Dont cut our pay, Tax everyone else instead!!!

P. Breathnach

Diarmuid wrote: »

I thought you had lived through the 80's? Feeling a bit nostalgic for it? Or just want the younger people to experience those "golden years"? :rolleyes:

That's no argument. The tax take as a percentage of either GDP or GNI has been low in Ireland for years; because of recent events, it has fallen even lower.

It is absurd to be soliciting the help of bodies outside Ireland (especially the ECB, let alone the IMF that some want to invite in) while we follow a policy of paying lower taxes than almost anybody else.

NewDubliner

_Kooli_ wrote: »

Well then allow people in the public sector to opt out of the public pension scheme.
Give them back their 15% that they pay towards their pension and let them start their own private pension with it if they want. So then everyone is on a level playing field.

Which public sector workers are you referring to? And with which private sector workers are you comparing them?

The public sector does not have one standard pension arrangement and neither does the private sector. Most pensions are part state pension and part top-up. The state pension is contributed to through PRSI and is the same for public and private sector workers. The amount finally paid out is not dependent on the amount paid in.

Both in the public and private sector, some employees pay more than others towards an additional top-up pension which is subsidised by the employer. In both private and public sector, some have more generous arrangements than others.

gerry28

Stark wrote: »

Why would the Government want private sector pay cut? The Government doesn't pay private sector wages. Now I'm not in favour of blanket cuts to public service wages; I think pay given to more recent hires has been "competitive" compared to the obscene salaries secured for the old guard through strike threats. The old guard doesn't deserve to be considered untouchable anymore.

I think if Cowan and Lenihan had a free run at it they would love to reduce both private and public sector wages.

It would make it easier for the IDA to attract foreign companies into a low wage economy - but they won't get their way.

Count Dooku

P. Breathnach wrote: »

From http://www.cso.ie/releasespublications/documents/other_releases/2008/progress2008/measuringirelandsprogress.pdf
GDP 2008: 181.8bn; GNI 2008: 155.9bn
Assume a fall of about 3% in 2009: A tax take of 32bn would amount to under 20% of GDP, and just over 20% of GNI. There would appear to be scope for some more taxation.

Note that I do not say that the public sector payroll should not be reduced. What I say is that we should consider tax increases as another component of a multi-part solution.

75% of GDP generated by FDI
Economic Brief - January 2009

Ireland has a high level of FDI as a percentage of GDP. 75%, (GNP 85%) compared to OECD average of 25%, Italy 20%, Spain 35%

If you will increase taxation on FDI, they simply will leave Ireland. Public services will have to learn how to provide full services on 30Bn tax take

P. Breathnach

Count Dooku wrote: »

75% of GDP generated by FDI
Economic Brief - January 2009

If you will increase taxation on FDI, they simply will leave Ireland. Public services will have to learn how to provide full services on 30Bn tax take

The difference between GDP and GNI is a good crude indicator of the amount that we have to be very cautious about taxing. It's about 15% of GDP. The other 85% of GDP is fair game. That's why I gave both GDP and GNI figures.

irish_bob

peter_de_tool wrote: »

The financially clued-in know that a public sector pension is almost worth its weight in gold. Theoretically, a private sector worker can fund for a maximum of two-thirds of their final salary for retirement. However, they need to save 28% of their salary for 40 years to do so. A 7.5% contribution is laughable the pension levy should be at least 25%.

a recent figure brought it home for me , in order for a private sector worker to build up a pension which is equal to what a guard recieves on retirement , the private sector worker would have to set aside 48% of thier income each year for said pension :eek:

thebman

peter_de_tool wrote: »

The financially clued-in know that a public sector pension is almost worth its weight in gold. Theoretically, a private sector worker can fund for a maximum of two-thirds of their final salary for retirement. However, they need to save 28% of their salary for 40 years to do so. A 7.5% contribution is laughable the pension levy should be at least 25%.

Realistically the problem is contribution is compulsory. It would be best to get rid of it altogether except the current employees fund the currently retired so it can't be done at the moment. It is unsustainable in its current form IMO.

P. Breathnach

thebman wrote: »

Realistically the problem is contribution is compulsory. It would be best to get rid of it altogether except the current employees fund the currently retired so it can't be done at the moment. It is unsustainable in its current form IMO.

The idea that current employees fund my pension is actuarial nonsense. How were the non-contributory pensions of past generations of civil servants funded? They were simply treated as a charge on the current budget.

The state has effectively contracted with its current and former employees to pay their pensions, and has not really set up a fund for the purpose (the National Pensions Reserve Fund was loosely linked to the idea of funding future pensions -- but it has since been more or less re-assigned for other purposes).

I think there should be no real obstacle to public service employees opting out of superannuation schemes. I also think that in all normal circumstances it would be very foolish of those employees to exercise such options.

thebman

P. Breathnach wrote: »

The idea that current employees fund my pension is actuarial nonsense. How were the non-contributory pensions of past generations of civil servants funded? They were simply treated as a charge on the current budget.

The state has effectively contracted with its current and former employees to pay their pensions, and has not really set up a fund for the purpose (the National Pensions Reserve Fund was loosely linked to the idea of funding future pensions -- but it has since been more or less re-assigned for other purposes).

I think there should be no real obstacle to public service employees opting out of superannuation schemes. I also think that in all normal circumstances it would be very foolish of those employees to exercise such options.

