Should the government stop interfering in the pensions market ?

The_Conductor

jimmmy wrote: »

Apologies if I did not choose my words carefully - what I mean is it is part of our infrastructure , which everything depends on. Society as we know it could not function without schools, hospitals, roads, Gardai etc.

Certainly.
So- are we in agreement? - The public sector provides public good services that society in general relies upon, and from experiments elsewhere, are unlikely to be universally provided by any other method or means.

jimmmy wrote: »

So you think nobody would set aside a few bob for a rainy day / the future, save money, invest in private pensions, accumulate savings, invest in property (there would be no rental market ), buy a few shares etc ? I thought us Irish were quite fond of saving...witness our hunger for eircom shares / property etc

Not 'nobody'. Lots of people do. Society in general however does not. Historically the Irish public was in fact among the top 5 savers per capita, in the world. Unfortunately we took very bad example from our US cousins and went on a 15 year credit binge. At least part of the government's current predicament is the problems with raising tax- given how indebted the public at large are. Its a similar problem with saving- its very hard to put away a few quid for a rainy day- when you are heavily burdened with debt taken on in better times- and have just had your net take home pay significantly reduced (as is the case in both the public and private sectors).

I really don't think that people's recent memories of property or Eircom shares are going to inspire confidence in the average saver- by any means- in all probability the opposite. Why save- (in shares or property), when you're money is going to vanish in a puff of smoke at some random point in the future. Do you know anyone who made money from Eircom shares (other than members of the ESOP)? I certainly don't.

jimmmy wrote: »

Oh yes they ( many people ) do. Even those who do not can still ( rightly ) get the old age pension.

Those who do- can claim the contributory old age pension- if they have paid sufficient stamps. Those who have not paid sufficient stamps will have their savings counted against them when determining eligibility for the means tested non-contributory OAP.

jimmmy

smccarrick wrote: »

Why save- (in shares or property), when you're money is going to vanish in a puff of smoke at some random point in the future. Do you know anyone who made money from Eircom shares (other than members of the ESOP)? I certainly don't.

So you think nobody should save or put aside a few cents for their raindays / old age ? We cannot all be public servants / rely on the state. That has been tried before , and failed miserably.

NewDubliner

jimmmy wrote: »

Even those who do not can still ( rightly ) get the old age pension.

Not according to your proposal that people should fund their own pensions 100%. And not, if the National Pension Reserve Fund has been raided by the government to compensate banks that made bad lending decisions.

The_Conductor

jimmmy wrote: »

So you think nobody should save or put aside a few cents for their raindays / old age ? We cannot all be public servants / rely on the state. That has been tried before , and failed miserably.

What are you talking about
Over 80% of retirees rely on the state for their old age- most notably via the contributory old age pension.

I never said, or implied, that people should not save or put money away for a rainy day or old age. I merely pointed out that at present- its simply not feasible for a vast majority of the productive population to do so, in a manner that they might have done in bygone years. Even in the 1980s when the country went bankrupt- private sector debt was below 30% of our then GDP- unlike the 208% it currently is, of our current GDP. People do not have the capacity to save as we did previously- because we are sinking in private debt (totally ignoring public debt).

Certainly we cannot all rely on the state to take charge of us in our old age- however its very much inaccurate to imagine that the public sector are but a small percentage of the overall total relying on the public purse in their old age.

Keep in mind- the PRSI fund is empty- so all payments to pensioners- contibutory or otherwies- are from government borrowings.........

With respect of your comment about government provision of pensions 'failing miserably'- would you care to clarify what you mean? Pensions have been paid by the exchequer for well over a hundred years- since before independence.......

jimmmy

smccarrick wrote: »

Certainly we cannot all rely on the state to take charge of us in our old age

People know that already. Only the lucky few get big pensions. Politicians, government employees, public servants. These pensions are paid by everyones taxes / borrowing. The ordinary person relies on the old age pension. If they want a little bit of luxury in their old age, or they want to save for kids third level fees, or for an emergency, they save. As I said, they can save anywhere they want. You wrote earlier "Why save- (in shares or property), when you're money is going to vanish in a puff of smoke at some random point in the future. Do you know anyone who made money from Eircom shares (other than members of the ESOP)? I certainly don't."

smccarrick wrote: »

With respect of your comment about government provision of pensions 'failing miserably'- would you care to clarify what you mean? Pensions have been paid by the exchequer for well over a hundred years- since before independence.......

