I am paying more for somebodys public sector pension than my own Private pension

Biffo The Bare

This situation has gone on for way too long. There is no justification for the top loaded pensions in the public sector, paid for by people in the private sector who need to pay up to 30% of their wages each week to have a pension thats close to being on par with public sector pensions. Even then private sector pensions are not guaranteed on retirement.

grahamo

:rolleyes:Yeah right!
Have you looked into your claims?
This has been explained lots of times before. Public sector workers (Post 1995 employees) receive a pension mostly made up of the state pension. If they have 40 years service they will receive a pension worth half salary.
This means that if they earn 40k a year whilst working they will receive a state pension of 12k. (This is paid for by their PRSI contributions). To bring the pension up to 50% of their salary they then receive a public sector pension of 8k.
12k plus 8k = 20k = 50% of salary. In return for this princely sum the public sector employee pays 6.5% of income plus a pension levy of around 5%
plus their PRSI contribution which from the 1st of May will be around 9%.
We'll leave the PRSI contributions out as everyone gets the state pension (If enough contributions paid).
I think 11.5 % of 40k per annum will accrue quite a bit of interest by the time it comes to retirement so should easily cover 8 grand a year until the average life expectancy which I believe is about 78 for men.
Lets work it out, retire at 65, receive pension for 13 years if you are lucky.
Pension = 8k x 13 years = 104k
Contributions = upwards of 184k (Then add interest to this)
even with a lump sum you dont even get back what you put in.!!!
Please explain how YOU are paying for this

I'm sure the top knobs in the public sector get very decent pensions but I can promise you the ordinary Joe doesn't get a good deal any more.

PS Public sector pensions aren't guaranteed anymore either. Haven't you heard? The Govt. gave the pension fund to the banks. By the time most people retire there may be nothing left for their pensions

10000maniacs

grahamo wrote: »

: To bring the pension up to 50% of their salary they then receive a public sector pension of 8k.
12k plus 8k = 20k = 50% of salary. In return for this princely sum the public sector employee pays 6.5% of income plus a pension levy of around 5%

I think this is what the PM is getting at.
Basically what you are saying is you will receive a guaranteed half of your salary index linked to inflation made up in part of a guaranteed "gift" of about €6000 (when you take out what you have paid) from the taxpayer which is index linked for inflation. This is what many of the private sector don't agree with....... Because its money that is taken out of their pockets and placed in the pockets of public sector employees.

Fergus08

Here we go again, another go at the public sector. The politics forum on boards.ie is full of surprises!!

Regarding the OP's point about private sector pensions not being guaranteed on retirement. Yeah, that's true. If you sink your investments into equities you're taking a big risk - but it's your choice. If it's goes pear-shared, as it has for hundreds of thousands, then that's the consequence of individual choice and investment advise, which you're free to ignore. Absolutely nothing to do with public sector workers. Jeez, when are people going to start to take responsibility for their own decisions!!

When you open a private pension you have the option of investing in cash (crap returns but safe); bonds (returns a little bit better but not as good as equities) or equities (great returns potentially, equally you could lose everything). That's the risk of a private pension. That's why you're advised to pull out of equities as you near retirement.

Now, the deeper question, which no-one here will ever address seriously, is why millions of private sector workers HAVE to hand over billions of their hard earned money every year to the private pensions industry for SFA in return...

And why hundreds, if not thousands, of private pension funds have huge holes (who has been dipping in to the goodies?) in them that are getting bigger and bigger.

But, no, it's much easier to lash public sector workers than attempt to think about the larger structural issues underlying the woes of the private sector pensioner.

Finally, it's worth remembering that the private pensions industry exists for one reason only; to enrich those who own and control private pension funds. Providing good, stable pensions into the future for workers is the very last thing on their list of priorities....

jimmmy

I am glad, Fergus08, that you are agreeing that the private sector gets a far worse deal on pensions, compared to the public sector, which it subsidises.

10000maniacs

Fergus08 wrote: »

But, no, it's much easier to lash public sector workers than attempt to think about the larger structural issues underlying the woes of the private sector pensioner.....

