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

Naz_st

kindajaded wrote: »

on 45k age 35yrs and 35k first 10yrs: eagle star = 520e/month; PS = 525e/month; savings = 119k; lump sum = 67.5k

How did you work out that someone on 45k in the public service would be paying 525 euro per month pension contribution?

I know when I was knocking some numbers together this wasn't an easy calculation, and I got it wrong anyway - as P Breathnach pointed out in a subsequent post the 6.5% contribution is only levied on the part of the salary that exceeds 407 euro per week.

I haven't had time to even keep up with this thread let alone look at re-doing the calculations I did before, but just taking your 45k salary example, wouldn't the PS monthly contribution be:

1) 45k/52 = 865.38
2) 865.38 - 407 = 458.38
3) 458.38 * 52 = 23,836 per annum subject to 6.5%
4) 23,836 * .065 = 1549.34
5) 1549.34 / 12 = 129.11
6) 45k * .04101 (pension levy % after tax relief) = 1845.55
7) 1845.55 / 12 = 153.80
8) 129.11 + 153.80 = 282.91

It's probably not exact, but it's a long way from 525 - just wondering how you calculated the 525?

kindajaded

Naz_st wrote: »

How did you work out that someone on 45k in the public service would be paying 525 euro per month?

I know when I was knocking some numbers together this wasn't an easy calculation, and I got it wrong anyway - as P Breathnach pointed out in a subsequent post the 6.5% contribution is only levied on the part of the salary that exceeds 407 euro per week.

I haven't had time to even keep up with this thread let alone look at re-doing the calculations I did before, but just taking your 45k salary, wouldn't the PS monthly contribution be:

1) 45k/52 = 865.38
2) 865.38 - 407 = 458.38
3) 458.38 * 52 = 23,836 per annum subject to 6.5%
4) 23,836 * .065 = 1549.34
5) 1549.34 / 12 = 129.11
6) 45k * .04101 (pension levy % after tax relief) = 1845.55
7) 1845.55 / 12 = 153.80
8) 129.11 + 153.80 = 282.91

It's probably not exact, but it's a long way from 525 - just wondering how you calculated the 525?

with the levy (i looked it up on the rte website - it is the old contribution + the new levy - and not including PRSI) the contributions are:
25k : 11.5%
35k : 13%
45k : bit less than 14%
55k : bit more than 14%
65k : about 14.5%
85k : about 15%
100k : upwards 16% - 17% or bit more


i think p. breathnach is a retired PS worker? - so he would have gotten the old deal

P. Breathnach

jimmmy wrote: »

PBreathnach, instead of personally attacking me, can you not understand the point I made ? ...

I did not attack you personally; I expressed a criticism of the type of post that you make.

Of course I understand the point you made (I do have an IQ higher than that of a dead rabbit). I also note that you tend not to make your points in a temperate way, and I find that, at best, tiresome.

kindajaded

Naz_st wrote: »

How did you work out that someone on 45k in the public service would be paying 525 euro per month pension contribution?

I know when I was knocking some numbers together this wasn't an easy calculation, and I got it wrong anyway - as P Breathnach pointed out in a subsequent post the 6.5% contribution is only levied on the part of the salary that exceeds 407 euro per week.

I haven't had time to even keep up with this thread let alone look at re-doing the calculations I did before, but just taking your 45k salary example, wouldn't the PS monthly contribution be:

1) 45k/52 = 865.38
2) 865.38 - 407 = 458.38
3) 458.38 * 52 = 23,836 per annum subject to 6.5%
4) 23,836 * .065 = 1549.34
5) 1549.34 / 12 = 129.11
6) 45k * .04101 (pension levy % after tax relief) = 1845.55
7) 1845.55 / 12 = 153.80
8) 129.11 + 153.80 = 282.91

It's probably not exact, but it's a long way from 525 - just wondering how you calculated the 525?

i can only assume that the figures given by the media are correct?

kindajaded

Naz_st wrote: »

How did you work out that someone on 45k in the public service would be paying 525 euro per month pension contribution?

I know when I was knocking some numbers together this wasn't an easy calculation, and I got it wrong anyway - as P Breathnach pointed out in a subsequent post the 6.5% contribution is only levied on the part of the salary that exceeds 407 euro per week.