Did I write "about government provision of pensions 'failing miserably'" ?????? if so, where? in what context ?

jimmmy

NewDubliner wrote: »

Not according to your proposal that people should fund their own pensions 100%.

I did not say that. See my original post:

"Its costing the citizens of the country tens of billions to
(A) pay high pensions to its own employees
(B) give tax relief to everyone who takes out a private organised pension.

Given the current budget defecit of 25,000,000,000.00 euro this year alone, this position is unsustainable. Employees should have to pay the full cost of their pensions. No tax relief or subsidies from now on. If they want one, they pay the economic cost of it, private or public. This will level the playing field. People can decide to put their savings in a post office or bank, in stocks or shares, or property, or unit linked funds...whatever. People would still be entitled to normal old age pension. "

BroomBurner

Jimmmy, your proposal for the government not to interfere with the pensions market is very incoherent.

Is it that you don't want the government to give tax relief to private pensions?

Soldie

The government to stop interfering in the market? Does not compute.

The_Conductor

jimmmy wrote: »

People know that already. Only the lucky few get big pensions. Politicians, government employees, public servants.

The pensions paid to the above are a portion of their final salary (typically half). This is less than in some parts of the private sector (notably the IT and Financial industry- where industry norm is 2/3).

I think we can agree than politicians are highly overpaid- the same is not true for all government employees nor public servants. Politicians used to be paid according to the HEO salary scale in the civil service (reasonable but by no means extravagant). They were unhappy with this- and over the years- totally aside from benchmarking and other exercises- have decided they are now worth more than Principle Officers. This is then used as a marker for ministers and the Taoiseach- which is why the Irish political leader is the best paid in the whole world. The argument that the US President has the White House as part of his remuneration is complete and utter bull.

I don't disagree with the manner in which their pensions are calculated- I disagree with what they are paid.

jimmmy wrote: »

These pensions are paid by everyones taxes / borrowing.

Actually this is not true. All public servants since 1995 pay into a variety of superannuation schemes. These are funded on a pay-as-you-go basis- so today's worker pays for today's pensioner and so ad-infinitum.....

jimmmy wrote: »

The ordinary person relies on the old age pension.

Along with any pension they have paid into- which is not a million miles away from what happens in the public sector- full PRSI + 8.6% of gross + Pensions levy.......

jimmmy wrote: »

If they want a little bit of luxury in their old age, or they want to save for kids third level fees, or for an emergency, they save.

As do everyone else. Whats your point?

jimmmy wrote: »

As I said, they can save anywhere they want. You wrote earlier "Why save- (in shares or property), when you're money is going to vanish in a puff of smoke at some random point in the future. Do you know anyone who made money from Eircom shares (other than members of the ESOP)? I certainly don't."

You used a number of examples of manners in which people can save- I pointed out what would have happened if many of those had been chosen- along with the fact that people do not currently have the same capacity to save that we previously had. I stand by my previous comments.

jimmmy wrote: »

Did I write "about government provision of pensions 'failing miserably'" ?????? if so, where? in what context ?

You said- "We cannot all be public servants / rely on the state. That has been tried before , and failed miserably. "

I assume that you are talking about relying on the state to provide for pensions in our old age- which doesn't really make sense- which is why I requested you clarify what you meant. In the context of what you posted, it doesn't make sense to me.

GUIGuy

Firstly it is not a tax subsidy it's a tax deferral. Everyone knows this... but some some left wing politicians and commentators omit this fact. Maybe they don't like the fact that income tax is based on 'income'.

There were a few articles by Fintan O Toole recently in which he compalined about the cost of 'subsidising' private pensions. It's easy to count how much this tax 'subsidy' costs... about 2.5 billiion a year. But it's far harder to count how much it's abolition would cost!

Every current pensioner is paying income tax on their income... just like the rest of us. It is only now that their funds release an income, and that is taxed. I'd have no problem with the tax free lump sum being abolished, but that's a separate subject.

