The truly shocking cost of State pensions

Sarenco said:
Really my point is that State pensions (and not just public sector pensions) are far more valuable (and costly) than most people realise.
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Well, it only took 100 posts for your point to gain broad-scale acceptance!! Fair play for your calm persistence!!
 
Sarenco, Thanks for that .

Still think I,d take my chances on having me 1.5 mill in my own paws !

(you are 100% correct , State type pensions are presently very valuable but if state runs out of funds ?)
 

As a civil servant I'd have no problem with what you suggest, as long as my employer also increases my salary by the additional ~20% that I could earn in the private sector in an equivalent role...! I'd be delighted to have been earning 20% more gross, and not paying the PRD or PPC, for the last couple of years while starting a family and saving the deposit for a house...
 
cremeegg said:
This is me not rising to the bait.
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Good man cremeegg,

It's interesting how when the essential point of the article (that pensions of civil servants are highly valuable) has been broadly vindicated - we get virtual silence, in terms of acknowledgement, from the "this is all crap" brigade - just the introduction of a new twist in the road.
 
I haven't read the original IT article, as they want to charge me for access, but from what I can make out from the previous posts they calculate what it would cost to buy the equivalent of a civil service pension on the open market. This shows a stunning lack of knowledge of how public sector pensions work. The government does not go out and buy an annuity to pay civil service pensions. You don't need a capital sum to generate the pension. They are paid on a PAYG system. The pensions themselves are not particularly overgenerous and a comparison with an annuity is just bogus.

It does not cost 1.5 million to provide a pension of 24,000. If you assume the retiree will live for 25 years he / she needs 25 euro capital for each euro of pension. (Assuming the capital sum is depleted by 1 euro for each year of retirement).

If the envisaged pension is 24,000 euro, this equates to a capital sum of 600,000 euro. Add in 72,000 for the lump sum and the capital value of this retiree's pension is 672,000 euro – it's not over 1 million. For post 1995 employees you can deduct the accumulated value of contributions made.
 
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I think the point that is been made is not the cost to the govement for providing a pension of €24k but the cost to a employee in the private sector to have a pension of the same amount
 
Cervelo said:
I think the point that is been made is not the cost to the govement for providing a pension of €24k but the cost to a employee in the private sector to have a pension of the same amount
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It's not a monetary amount. The employee in the private sector is not in the public sector; either because he / she made an informed choice not to join the public service, or did not have the smarts to pass the entrance exam.
If he / she wants a public sector pension the cost is more than the relative costs in the two pensions. It's the (difference in salary between public and private sectors)+(difference in career outcomes for the individual between working in public and private sectors) + (difference between the public and the private sectors ability to meet the individual's Maslow needs). It's not just money.
 
PMU said:
I haven't read the original IT article....
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That's quite obvious!

PMU said:
The government does not go out and buy an annuity to pay civil service pensions. You don't need a capital sum to generate the pension. They are paid on a PAYG system.
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The article does not suggest or imply that the State purchases annuities to discharge its pension obligations. As you rightly say, the State's pensions are not pre-funded and are discharged out of current revenue. I don't believe anybody suggested otherwise.

PMU said:
The pensions themselves are not particularly overgenerous ...
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Relative to what exactly?

PMU said:
It does not cost 1.5 million to provide a pension of 24,000. If you assume the retiree will live for 25 years he / she needs 25 euro capital for each euro of pension. (Assuming the capital sum is depleted by 1 euro for each year of retirement).
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I'm afraid that analysis ignores the pension entitlement of any surviving spouse and, more importantly, it completely ignores the compounding effect of inflation over time. The PS pensioner will almost certainly receive payments that are dramatically higher than €24k pa in 25 years time.

If anything, the analysis as to what lump sum would be required to purchase an annuity to provide an income in retirement comparable to a PS pension actually underplays the true cost of PS pensions to the taxpayer. The annuity quotes detailed above all assume that the annuity payment will escalate in line with inflation, subject to an annual cap. However, PS pensions do not escalate in line with inflation - they increase in line with salary increases of serving PS employees.

The Department of Public Expenditure estimated a couple of years ago that the State would reduce its pension liabilities by around €16 billion if it linked future PS pension increases to the cost of living rather than increases in the salaries of serving PS employees. A saving of €16 billion would go a long way to securing the sustainability of the State's pension liabilities.
 


It's a bit like arguing with the SSM crowd, only one opinion seems to matter and they have this stupid mindset that feels they're always right. Must have very long hands as well because they're always clapping themselves on the back. Ah well?
 

Of course it's very valuable, that was exactly my point?! I could certainly earn a higher gross in the private sector with my qualifications and experience, but I very much value the DB pension I'm getting from relatively small deductions at my end, hence I'm happy to stay.

I thought Cremeegg was suggesting that I'm full of it about the pay gap, buying into the myth that all public sector employees are overpaid...
 
Jon Stark said:
I thought Cremeegg was suggesting that I'm full of it about the pay gap, buying into the myth that all public sector employees are overpaid...
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Hi Jon

Would you mind starting a new thread if you would like to debate whether or not public sector workers are more poorly paid than their private sector equivalents? This thread has already got quite long and I am anxious to keep it on topic.

Many thanks.
 

I never suggested I want to debate it - if you read my original post on this thread you'll see it was specifically in response to a suggestion about what should be done to reduce the cost of PS pensions.

Maybe the thread should be closed, since all you seem to have wanted is to say "Look at this article about how much PS pensions cost", and you've now said it. You've shouted down any and all attempts at discussing the changes to mitigate the cost of pensions for future retirees. You've also managed to land a dig with your assertion that public servants don't appreciate the value of their pensions, but I'm off topic when I assert that I do and that's why I'm happy enough to earn a lower salary than I could in the private sector without a DB occupational pension... so there doesn't seem to be much scope for discussion...??
 
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