I haven't had time to even keep up with this thread let alone look at re-doing the calculations I did before, but just taking your 45k salary example, wouldn't the PS monthly contribution be:

1) 45k/52 = 865.38
2) 865.38 - 407 = 458.38
3) 458.38 * 52 = 23,836 per annum subject to 6.5%
4) 23,836 * .065 = 1549.34
5) 1549.34 / 12 = 129.11
6) 45k * .04101 (pension levy % after tax relief) = 1845.55
7) 1845.55 / 12 = 153.80
8) 129.11 + 153.80 = 282.91

It's probably not exact, but it's a long way from 525 - just wondering how you calculated the 525?

jaysus, sorry, ok - looked again - i added the 6.5% - will have to work it out again..

P. Breathnach

kindajaded wrote: »

i think p. breathnach is a retired PS worker? - so he would have gotten the old deal

Correct.

But what I pointed out about the application of the 6.5% rate is the current deal.

As a minor matter of interest, the 6.5% is itself an aggregation of a 5% contribution for pension and 1.5% for what was originally termed "Widows and Orphans" cover (to ensure they received something in the event of the death of the employee). In these more politically correct days, it is termed "Spouses and Children" cover.

It used to be that if somebody retired or resigned without having married, the W&O contributions were refunded. I don't know if that still applies.

Naz_st

kindajaded wrote: »

with the levy (i looked it up on the rte website - it is the old contribution + the new levy - and not including PRSI) the contributions are:
25k : 11.5%
35k : 13%
45k : bit less than 14%
55k : bit more than 14%
65k : about 14.5%
85k : about 15%
100k : upwards 16% - 17% or bit more

i think p. breathnach is a retired PS worker? - so he would have gotten the old deal

Yeah, I used something similar originally, but I found out it's a bit more complicated than that. As far as I know the new levy is:

first 15k @ 3%, next 5k @ 6% and the balance @ 10% with tax relief at both 20% and 41% levels calculated. The tax relief is the hardest bit to figure out. I found this table from the nurses union very useful for rough estimates of exactly how the gross % turns into the net %.

On the 6.5% contribution, as I said I just used it as 6.5% off the top, but I used the numbers based from P. Breathnach's post on the above (maybe he can shed more light on that [Edit: I see he already has! Too fast to keep up with!] - I know from reading some of his prior posts that he knows more than me about this anyway!).

Either way, thanks for making the effort at putting some calculations together, it adds more to the discussion that simply regurgitating some snippet from various sensationalist news sources that seems to happen a lot on boards and simply frustrates everyone.

kindajaded

Naz_st wrote: »

How did you work out that someone on 45k in the public service would be paying 525 euro per month pension contribution?

I know when I was knocking some numbers together this wasn't an easy calculation, and I got it wrong anyway - as P Breathnach pointed out in a subsequent post the 6.5% contribution is only levied on the part of the salary that exceeds 407 euro per week.

I haven't had time to even keep up with this thread let alone look at re-doing the calculations I did before, but just taking your 45k salary example, wouldn't the PS monthly contribution be:

1) 45k/52 = 865.38
2) 865.38 - 407 = 458.38
3) 458.38 * 52 = 23,836 per annum subject to 6.5%
4) 23,836 * .065 = 1549.34
5) 1549.34 / 12 = 129.11
6) 45k * .04101 (pension levy % after tax relief) = 1845.55
7) 1845.55 / 12 = 153.80
8) 129.11 + 153.80 = 282.91

It's probably not exact, but it's a long way from 525 - just wondering how you calculated the 525?

ok - so back to the eagle star calculator:
it the contribution is made only after 407e/week or 21k/year:

this is going to take a while..

P. Breathnach

kindajaded wrote: »

... this is going to take a while..

You will have earned your username by the time you have finished.

kindajaded

P. Breathnach wrote: »

You will have earned your username by the time you have finished.

:D

P. Breathnach

Naz_st wrote: »

... On the 6.5% contribution, as I said I just used it as 6.5% off the top, but I used the numbers based from P. Breathnach's post on the above (maybe he can shed more light on that - I know from reading some of his prior posts that he knows more than me about this anyway!)...

