For those interested in the Public / Private sector wage debate

Riskymove

Long Onion wrote: »

If I recall correctly (and I am a bit rusty here so am open to correction) full service (i.e. 40 yrs) would give you a pension for life of 2/3rd's of your final salary which would increase in line with salary increases for those who are doing your job (i.e. your replacement gets a 10% pay rise, your pension goes up accordingly - not sure if it goes up by 10% or 2/3rds of 10%)

You also get a tax free lump sum of 1.5 times annual salary on leaving service.

no no this is getting mixed up here

Long Onion - you seem to be talking about public service pensions (and its 50% of salary not 66% btw)

Opto - I think your question is about the OAP pension which is around €12,000 a year I think at present

Long Onion

Riskymove wrote: »

no no this is getting mixed up here

Long Onion - you seem to be talking about public service pensions (and its 50% of salary not 66% btw)

Cheers for that, is there also an older scheme still on the go for some of the longer serving members?

Riskymove wrote: »

Opto - I think your question is about the OAP pension which is around €12,000 a year I think at present

Re-read the post and it looks like it is the state pension which the post referred to - it works out near enough €12k alright.

Riskymove

Long Onion wrote: »

Cheers for that, is there also an older scheme still on the go for some of the longer serving members?

Not sure what u mean?

Long Onion

Riskymove wrote: »

Not sure what u mean?

I thought that some of the longer serving civil servants had a different pansion arrangement than those who joined more recently?

cyclopath2001

Riskymove wrote: »

Opto - I think your question is about the OAP pension which is around €12,000 a year I think at present

or 24k if you have a dependent spouse, again regardless of how much you paid in over the years. When the private sector attack 'state-guaranteed' pensions in the public sector, they usually forget to mention the generous state-guaranteed pensions (i.e. OAP) that they themselves have and for which they don't pay the full economic cost.

Riskymove

Long Onion wrote: »

I thought that some of the longer serving civil servants had a different pansion arrangement than those who joined more recently?

the only change I am aware of is that from 1995 entrants pay Class A PRSI and therefore get the OAP pension (which is deducted from the public service pension)

this means a significant portion of the pension costs are reduced...though obviously this wont really have an effect on the bill for some time but it will reduce it quite dramatically

jimmmy

Long Onion wrote: »

If I recall correctly (and I am a bit rusty here so am open to correction) full service (i.e. 40 yrs) would give you a pension for life of 2/3rd's of

You also get a tax free lump sum of 1.5 times annual salary on leaving service.

In some parts of the public service "full service " is 30 years eg the Gardai and 15 years eg the Judges.

As another poster pointed out, its 50% ....but you get whatever rises the position gets eg a public servant who retired 10 years ago now gets approx. the same pension as the total of what his/her annual salary was when he / she retired 10 years ago.

Riskymove

jimmmy wrote: »

eg a public servant who retired 10 years ago now gets approx. the same pension as the total of what his/her annual salary was when he / she retired 10 years ago.

you what now?

are you suggesting that someone who retired at a salary of say 50k 10 years ago and a pension of 25k now has a pension of 50k?

jimmmy

Long Onion wrote: »

you can retire whenever the hell you like.
.

I actually asked "What group from the private sector can retire after only 30 years service ? Well ? ?????????" Your answer is not helpful.

Long Onion wrote: »

Show me the figure for the average Gardai pension pot and I will tell you within 10 mins how much you would need to contribute to a personal pension to get there. You mentioned a sum of €1,000,000 so lets run with that - A 35 year old paying any tax at the 41% marginal rate would have a €1,000,000 pension pot (assuming growth of 6% p.a. which is below the average) by the age of 65 for a net monthly contribution of €488.99 per month. Hardly ultra high flier stuff there Jimmmy.

You are wrong there again Long Onion. The pension pot of the average retiring Guard is worth over 1 million but lets round it off at a million anyway. Eddie Hobbs has confirmed ( on RTE tv on Monday week last ) a Guard wopuld need to be paying 48% of his average salary in to his pension if he was paying the economic cost of it. Also, you assume growth of 6% p.a. ...talk about a reasonable growth rate, will you ? Even over the past ten years most funds have struggled to achieve 1% growth.
And tell us the gross value of "net monthly contribution of €488.99 " you mention, so people will have to know how much they have to earn ( gross, not net ). And you mention retiring at age 65 - I mention retiring at age 50 which many Gardai now do on full pension. Those 15 years mean a lot. How much over the past 30 years do you think the Gardai retiring today has contributed to his pension ? If he saved 488 per month over the past 30 years ( with would have been a fortune to contribute in 1979 when he started work, given inflation , prices + wages then etc ) he would not have a pension equivalent to a Garda pension today, I can tell you that with certainty. I know people with private pensions now who find that they are worth less than they put in to them, due to the market collapse worldwide, commissions taken by the insurance companies etc. Lucky are those on the public service gravy train.

jimmmy

Riskymove wrote: »

you what now?

are you suggesting that someone who retired at a salary of say 50k 10 years ago and a pension of 25k now has a pension of 50k?

Approximately yes, given that public sector salaries have nearly doubled over the past 10 years.