So imagine if we abolish the "tax deferral". The money can't be taxed at the other end as it already has been... So the government would loose all this tax revenue.
As the proportion of the retired population is increasing the government would be stupid to cut off this tax base.

But far more difficult to count is how many people would simply abandon their private pensions if the tax deferral were withdrawn... I don't know. But I suspect the prospect of having an extra 500,000 (very costly and labour intensive) pensionless elders under direct state care in the future scares them far more than 500,000 unemployed today.

It is the middle income earners who are hit hardest by taxes... they do the heavy lifting. Hard pressed as they are, they also are the ones who pay for private pensions and contine to give tax income even when retired.

For all our sakes please continue to encorage them to do so!

jimmmy

smccarrick wrote: »

You said- "We cannot all be public servants / rely on the state. That has been tried before , and failed miserably. "

I assume that you are talking about relying on the state to provide for pensions in our old age- which doesn't really make sense- which is why I requested you clarify what you meant. In the context of what you posted, it doesn't make sense to me.

You assumed incorrectly. When I wrote "We cannot all be public servants / rely on the state.", I meant just that. Its a two tier system. Public servants and people from the government have the best pensions. Also average public sector pay is much higher than the average industrial wage, as we all know. "We cannot all be public servants / rely on the state." It financially pays to be a public servant ( as well as usually better holidays etc ) in terms of salary, security, pension etc...but we cannot all be employed by the state. See what happened in Eastern Europe / Russia ?

The_Conductor

jimmmy wrote: »

You assumed incorrectly. When I wrote "We cannot all be public servants / rely on the state.", I meant just that. Its a two tier system. Public servants and people from the government have the best pensions. Also average public sector pay is much higher than the average industrial wage, as we all know. "We cannot all be public servants / rely on the state." It financially pays to be a public servant ( as well as usually better holidays etc ) in terms of salary, security, pension etc...but we cannot all be employed by the state. See what happened in Eastern Europe / Russia ?

You're actually incorrect.
The average public sector employee is on a salary of just under 33k- which is slightly below the average industrial wage (currently said to be 34,800- but obviously this is fluid). This varies greatly from sector to sector- if you factor in overtime for Gardai, prison officers or medical staff- it can more than double their salary. An executive officer in the civil service starts @ 32,179, a Non-consultant-hospital doctor (on which our entire hospital system is based- with their 90-100 hour weeks) has a basic salary of 36,457, a Garda starts on 27,098. It should be pointed out that the average public sector salary includes overtime for the prison service and gardai, which is quite considerable and does bring up the average, but this is counterbalanced by very low wages in other areas such as General Operatives etc.

Its actually acknowledged that pension funds operated by the banks and certain IT companies are the best in the country- insofar as some of them pay a defined benefit of 2/3 final salary plus a tax free lumpsum of the average of your final 4 years of tenure.

I'm not sure who you are talking to about holidays- have a look at publicjobs.ie- an EO, which is considered to be graduate recruitment as the AO grade is being phased out- gets 21 days annual leave- the statutory minimum. After 5 years they get an extra day- and after 10 years a further day. So- graduates can expect 23 days annual leave- unless they are promoted (which certainly isn't going to happen in the current climate). In some cases people may be able to work flexible hours and work up flexi-leave, however this is not across the board- and is not something that is in any contracts.

Security- I see 10% of Teagasc staff have been let go, and contract staff in all government departments let go as their contracts elapse.

Pension- as already discussed, but you don't seem to want to acknowledge- all public sector employees post 1995, pay full PRSI towards a contributory OAP- which forms the bulk of their pension entitlements. They also pay 8.6% into a variety of schemes as a top-up towards making the defined element of their pensions, and now they also pay the pensions levy too. You seem to be harping on and on about it- but are unwilling to acknowledge that the situation is very different from that which you are depicting. Have a look at the Department of Finance website re:pensions and publicjobs.ie re annual leave- its not the rosy picture you are painting.......

People accept a lower salary to work in the public sector- particularly in technical positions. IT workers in the private sector have a far better pension and up to double the salary. They don't have the same security of tenure or family friendly policies though. Its similar across the board.