I know enough to put me off trying to do the maths!

A further complication is the Spouses and Childrens cover I mentioned. If a member of the scheme dies before retirement age, the family gets a lump sum equal to 75% of the annual rate of salary at the date of death, and a pension equal to 25% of the salary, indexed to current rates. If somebody dies after retirement and there is a surviving spouse, that spouse gets half of the pension until he or she dies -- again, indexed to current pay rates.

kindajaded

Naz_st wrote: »

How did you work out that someone on 45k in the public service would be paying 525 euro per month pension contribution?

I know when I was knocking some numbers together this wasn't an easy calculation, and I got it wrong anyway - as P Breathnach pointed out in a subsequent post the 6.5% contribution is only levied on the part of the salary that exceeds 407 euro per week.

I haven't had time to even keep up with this thread let alone look at re-doing the calculations I did before, but just taking your 45k salary example, wouldn't the PS monthly contribution be:

1) 45k/52 = 865.38
2) 865.38 - 407 = 458.38
3) 458.38 * 52 = 23,836 per annum subject to 6.5%
4) 23,836 * .065 = 1549.34
5) 1549.34 / 12 = 129.11
6) 45k * .04101 (pension levy % after tax relief) = 1845.55
7) 1845.55 / 12 = 153.80
8) 129.11 + 153.80 = 282.91

It's probably not exact, but it's a long way from 525 - just wondering how you calculated the 525?

i think you have accounted for tax deductions? - i left it out because it the same for private pensions

o.k this is what i got:

• at 25k the person pays 6.5% of 4k approx and 5% on 25k - 125 per month - eagle star costs 101 per month; the savings for 10yrs on this amount would be 36k; lump sum 37.5k - this guy worse off with PS
• at 35k the person pays 262.5e/month - the cost is 311e so state contributes 39e/month; savings same as above = 36k; lump sum = 15k - so state contributing 39e/month * 40yrs = 18.7k over that period - 18.7 +15 = 33.7k . this guy would also be better off in a private pension with some savings!!
• at 45k the person contributes 400k (7.2% of 45k = 3240 + 6.5% of 24k = 2210 = about 400 per month) the cost is about 520k so state contributes 120 euros/month and savings (from 35k at 262.5/month) = 66k + l.s. = 67.5k - now starting to get some contribution from employer - of 120e/month - not huge but ok
• at 55k the person contributes 537e/month eagle star costs 737e/month; saving 400e/month * 10yrs then for 30 yrs = 102k; l.s. = 77.5k. so employer contributing 200e/month for 40yrs = 96,000 - 24,500e = 148e/month from employer - not huge but ok
• at 65k the person contributes 677e/month the cost is about 940e/month; savings assuming first 10yrs working at 45k p.a. = 102k; l.s. = 97.5k - so now employer starting to contribute more - about 263 per month
• above that - i give up - agreed that over 85k is PS pension very good deal

back to 65k downwards: (not withstanding that i may have to be corrected again!):

1. the lowest paid i.e. on 35k or less are getting a very bad deal - they would be better off with a private pension and savings
2. from 45k to 55k the state contribution is 100 to 150 e/month. is this an unreasonable contribution for the employer to make? especially when they are also the insurer and could potentially make some money out of it.
3. at 65k the worker now getting a very decent employer contribution - perhaps the contribution should be reduced a bit further by reducing the value of the pension : if this earner only got 40% of their final salary instead of 50% then it would cost the state nothing (or earn it a bit if they used the fund well)
4. at 85k a similar adjustment in the final pay out would make it cost neutral (roughly, gotta go now!)

am interested to see any other calculations but remain to be convinced that the PS pension is the madness people are making out EXCEPT for people earning over 85k or retiring early..

ixoy

Naz_st wrote: »

first 15k @ 3%, next 5k @ 6% and the balance @ 10% with tax relief at both 20% and 41% levels calculated.

Isn't this defunct now though? The supplementary budget introduced new figures for this:
* first €15,000 of earnings exempt,
* 5% on next €5,000 of earnings,
* 10% on earnings between €20,000 and €60,000 and
* 10.5% on earnings above €60,000.