Maybe its because they need to be lashed. Public sector workers recieve an index linked 40% topup from the taxpayer that the private sector 1: Pays for and 2: Is not entitled to.:mad:

ardmacha

Change the record. Public sector pensions have had pretty much the same structure since the 19th century. If they were so good then people would be running over themselves to get into public sector jobs, which they have not been. Those at the top of the class, those with good connections, the well informed etc have not shown a particular preference for public sector jobs over this time.

dresden8

ardmacha wrote: »

Change the record. Public sector pensions have had pretty much the same structure since the 19th century. If they were so good then people would be running over themselves to get into public sector jobs, which they have not been. Those at the top of the class, those with good connections, the well informed etc have not shown a particular preference for public sector jobs over this time.

Oddly enough those at the top walk away with their pensions surprisingly intact while the average private sector worker gets nailed to the wall. Fingleton anybody?

Bloody public service, must be their fault somehow.

tedstriker

I wouldn't mind paying higher taxes for both the inflated salary and pensions if the service that we got as tax payers was much better. We get a poor return for our investment.

grahamo

10000maniacs wrote: »

I think this is what the PM is getting at.
Basically what you are saying is you will receive a guaranteed half of your salary index linked to inflation made up in part of a guaranteed "gift" of about €6000 (when you take out what you have paid) from the taxpayer which is index linked for inflation. This is what many of the private sector don't agree with....... Because its money that is taken out of their pockets and placed in the pockets of public sector employees.

What gift??? What are you talking about? Did you read my post. I explained exactly how a public sector employee pays for his pension and shown that it is MORE than paid for!
Maybe some people with private pensions should be having a go at their brokers for investing their money badly!

grahamo

jimmmy wrote: »

I am glad, Fergus08, that you are agreeing that the private sector gets a far worse deal on pensions, compared to the public sector, which it subsidises.

Did you bother reading my post Jimmmy?
I've just shown that its NOT subsidised!!!! If the private sector gets a worse deal on pensions its because of investing unwisely. Nobody's fault but the investor.

grahamo

some of the answers on here are ridiculous, you would expect more sense from 7 year olds. Ranting with nothing to back it up

Victor

Um, given that pension is based on last salary, those calculations are out of whack.

jimmycrackcorm

grahamo wrote: »

What gift??? What are you talking about? Did you read my post. I explained exactly how a public sector employee pays for his pension and shown that it is MORE than paid for!

If that's the case then why can't I simply give 6.5% of my private sector income to the government and be entitled to a cushy pension also? After all you claim that it's sufficient to provide a non-subsidized pension, so surely the answer is for everyone to pay 6.5% and we'll all not have to worry about our pension.

Of course in real life for me to achieve the same pension with a private pension, I'd actually have to pay over 50% of my salary each month.

grahamo

jimmycrackcorm wrote: »

If that's the case then why can't I simply give 6.5% of my private sector income to the government and be entitled to a cushy pension also? After all you claim that it's sufficient to provide a non-subsidized pension, so surely the answer is for everyone to pay 6.5% and we'll all not have to worry about our pension.

Of course in real life for me to achieve the same pension with a private pension, I'd actually have to pay over 50% of my salary each month.

You already do give 6.5% of your income (PRSI) to the govt. (If your a PAYE worker)and you will get a pension of around
12k a year.
Public sector pay this 6.5% PRSI also, then another 6.5%, then another amount between 3 and 9% (Pension levy), so a public sector worker is now paying between 16 and 22% of income towards a pension.
Have a look at post number 2 in this thread and tell me which bit you think is wrong!

I've just shown that a public sector employees (earning 40k /year) pension is made up of 12k state pension( paid for by his PRSI contributions) and 8k from his public sector pension. Are you seriously expecting people to believe you would have to pay 50% salary into a pension fund to get a pension of 8k a year. What RUBBISH!

ardmacha

so surely the answer is for everyone to pay 6.5% and we'll all not have to worry about our pension.

Pensions have had employee contributions and employer contributions, it is not claimed that 6.5% funds the pension.

But given the lame and irresponsible performance of private pension funds the concept of a national pension fund is worth looking at.

dresden8

It should also be pointed out that if a public sector worker on 40k at retirement had an adult dependant their PRSI pension circumstances as follows

Personal Rate 230.30 + Adult Dependant (under 66) 153.50 = 353.80 by 52 weeks = 18,397.60

Max pension - €20,000

Value of "Gilt Edged" "Gold Plated" Public sector pension = €1,602.40 per annum.

Personal Rate 230.30 + Adult Dependant (over 66) 206.30 = 436.60 by 52 weeks = 22,703 per annum.

Max pension - €20,000

Value of "Gilt Edged" "Gold Plated" public sector pension = fnck all.