When you are suggesting that 'everyone knows' that public sector employees are paid above the average industrial wage- certainly there are lots of high profile cases- notably the politicians and staff in their quangoes (such as FAS and other state bodies). These excesses are inexcusable- but to suggest they are endemic across the public sector is factually incorrect.

I'm not going to reply any longer- as obviously you have a bone to pick about the public sector- and this thread is simply subterfuge towards that end. Perhaps posting in afterhours might get a better audience?

jimmmy

smccarrick wrote: »

You're actually incorrect.
The average public sector employee is on a salary of just under 33k- which is slightly below the average industrial wage (currently said to be 34,800- but obviously this is fluid).

When you are suggesting that 'everyone knows' that public sector employees are paid above the average industrial wage- certainly there are lots of high profile cases- notably the politicians and staff in their quangoes (such as FAS). These excesses are inexcusable- but to suggest they are endemic across the public sector is factually incorrect.

Its you that is actually incorrect again smccarrick. Check the public sector wages on the cso website ....ok I know they are 2 years out of date ( shows how efficient the c.s.o. is ! ) but they would not have decreased since 2007
http://www.cso.ie/statistics/public_sector_earnings.htm

BroomBurner

Why don't you answer my question jimmmy?

jimmmy

BroomBurner wrote: »

Is it that you don't want the government to give tax relief to private pensions?

Precisely, among other things. It currently gives tax relief to some private pensions ( those organised through a pension company ) but not those who simply save their money, buy a buy to let property, shares or whatever. Remove that - it costs the taxpayer billions per year, as Fintan O'Toole says. I am also against selected people ( government people and their employees ) getting much higher pensions than everyone else.

kippy

jimmmy wrote: »

Precisely, among other things. It currently gives tax relief to some private pensions ( those organised through a pension company ) but not those who simply save their money, buy a buy to let property, shares or whatever. Remove that - it costs the taxpayer billions per year, as Fintan O'Toole says. I am also against selected people ( government people and their employees ) getting much higher pensions than everyone else.

Would you be of the opinion that everyone, no matter what they do, should get paid the same wages as well? Thats pretty much what you are calling for here.

jimmmy

kippy wrote: »

Would you be of the opinion that everyone, no matter what they do, should get paid the same wages as well? Thats pretty much what you are calling for here.

lol lol. Absolutely not! Where did you get that idea / how did you make that out ?


Incidentally, if everyone was now paid the same wages, private sector employees would now be as well paid as public sector employees.
I believe in free market economics, not left wing communism.

kippy

jimmmy wrote: »

lol lol. Absolutely not! Where did you get that idea / how did you make that out ?


Incidentally, if everyone was now paid the same wages, private sector employees would now be as well paid as public sector employees.
I believe in free market economics, not left wing communism.

Thats strange, because in your previous post you said:

I am also against selected people ( government people and their employees ) getting much higher pensions than everyone else.

Surely, the only way to stop this happening is for everyone to get the same pension?? Can you perhaps enlighten me?

NewDubliner

jimmmy wrote: »

I did not say that. See my original post:

You said:

jimmmy wrote: »

Employees should have to pay the full cost of their pensions.

and

jimmmy wrote: »

People would still be entitled to normal old age pension.

You're ignoring the fact, brought to your attention many times, that people are not paying the full cost the old age pension.

This coupled with a crazy idea that people should invest in the stock market and a complete lack of understanding of where 'investment returns' come from, demonstrates that you'd be highly qualified for a job in FF.

jimmmy

NewDubliner wrote: »

You're ignoring the fact, brought to your attention many times, that people are not paying the full cost the old age pension..

Are you referring to the public service old age pension. Yes, you are right, it is being subsidised by the ordinary person such as the shopworker, the farmer, the factory floor employee etc

NewDubliner wrote: »

This coupled with a crazy idea that people should invest in the stock market and a complete lack of understanding of where 'investment returns' come from, demonstrates that you'd be highly qualified for a job in FF.

I said people can invest wherever they want ....be it the post office, bank, stock market, private pensions , stamp albums or fine wine... this is one of the advantages of living in a democracy. I am only too well aware of where returns on investment come from.

jimmmy

I am also against selected people ( government people and their employees ) getting much higher pensions than everyone else.

kippy wrote: »

Surely, the only way to stop this happening is for everyone to get the same pension?? Can you perhaps enlighten me?