So back to the calculations again (which have made for some interesting reading)

jimmmy

grahamo wrote: »

MOST employers are good enough to offer a pension scheme to their workers. Some are better than others.

Of the approx 1,800,000 people in the private sector, few have as generous a deal as a Garda taking early retirement, for example. Few employers can fund a pension pot worth over a million euro per employee.,,,most are struggling to stay afloat as it is. I know some public servants who feel privately ashamed at getting so much money, but yet they keep it, like the other peiople who get govt money, the politicians.

dresden8

jimmmy wrote: »

Of the approx 1,800,000 people in the private sector, few have as generous a deal as a Garda taking early retirement, for example. Few employers can fund a pension pot worth over a million euro per employee.,,,most are struggling to stay afloat as it is. I know some public servants who feel privately ashamed at getting so much money, but yet they keep it, like the other peiople who get govt money, the politicians.

How much they get Jimmmy? Where did they work Jimmmy?

No more vague hints and mysterious public sector pension conspiracy type crap.

Put up or shut up.

jimmmy

dresden8 wrote: »

How much they get Jimmmy? Where did they work Jimmmy?

No more vague hints and mysterious public sector pension conspiracy type crap.

Put up or shut up.

ask the same to grahamo...my post above was in reply to him....he wrote "
MOST employers are good enough to offer a pension scheme to their workers. Some are better than others."

Ask him "How much they get ? " "Where did they work"

dresden8

jimmmy wrote: »

ask the same to grahamo...my post above was in reply to him....he wrote "
MOST employers are good enough to offer a pension scheme to their workers. Some are better than others."

Ask him "How much they get ? " "Where did they work"

No, I thought not.

grahamo

jimmmy wrote: »

ask the same to grahamo...my post above was in reply to him....he wrote "
MOST employers are good enough to offer a pension scheme to their workers. Some are better than others."

Ask him "How much they get ? " "Where did they work"

Well Jimmmy, if you must know one of the companies I worked for was a BIG American multinational.
You can see the benefits or perks here.
http://www.intel.com/jobs/ireland/bencomp/benefits.htm#Other
The pension plan was defined benefit pension with a lump sum paid on retirement. You also had the choice of paying contributions into high risk or low risk (or a combination of both) pension funds.
There was also free life and accident insurance, free medical insurance, a spouse/dependent pension, stock options, 2 bonuses per year etc. etc.
In my working life I've had 5 long term jobs. 4 of those had pension schemes.
Now, Can you prove any of your claims????

kindajaded

ixoy wrote: »

Isn't this defunct now though? The supplementary budget introduced new figures for this:
* first €15,000 of earnings exempt,
* 5% on next €5,000 of earnings,
* 10% on earnings between €20,000 and €60,000 and
* 10.5% on earnings above €60,000.

So back to the calculations again (which have made for some interesting reading)

is that for tax relief? is not the same for any pension and thus included in the calculation done by private online insurance companies? (they give the figure for including tax relief and the ones with the tax relief excluded - the latter are the ones i compared to those with tax relief excluded for the PS) think i did make bit of an error in 35k bracket. it works out about 5% employer contribution from and including 65k below - maybe at higher salaries to an extent but only if there were no very large jumps in salary - a rare situation i'd think.
i had a look at typical percentage contributions in ireland and there was this article from 2006:
http://www.finfacts.ie/irishfinancenews/article_10006287.shtml
obviously an awful lot of employers are not contributing anything or anything like the 16% suggested by this article. i think 5% is a pretty fair level of employer contribution - and don't forget that goes right up to 65k per yr and catches nearly all teachers, gardai and the vast majority of nurses.
if people want to make the PS pensions completely cost neutral then lowering the payout to about 40% - 48% instead of full 50% of final salary(quick calculation - depends on salary scale) would do it. also if you wanted to make them completely equal women would have to pay a little bit more for the inconvenience of living longer.
however, if you were going to completely remove the employer contribution to make it cost neutral then i think it would only be fair to allow PS workers to have the option of takin their money elsewhere - investing it etc..
and for those who are working this out on the actual pay out to the actual pay in consider that all the state would have to do to earn the actual pay out would be put the money directly into a low risk private pension fund and a savings bank to get the same pay out - but then they'd have no pension fund for rainy days..

kindajaded

ixoy wrote: »

Isn't this defunct now though? The supplementary budget introduced new figures for this:
* first €15,000 of earnings exempt,
* 5% on next €5,000 of earnings,
* 10% on earnings between €20,000 and €60,000 and
* 10.5% on earnings above €60,000.

