referring to a "typical" good DB scheme indexed to inflation (as most are.) Such a scheme is not wildly out of balance with the Civil Service scheme which is indexed to wage movement.

 

[eoflaherty]

I worked in the public sector for 11 years and in the private sector since where I have paid into a personal pension policy every year.Looking at the figures now I am amazed at how good the public sector pension I will get is compared to what I will get from the personal pension.I earned 500 euros per year (yes, per year) in my first year and notice that that one year will bring me a benefit of 650 Euros per year at 60 and my wife if she becomes a widow will get half that,all updated to current salaries as the years go on.I have seen some estimates that the value of the "pension pot" at 65 is in the region of 600,000 Euros to 800,000 Euros for civil servants.In Britain government pensions are adjusted in line with inflation,not salaries,after retirement.