So RTE said in a programme on the public sector gravy train...remember that programme about 4 months ago ?


Eg a public servant on 100k 10 years ago + who retired got 50K as pension then, but assuming such grades gets 200 k a year now ( ie his replacement gets 200 a year for working now ) , then the pension is 100k, which is the same as his salary was 10 years ago.

Sure with the cost of living + inflation, would 'nt he need it ? :rolleyes:

Riskymove

jimmmy wrote: »

Approximately yes, given that public sector salaries have nearly doubled over the past 10 years.

according to the CSO, the average wage in the public sector went from €611.54 in 2000 to €948.91 in 2008

ok 8 years rather than 10 but this is not a doubling of wages

perhaps the programme was talking about the Public pay bill doubling rather than wages?

also while the national pay deal increases are applied to pensions i am not sure if the benchmarking awards were

Diarmuid

Long Onion wrote: »

I can't say that i know the average salary of a Garda - Jimmmy raised this. The €488.99 is what would be required to have €1,000,000 pension fund after 30 years - you could start at 25 and finish at 55 if you so wished, the cost of funding does not change as long as there are 30 years to run.

As for the cost, it is €122 per week to have a million euro on the day you retire. Many poeple spend this on car repayments, fuel, life cover, drinking, eating out. It is a matter of what your priorities are.

Can you clarify what rate of return you used to calculate these figures? From my calculations it looks like you are working on an annualised rate of 10%? That sounds optimistic considering the NPRF has an average annualised rate since inception of 0.5%

jimmmy

Riskymove wrote: »

according to the CSO, the average wage in the public sector went from €611.54 in 2000 to €948.91 in 2008

ok 8 years rather than 10 but this is not a doubling of wages

The 10 years is close to it, especially when you factor in tax decreases over the period, and you talk about "take home pay" instead, which is the type of pay most p.s. talk about ...go to any chat show + they will mention net pay, not gross

optocynic

cyclopath2001 wrote: »

or 24k if you have a dependent spouse, again regardless of how much you paid in over the years. When the private sector attack 'state-guaranteed' pensions in the public sector, they usually forget to mention the generous state-guaranteed pensions (i.e. OAP) that they themselves have and for which they don't pay the full economic cost.

Isn't that what PAYE is for?.. Among other things!

jimmmy

Riskymove wrote: »

anybody can retire whenever they decide to

But the question is "What group from the private sector can retire after only 30 years service ? " ( like the Gardai do, who earn an average of 60k a year each before they retire ) ...what other group from society can retire aged 50 , after only 30 years service , with a pension pot of over a million ? While I have a lot of respect for them, its not as if they are brain surgeons or rocket scientists or anything.....and many have cushy enough numbers in country areas at least.

N.B. not everyone " can retire whenever they decide to "...many have lost a lot of their meager pensions / savings / investments ....and most people in the private sector ( going by statistics such as the average industrial wage etc ) never earned what the average p.s. employee earns to begin with, so never had the same earning ability to save for the rainy day.

gurramok

Average Garda earns about 49k. Google it.

cyclopath2001 wrote:

It was not subject to pension tax relief as it was not a pension contribution. Did you not read the legislation?

It was treated by Revenue the same as a pay-cut. Situation similar to private sector employees whose pay was cut, they were not taxed on what they did not receive.

The Irish Times disagrees with you. http://www.irishtimes.com/newspaper/opinion/2009/0205/1233713219253.html

IT wrote:

It was not subject to pension tax relief as it was not a pension contribution. Did you not read the legislation?

It was treated by Revenue the same as a pay-cut. Situation similar to private sector employees whose pay was cut, they were not taxed on what they did not receive.

They say 4.5% is the real reduction. Did something change to say there was no tax relief on the pension levy?

jimmmy

Riskymove wrote: »

the average wage in an garda siochana is around €1,200

thats including all grades not just rank and file

edit: thats weekly, including overtime

While I do not often agree with you, you are correct there. That equates to just over 60 grand a year.

Riskymove

jimmmy wrote: »

The 10 years is close to it, especially when you factor in tax decreases over the period, and you talk about "take home pay" instead, which is the type of pay most p.s. talk about ...go to any chat show + they will mention net pay, not gross

http://www.cso.ie/quicktables/GetQuickTables.aspx?FileName=PSA01.asp&TableName=Public+Sector+Average+Weekly+Earnings&StatisticalProduct=DB_PS

here's the link, it does not say anything about being take-home pay

according to it, the increase in 8 years is around 50%;you are suggesting that in just 2 years 1998-2000 it also rose 50%?

..I notice you dont have a link or source for that suggestion

I am not quite sure what you are getting at though, surely tax decreases would affect net pay not gross...and wtf are you on about chatshows?