So back to the calculations again (which have made for some interesting reading)

and by the way - the savings calculator i used was for ordinary savings because i couldn't find one to work out deposit savings - which would pay out alot more (about a whole 1% or more). so, the 5% is the very most that the state could be contributing to those PS pensions for people earning 65k or lower (and close at up to 85k - i haven't calculated beyond that)

kindajaded

ixoy wrote: »

Isn't this defunct now though? The supplementary budget introduced new figures for this:
* first €15,000 of earnings exempt,
* 5% on next €5,000 of earnings,
* 10% on earnings between €20,000 and €60,000 and
* 10.5% on earnings above €60,000.

So back to the calculations again (which have made for some interesting reading)

please don't so this to me - are those the new figures for PS contributions??!
if they are then all i can say is we were told that that adjustment was cost neutral - so all it has done is (rightly from what i can see) get the lower paid contributing a bit less and the higher paid contributing a bit more - it supposedly hasn't affected the state at all.
so either keep the 5% figure as rough a guess for all or could someone work it out again:)

jimmmy

grahamo wrote: »

Well Jimmmy, if you must know one of the companies I worked for was a BIG American multinational.

Good for you. Most of the 1,800,000 people in the private sector do not work for BIG American multinationals. Very few people in the private sector have as generous a deal as a Garda taking early retirement, for example. Few employers can fund a pension pot worth over a million euro per employee. Perhaps if the employee is highly qualified , highy paid and very lucky in the private sector then they will get as good a guaranteed pension as a Garda taking early retirement, for example. Few people in the private sector have a pension pot worth over a million at retirement.

kindajaded

jimmmy wrote: »

Good for you. Most of the 1,800,000 people in the private sector do not work for BIG American multinationals. Very few people in the private sector have as generous a deal as a Garda taking early retirement, for example. Few employers can fund a pension pot worth over a million euro per employee. Perhaps if the employee is highly qualified , highy paid and very lucky in the private sector then they will get as good a guaranteed pension as a Garda taking early retirement, for example. Few people in the private sector have a pension pot worth over a million at retirement.

jimmmy, i've been working this out using online calculators for insurance companies and savings banks and keep coming up with the roughly the same thing: the contribution the state makes to PS pensions is at most 5% of the workers salaries - that is now WITH the levy. the calculators i used are not for deposit savings (couldn't find one) so actually overestimate what the state has to contribute.

until the levy the state was contributing more like 12%-16% which is what big multinationals and 'good companies' were also paying (see link i included above to article about this) - and i agree that most private sector workers were not that lucky.

now, anyone going into the PS today has a 5% or less contribution from their employer. (and i may have to take back what i said about it being alot more for v high paid PS workers because it looks like the contribution for them is also in that region, maybe a bit higher but not much assuming a single jump from a medium high salary to very high at around 40 yrs of age)

what you need to decide jimmy is whether the state just abolishes compulsory pensions for workers or keeps contributing something - anything less than 5% is too little for compulsory pensions - people have too much opportunity to make more money with other investments.

or, my own favourite idea, de-privatize the whole thing and make PS pensions compulsory for everyone - that would mean you contributing up to 15% of your salary jimmmy. we are aging fast and if we do not have the pensions thing sorted out by 2030 or so we will have alot of impoverished elderly with a much lower proportion of able bodied working people.

you also have to balance the advantage to the state of having the pension fund.
i completely agree that pre the levy the pensions were way too much.
however, i think it's a bit over the top to say that anyone at or near the start of their working life with the PS now will have made a killing - a 5% employer contribution is not alot.