There is a difference between "much higher" and the "same". If govt people and their employees, or private industry people and their employees, want high pensions, let them pay for it....the full cost, not a subsidised cost. Why subsidise the cost for some people more than others, at a cost of billions ? I do not think you quite understand how much the country is borrowing - a cost our children and grandchildren will also have to pay, plus interest.

BroomBurner

Jimmmy, thank you for finally answering my question. Now, to explain how you're suggestion, while it has it's merits if reviewed, is implausible.

Some people save money, some people don't. That's pretty much it.

The government didn't want everyone relying on the social welfare pension that we are all entitled to as they know it's not a pretty amount to have to live on, very basic. In order for them not to have to bare the burden of loads of pensioners trying to scrape by on a pittance, they had to incentivise pensions. There would be no tax relief on pensions if there wasn't a need to push people to save for their pension. Do you understand that part? Just because you might, or others here might, doesn't mean the majority will. The government wants the majority to save for their own pension.

Now, I wouldn't be against the tax relief for those earning in the higher tax bracket to be reduced to 21% in line with the lower tax bracket. That way, they still receive tax relief (hence the will to save for their pension), but it wouldn't cost the state as much.

As for your jealousy of those on hgher salaries getting higher pensions, some people have worked hard for those and deserve that pension. I'm not saying everyone, I'm not going to follow your path of generalising everything, but there are those that work hard at their jobs, I'm certainly not going to begrudge them what they've earned.

jimmmy

BroomBurner wrote: »

Some people save money, some people don't. That's pretty much it.

Yes. And those who are not politicians or in the public service tend to have to save that bit harder ( in a private pension, or other investments such as property, cash or shares ) if they want the same standard of living as say, a Guard retiring at age 55 ( whose pension fund would be worth 1 million if he was to have funded it himself )

BroomBurner wrote: »

The government didn't want everyone relying on the social welfare pension that we are all entitled to as they know it's not a pretty amount to have to live on, very basic. In order for them not to have to bare the burden of loads of pensioners trying to scrape by on a pittance, they had to incentivise pensions. There would be no tax relief on pensions if there wasn't a need to push people to save for their pension. Do you understand that part? Just because you might, or others here might, doesn't mean the majority will. The government wants the majority to save for their own pension.

"The government wants the majority to save for their own pension."
Yes indeed, you hit the nail on the head. To the minority, the government gives generous pensions.

BroomBurner wrote: »

As for your jealousy of those on hgher salaries getting higher pensions, some people have worked hard for those and deserve that pension. I'm not saying everyone, I'm not going to follow your path of generalising everything, but there are those that work hard at their jobs, I'm certainly not going to begrudge them what they've earned.

Yes indeed " some people have worked hard for those and deserve that pension ". But the pension was subsidised by the taxpayer....to whom the bill is many many billions per year. Of course there are "those that work hard at their jobs, I'm certainly not going to begrudge them what they've earned" either. But do you think it is fair that those that work hard at their jobs and do not get a big pension pay towards the pension of those who took more holidays, worked a shorter week, had more job security, and a higher salary ?

BroomBurner

jimmmy wrote: »

Yes. And those who are not politicians or in the public service tend to have to save that bit harder ( in a private pension, or other investments such as property, cash or shares ) if they want the same standard of living as say, a Guard retiring at age 55 ( whose pension fund would be worth 1 million if he was to have funded it himself )



"The government wants the majority to save for their own pension."
Yes indeed, you hit the nail on the head. To the minority, the government gives generous pensions.


Yes indeed " some people have worked hard for those and deserve that pension ". But the pension was subsidised by the taxpayer....to whom the bill is many many billions per year. Of course there are "those that work hard at their jobs, I'm certainly not going to begrudge them what they've earned" either. But do you think it is fair that those that work hard at their jobs and do not get a big pension pay towards the pension of those who took more holidays, worked a shorter week, had more job security, and a higher salary ?