Remember, public sector has PRSI pension deducted from final overall pension figure, private sector gets to keep both.

Along with tax relief on contributions.

Has anybody worked those out yet?

dresden8

Biffo The Bare wrote: »

This situation has gone on for way too long. There is no justification for the top loaded pensions in the public sector, paid for by people in the private sector who need to pay up to 30% of their wages each week to have a pension thats close to being on par with public sector pensions. Even then private sector pensions are not guaranteed on retirement.

Actually now that I think of it, I'm sick of my PAYE going to fund your pension.

Private sector leach.

grahamo

dresden8 wrote: »

It should also be pointed out that if a public sector worker on 40k at retirement had an adult dependant their PRSI pension circumstances as follows

Personal Rate 230.30 + Adult Dependant (under 66) 153.50 = 353.80 by 52 weeks = 18,397.60

Max pension - €20,000

Value of "Gilt Edged" "Gold Plated" Public sector pension = €1,602.40 per annum.

Personal Rate 230.30 + Adult Dependant (over 66) 206.30 = 436.60 by 52 weeks = 22,703 per annum.

Max pension - €20,000

Value of "Gilt Edged" "Gold Plated" public sector pension = fnck all.

Remember, public sector has PRSI pension deducted from final overall pension figure, private sector gets to keep both.

Along with tax relief on contributions.

Has anybody worked those out yet?

Another good point. You could explain these points all day long and it simply won't sink in with the people who begrudge people who have worked all their lives a pension.
I bet the post above won't be answered or acknowledged either as the begrudgers like to cherry pick their arguments:D

dresden8

grahamo wrote: »

Another good point. You could explain these points all day long and it simply won't sink in with the people who begrudge people who have worked all their lives a pension.
I bet the post above won't be answered or acknowledged either as the begrudgers like to cherry pick their arguments:D

Don't worry I've made that point many times before. I got hit with those old leaches on State Pensions are paid too much.

Wrinkly b@st@rds! (That's my spin on their comments by the way.)

ixoy

In all these calculations above, it doesn't take into account the fact the pension is index linked. So we see someone say that, if they retired now on 40k, they'd receive 20k for the next 13 years - when in fact the final wage would be going up, so by year 10 they could be on 28k a year.

It's also important for the pension contribution itself - you'll be contributing far less in year 1 than year 40, yet you'll be receiving half the current wage when you retire.

Then there's the fact that the 40x figure above works only on the assumption that you've just joined and will pay the levy for the next 40 years, rather than the many who may have say 10 odd years in without paying any levy.

It's this index linking to the current wage that has people annoyed but the figures above don't seem to take this into account.

dresden8

They also don't take into account public servants who won't get their full 40 years done and won't qualify for a full pension.

I work with a guy who is paying c. 60 a week pension contributions for a c. 36 increase in his pension over the state pension rate.

Now his levies and taxes are going to pay private sector pension tax relief for fingers Fingleton and his 27 million pension pot.

Private sector leaching off the public sector yet again. Disgraceful.

grahamo

ixoy wrote: »

In all these calculations above, it doesn't take into account the fact the pension is index linked. So we see someone say that, if they retired now on 40k, they'd receive 20k for the next 13 years - when in fact the final wage would be going up, so by year 10 they could be on 28k a year.

It's also important for the pension contribution itself - you'll be contributing far less in year 1 than year 40, yet you'll be receiving half the current wage when you retire.
Then there's the fact that the 40x figure above works only on the assumption that you've just joined and will pay the levy for the next 40 years, rather than the many who may have say 10 odd years in without paying any levy.

It's this index linking to the current wage that has people annoyed but the figures above don't seem to take this into account.

You still don't seem to be getting it. You DO NOT receive half your salary from your public sector pension. You receive half your salary MINUS the state pension.
( If you are married or have dependents the state pension will more than likely add up to more than half your salary on its own so you will then receive NO public sector pension).
As for contributing less in year 1 in than in year 40, surely if you put some money in the post office for 40 years it would accrue interest. The money contributed in year 1 would be worth at least the amount from year 40 if you add 40 years compound interest!
And even if wages went up, I'm sure the state pension would increase on a par with this so a lot
of people would still be receiving very little back after years of contributing.
I've got to admit there are some nice public sector pensions out there. TD's,Gardai etc where you can retire early and get more than what you pay in but these are few and far between.

jimmmy

grahamo wrote: »

I've got to admit there are some nice public sector pensions out there.