P. Breathnach

jimmmy wrote: »

... Very few people in the private sector have as generous a deal as a Garda taking early retirement, for example. Few employers can fund a pension pot worth over a million euro per employee. Perhaps if the employee is highly qualified , highy paid and very lucky in the private sector then they will get as good a guaranteed pension as a Garda taking early retirement, for example. Few people in the private sector have a pension pot worth over a million at retirement.

Welcome back jimmmy. It's been fairly quiet here during the last couple of days without your colourful contributions.

It would be helpful if you told us what the early retirement terms are for members of the Gardai. Otherwise people might suspect that you are making things up.

kindajaded

jimmmy wrote: »

Good for you. Most of the 1,800,000 people in the private sector do not work for BIG American multinationals. Very few people in the private sector have as generous a deal as a Garda taking early retirement, for example. Few employers can fund a pension pot worth over a million euro per employee. Perhaps if the employee is highly qualified , highy paid and very lucky in the private sector then they will get as good a guaranteed pension as a Garda taking early retirement, for example. Few people in the private sector have a pension pot worth over a million at retirement.

and i agree about the early retirement thing but that is a bit of an outlier and difficult to set right. i personally think it is wrong to force gardai to retire at an age when many people are healthy and want to continue working.
your ealier figures of 30 - 40 years were way out though - life expectancy for irish men at 60 is not 30 - 40 years!!
maybe if retirement at 60 was not compulsory then the early retirement pension could be reduced.

kindajaded

ixoy wrote: »

Isn't this defunct now though? The supplementary budget introduced new figures for this:
* first €15,000 of earnings exempt,
* 5% on next €5,000 of earnings,
* 10% on earnings between €20,000 and €60,000 and
* 10.5% on earnings above €60,000.

So back to the calculations again (which have made for some interesting reading)

i've done a few sample calculations on that ixoy - it's still working out at about 5% plus or minus a bit depending on which bracket

ixoy

kindajaded wrote: »

i've done a few sample calculations on that ixoy - it's still working out at about 5% plus or minus a bit depending on which bracket

I assume it was to "remove the pain" from the lower-end. It's not a cost-neutral adjustment though - it comes in at a fairly big 150m a year.

I'm surprised that there doesn't seem to be reliable calculators for all of this.

kindajaded

ixoy wrote: »

I assume it was to "remove the pain" from the lower-end. It's not a cost-neutral adjustment though - it comes in at a fairly big 150m a year.

I'm surprised that there doesn't seem to be reliable calculators for all of this.

no, i got over the cost neutral delusion after being informed that the 6.5% only kicks on after the first 21k.
but what it is is 5% employer contribution - the problem with it being any lower is that the PS pension is compulsory.
a 5% employer contribution is not in the high range (google it - you'll find averages much higher see this article
http://www.finfacts.com/irelandbusinessnews/publish/article_10006287.shtml
which put the average at 16% in the private sector (i don't necessarily believe this but it is alot more than 5%)
if people want the PS pension to be cost neutral then it has to be made non-compulsory - people could make more than a 5% return with their money by investing wisely. they could also shop around for better savings and pension deals.

kindajaded

ixoy wrote: »

I assume it was to "remove the pain" from the lower-end. It's not a cost-neutral adjustment though - it comes in at a fairly big 150m a year.

I'm surprised that there doesn't seem to be reliable calculators for all of this.

ya, and the problem with the calculators is that you can't work out a combination of lump sum and pension on any of the ordinary pension ones.
also there doesn't seem to be any easy way of figuring out how much savings in long term bonds or deposits would be worth unless you know how to calculate it yourself - so i just used an ordinary savings account currently giving 2.25% interest which must significantly underestimate what you'd get by saving monthly for 10yrs and then sitting on it for 30yrs in bonds or whatever.
no matter what way you look at it the current PS pension just is not a scam of a deal anymore. it's still worthwhile because many people would be in private sector jobs with no pension but many others would be in private sector jobs with much higher employer contributions.

jimmmy

kindajaded wrote: »

your ealier figures of 30 - 40 years were way out though - life expectancy for irish men at 60 is not 30 - 40 years!!
.

I never quoted or gave life expectancy figures - you must be thinking of someone elses post