Riskymove

optocynic wrote: »

Isn't that what PAYE is for?.. Among other things!

no...PRSI

Riskymove

what other group from society can retire aged 50 , after only 30 years service , with a pension pot of over a million ?

that's a different question...I think we can all accept that the Garda pension plan is exceptionally good

N.B. not everyone " can retire whenever they decide to "...many have lost a lot of their meager pensions / savings / investments ....and most people in the private sector ( going by statistics such as the average industrial wage etc ) never earned what the average p.s. employee earns to begin with, so never had the same earning ability to save for the rainy day.

well then they have to decide not to retire dont they? which is to be regretted

everyone's situation is different granted, and some are in difficult circumstances..but there are also many private sector workers who will have a good pension plan in place

cyclopath2001

gurramok wrote: »

They say 4.5% is the real reduction. Did something change to say there was no tax relief on the pension levy?

You didn't read the legislation, did you? Nowhere in the legislation is 'pension tax relief' given in respect of the levy. What it says is:

Any deduction made under the Finan-
cial Emergency Measures in the Public Interest Act
2009 in respect of a public servant (within the
meaning of that Act) shall, in assessing income tax
under Schedule E, be allowed to be deducted as
an expense incurred in the year in which the
deduction is made.”.

This is only fair, as you can't be taxed on a pay cut.

The reasons for the levy, as opposed to a pay cut are 1: It does not affect existing pensioners. 2: It was more palatable to the unions to have a levy rather than agree to a cut. 3: A levy can be removed.

If it were a pension fund contribution, its value could be taken from job-to-job as when a person makes career changes.

lmimmfn

they should just make public sector pensions contributary only like a lot of the private sector firms do, government should put in 0 and the employee contributes solely to their pension. Whatevers in the pot when you're 65 you're entitled to.

Its as fair as it is in the private sector

gurramok

cyclopath2001 wrote: »

You didn't read the legislation, did you? Nowhere in the legislation is 'pension tax relief' given in respect of the levy. What it says is:

This is only fair, as you can't be taxed on a pay cut.

The reasons for the levy, as opposed to a pay cut are 1: It does not affect existing pensioners. 2: It was more palatable to the unions to have a levy rather than agree to a cut. 3: A levy can be removed.

If it were a pension fund contribution, its value could be taken from job-to-job as when a person makes career changes.

Got a link?

jimmmy

Riskymove wrote: »

I think we can all accept that the Garda pension plan is exceptionally good

Good for the Gardai concerned : definitely not good for our balance of payments or our general economy. You could say the same for other public service pensions eg Judges who can retire after 15 years on a massive pension.

"What group from the private sector can retire after only 30 years service ? "

Riskymove wrote: »

.but there are also many private sector workers who will have a good pension plan in place

" a good pension plan " lol lol:D
out of the 1.8million private sector workers, what percentage do you think can retire after only 30 years working ( eg at age 50 ), with a state guaranteed pension pot worth over a million ?

jimmmy

Riskymove wrote: »

I am not quite sure what you are getting at though, surely tax decreases would affect net pay not gross?

exactly. Average net take home pay rose more than gross take home pay during the ten year period due to the tax decreases during the celtic tiger.

Take home pay as a percentage of gross income increased during the tiger years, due to tax reductions etc.

Riskymove

jimmmy wrote: »

out of the 1.8million private sector workers, what percentage do you think can retire after only 30 years working ( eg at age 50 ), with a state guaranteed pension pot worth over a million ?

thats a fairly loaded question

I do believe that there are probably at least as many people in the private sector who are successful, wealthy and prudent who could retire at 50 as there are Guards...however that doesn't really matter in the context of our debate on the public finances

jimmmy

Riskymove wrote: »

thats a fairly loaded question

I think its a straight question. 0.5% ? 5% ? 50% ?

Riskymove wrote: »

I do believe that there are probably at least as many people in the private sector who are successful, wealthy and prudent who could retire at 50 as there are Guards...

All guards can retire after 30 years service eg at age 50 if they joined at age 20, a not unreasonable age to suggest is the average Garda joining age....some may have been younger, some a bit older. Their pension pot is worth over a million. What group of employees from the private sector could do that ? In every western country there are a few successful , lucky people from the private sector who may be able to do that, but they almost exclusively had some combination of a unique and great idea, hard work, risk-taking etc. We are not talking about them, as very few people from the private sector seem to achieve that dream of being able to retire at 50, despite often woking 80 hours per week, etc etc.

Riskymove

jimmmy wrote: »

I think its a straight question. 0.5% ? 5% ? 50% ?

it has a striaght answer that we all know as you have phrased it ina loaded fashion...no private sector worker gets a state pension (outside of PRSI related welfare)..as we all know

if you ask "how many private sector workers can retire at 50?" I have attempted to answer that

We are not talking about them

I know you don't want to talk about them as it suits your purposes to portray all private sector workers as honest, hardworking people, paid very little and retiring in poverty being grinded underfoot by the evil public sector overlords

as very few people from the private sector seem to achieve that dream of being able to retire at 50

thats true, however very few public servants can either

TCP/IP_King

cyclopath2001 wrote: »

..... 3: A levy can be removed.

And a levy can also be increased with no legal impediment, i.e. changes to employment contracts etc.

TCP/IP_King

realcam wrote: »

I think there is a few myths flying around here.

... The pension levy is an additional contribution.

The pension levy is a wage cut, the money goes nowhere except to reduce the wage bill for the government.