1. Give information to support your abov comment on how those in the public sector and government don't save.

2. What minority exactly are you talking about that the government "give" generous pensions to?

3. If you make a personal choice to work in a job that requires longer hours and less pay, then that is your own fault. Don't blame other people for having an easier life than you. Sounds extremely petty and childish.

jimmmy

BroomBurner wrote: »

1. Give information to support your abov comment on how those in the public sector and government don't save.
.

lol. I did not say that. Where did I say that "those in the public sector and government don't save" ?

You wrote "Some people save money, some people don't. That's pretty much it. "
I replied "Yes. And those who are not politicians or in the public service tend to have to save that bit harder ( in a private pension, or other investments such as property, cash or shares ) if they want the same standard of living as say, a Guard retiring at age 55 ( whose pension fund would be worth 1 million if he was to have funded it himself )"

I never said "those in the public sector and government don't save". I know many public servants who have buy-to-let investment properties etc.

BroomBurner wrote: »

2. What minority exactly are you talking about that the government "give" generous pensions to?.

Read again the comment. You wrote "The government wants the majority to save for their own pension."
Yes indeed, you hit the nail on the head. To the minority, the government gives generous pensions. You do not need to be Einstein to work out who the govt gives the highest pensions to.

BroomBurner wrote: »

3. If you make a personal choice to work in a job that requires longer hours and less pay, then that is your own fault. Don't blame other people for having an easier life than you. Sounds extremely petty and childish.

So that justifies the government overpaying themselves and their employees compared to virtually every other country in the world ?

BroomBurner

Jimmmy, this jealousy you have of the public sector is really making you run rings around yourself.

Maybe take your suggestion of the government not interfering in the pensions market to the Economics forum, you might get some number crunching done there.

jimmmy

You were not able to contradict one of the points I made.

You are obviously one of the lucky " I'm all right Jacks" who has a large government pension - subsidised / funded by others - to look forward to.
You may even be a politician, still working, on a large pension. Not everyone is as lucky as you.

NewDubliner

jimmmy wrote: »

Are you referring to the public service old age pension. Yes, you are right, it is being subsidised by the ordinary person such as the shopworker, the farmer, the factory floor employee etc

That's a clumsy evasion. The pension is subsidised by anyone who pays taxes. That includes bankers, public servants, foreign visitors, multinational companies, students and also those in your carefully selected list.

Does the fact that the OAPS have not funder their own pensions not conflict with your position that everyone would be responsible 100% to pay for their own retirement?

jimmmy wrote: »

I am only too well aware of where returns on investment come from.

So you're OK with the idea that rhe ROI may come from profits derived by over-charging others for goods and services? Does this not also conflict with your statement that everyone should fund their own pension 100%?

kippy

jimmmy wrote: »

I am also against selected people ( government people and their employees ) getting much higher pensions than everyone else.



There is a difference between "much higher" and the "same". If govt people and their employees, or private industry people and their employees, want high pensions, let them pay for it....the full cost, not a subsidised cost. Why subsidise the cost for some people more than others, at a cost of billions ? I do not think you quite understand how much the country is borrowing - a cost our children and grandchildren will also have to pay, plus interest.

I am fully aware of the figures that we are borrowing, fully aware of what is taken in in tax and fully aware of what the expenditure is. Anyone who isnt hasnt read a paper recently.

Define the difference?
The reason the costs are subsidised for some people more than others are numerous, depending on what sector you are talking about.

To be honest, I am sick and tired of your running around in circles. You may have some good points but when it comes to teasing them out and actually getting down to the nitty gritty of your suggestions they fall apart.
I think you should take this to the economics forum to actually discuss the figures and statistics with people who are better versed in that area. If you do that please link to the thread here.
Kippy

jimmmy

NewDubliner wrote: »

The pension is subsidised by anyone who pays taxes. That includes bankers, public servants, foreign visitors, multinational companies, students and also those in your carefully selected list.

I did use the word "etc" at the end of my "carefully selected list" as you call it. Of course taxes are also paid by bankers, public servants, foreign visitors, multinational companies, students lol lol

Do you think a Guard retiring at age 55 ( whose pension fund would be worth 1 million if he was to have funded it himself ) has paid that much tax in his lifetime ? There are hundreds of thousands of ex-politicians, government employees etc all getting very generous pensions - who do you think is paying for that ?