Thats the understatement of the century. As the RTE programme devoted to the public sector gravy train recently showed, there are hundreds of thousands of these. Not only that, but public service people retiring get a very sizeable " gratuity " as well as a pension. Thats not often mentioned by the public sector people

gazzer

ixoy wrote: »

It's also important for the pension contribution itself - you'll be contributing far less in year 1 than year 40, yet you'll be receiving half the current wage when you retire.

.

Thats not true. Say somebody is earning 700 a week. When they retire they will get 350 - State Pension. If they area single person they will get a PS pension of 350 - 230 = 120. Thats 20% of your salary not half.

Take this scenario further. If you have a spouse you will get a further 206.30 a week for them. State pension of 230 + 206.30 = 406.30. That is more than half the salary you retire on so in that scenario you dont get ANY PS pension. Fair enough you will get the lump sum but you will have more than paid for that over 40 years.

Use this example of a person with a spouse and this is assuming this person retired this year and so didnt even pay the pension levy but has paid the 6.5% of their salary towards their pension. Say an average wage of 30,000. Thats 1950 a year over 40 years = 78000. Say your wage on retirement is 700 a week. Thats approx 36000 a year. One and half times that salary is 54000. That means that you lost 24000. Remember with this calculation I havnt even added the new pension levy.

dresden8

jimmmy wrote: »

Thats the understatement of the century. As the RTE programme devoted to the public sector gravy train recently showed, there are hundreds of thousands of these. Not only that, but public service people retiring get a very sizeable " gratuity " as well as a pension. Thats not often mentioned by the public sector people

Well done Jimmmy. Don't dispute the calculations as you can't, just repeat mantra of RTE programme.

Just to make it clear, yet again, not all public servants earn 300 grand a year.

grahamo

jimmmy wrote: »

Thats the understatement of the century. As the RTE programme devoted to the public sector gravy train recently showed, there are hundreds of thousands of these. Not only that, but public service people retiring get a very sizeable " gratuity " as well as a pension. Thats not often mentioned by the public sector people

I agree some pensions are good but to say 'Hundreds of thousands' is a bit of a joke. It has been shown on this thread how the public sector pensions work these days and in a lot of cases people who will have been paying over 20% of income will receive NO public sector pension. They will receive a lump sum if they have enough service but by the time most people retire that will be heavily taxed and as someone posted above this will be easily covered by what people paid in. This will again show that POST 1995 EMPLOYEES WILL NOT EVEN GET BACK WHAT THEY PAY IN.
How people say they are subsidising this is beyond me.
PS I notice you conveniently ignored the rest of my post Jimmmy:)

Gumbo

jimmmy wrote: »

Thats the understatement of the century. As the RTE programme devoted to the public sector gravy train recently showed, there are hundreds of thousands of these. Not only that, but public service people retiring get a very sizeable " gratuity " as well as a pension. Thats not often mentioned by the public sector people

i dont think this guy even reads posts anymore....:rolleyes:
just copies and pastes what he reads on the online newspapers, thats all.

loobylou

gazzer wrote: »

Say an average wage of 30,000. Thats 1950 a year over 40 years = 78000. Say your wage on retirement is 700 a week.

Let me see now. He's been AVERAGING €600 a week for the last 40 years. His wage now is €700. Makes you wonder what his starting wage (in 1969) was?

ixoy

gazzer wrote: »

Use this example of a person with a spouse and this is assuming this person retired this year and so didnt even pay the pension levy but has paid the 6.5% of their salary towards their pension. Say an average wage of 30,000. Thats 1950 a year over 40 years = 78000. Say your wage on retirement is 700 a week. Thats approx 36000 a year. One and half times that salary is 54000. That means that you lost 24000. Remember with this calculation I havnt even added the new pension levy.

Are you averaging the wage over 40 years there? Seems excessively high if your retirement wage is only 35k. It also still excludes the fact the wage would rise after retirement. Now admittedly so too could the SW pension.

It's also true in this example only if you have a spouse.

I must try and knock up some figures on this as most of the examples so far have excluded interest and wage rises over the years in them. They're a bit simplistic (from both sides) so it's hard to get a clear picture on how well it's be for say an average executive officer. We keep hearing from numerous sources how good it is, but I'd like to see for myself (using a rather crude data set but I'm not actuary).

stevoman

another public sector bashing thread. thats original. :rolleyes: why not just dig up the other 50?