I meant the government hasn't really kept money set aside from previous employees paying in to pay for their pensions.

skearon

Count Dooku wrote: »

75% of GDP generated by FDI
Economic Brief - January 2009


If you will increase taxation on FDI, they simply will leave Ireland. Public services will have to learn how to provide full services on 30Bn tax take

Thanks for the link - very useful facts to know, and totally agree with your comment on the PS

_Kooli_

NewDubliner wrote: »

Which public sector workers are you referring to? And with which private sector workers are you comparing them?

The public sector does not have one standard pension arrangement and neither does the private sector. Most pensions are part state pension and part top-up. The state pension is contributed to through PRSI and is the same for public and private sector workers. The amount finally paid out is not dependent on the amount paid in.

Both in the public and private sector, some employees pay more than others towards an additional top-up pension which is subsidised by the employer. In both private and public sector, some have more generous arrangements than others.

Ahh, now we're getting somewhere. There has been a reluctance of public sector bashers to compare like for like when comparing public and private sector workers up to now. Congratulations on taking the first step in fairness.

_Kooli_

irish_bob wrote: »

a recent figure brought it home for me , in order for a private sector worker to build up a pension which is equal to what a guard recieves on retirement , the private sector worker would have to set aside 48% of thier income each year for said pension :eek:

Please show us all this figure and how it was arrived at?
Its very easy to look up what contributions will roughly give you for private pensions at pensionsboard.ie

So if you can show us where you got your recent figure we can compare.

I think we'll all find that private is the way to go, even for public workers who opt out. Oh, i forgot, they are not allowed to opt out. I wonder why. Would it be because they are being conned and most of them dont realize it?

SkepticOne

_Kooli_ wrote: »

I think we'll all find that private is the way to go, even for public workers who opt out. Oh, i forgot, they are not allowed to opt out. I wonder why. Would it be because they are being conned and most of them dont realize it?

You can't get defined benefit pensions on the open market. You can get defined contribution, where you are guaranteed to pay a certain amount into it every month but the final return is not guaranteed. I can't see many ps workers opting for that to be honest.

_Kooli_

SkepticOne wrote: »

You can't get defined benefit pensions on the open market. You can get defined contribution, where you are guaranteed to pay a certain amount into it every month but the final return is not guaranteed. I can't see many ps workers opting for that to be honest.

Almost everyone gets a defined benefit pension.
Its called the state pension.
Then you provide for your own private pension to add to that.
Just like most people in the private sector, people in the public sector have not done their homework on how much better off they would be if they channeled what goes into their public pension into a private pension instead.

And besides whether or not they would choose to opt out of the public sector pension - why not at least allow them that choice?

Sure if they opt out doesnt it cost all of us tax payers less, because they now have to provide their own pensions?

SkepticOne

_Kooli_ wrote: »

Almost everyone gets a defined benefit pension.
Its called the state pension.
Then you provide for your own private pension to add to that.
Just like most people in the private sector, people in the public sector have not done their homework on how much better off they would be if they channeled what goes into their public pension into a private pension instead.

With a public sector pension, the entire pension is defined benefit. Like I said you can't buy this on the open market.

And besides whether or not they would choose to opt out of the public sector pension - why not at least allow them that choice?

I would be in favour of allowing them to opt out however I think you will find that the unions representing public sector workers are not pushing this.

_Kooli_

SkepticOne wrote: »

With a public sector pension, the entire pension is defined benefit. Like I said you can't buy this on the open market.I would be in favour of allowing them to opt out however I think you will find that the unions representing public sector workers are not pushing this.

Thats a red herring. Noone is saying they should be buying a defined benefit pension.
They dont need to buy one. They would be better off on a defined cont and state pension if you work out the numbers on it.

Nobody should need to push an opt out option on their pensions. It should be their right to choose if they want to opt out or not.

Let them choose yjemselves what they want to do with the c15% they contribute to their pensions now. If they want to pocket it and live on the state pension when they retire, so be it. If they want to contribute to a private pension, so be it too.

SkepticOne

_Kooli_ wrote: »

Nobody should need to push an opt out option on their pensions. It should be their right to choose if they want to opt out or not.

The unions as representatives of public sector workers would need to raise it in their negotiations. I can't see them doing this.

I'm sure the government would love to be able to say to public sector workers "if you don't like what we're offering you are free to go to open market". This is why I think such a move would be opposed by the unions.

I agree with you, though, that the option should be made available.

ParkRunner

http://www.progressive-economy.ie/2009/10/deconstructing-public-sector-pay-cuts.html

it is reasonable to assume that the net savings to the Exchequer / reduction in the borrowing requirement will be close to 50 percent of the gross reduction in expenditure. In other words, a 5 percent reduction in public sector pay/pensions – or approximately €1 billion – will not produce ‘savings’ of €1 billion. Rather they true savings will be close to €500 million.

the pension levy achieved a headline 'saving' of €1.4 billion - but the deficit continued to spiral downwards. Another round of pay cuts may only end up lengthening and deepening the recession - a process that only postpones the day when fiscal consolidation strategies become effective.

I thought this was an interesting analysis of what public sector pay cuts would actually achieve, taking into account the inevitable reduction in tax receipts following a cut in public sector pay. If Lenihan wants to reduce the budget deficit by 4bn he will need to look at cutting public sector pay by something more in the region of 12.5%! I dont envy him!

Diarmuid

P. Breathnach wrote: »

That's no argument. The tax take as a percentage of either GDP or GNI has been low in Ireland for years; because of recent events, it has fallen even lower.

Total tax/GNP take might be low but (income tax or VAT) / GNP is not. Our PRSI and corporation taxes are low

You seem to be keen on raising taxes, so I guess you are talking about PRSI and corporation. Do you think it will impact on the labour market? Will an increase in tax improve or dis-improve our unemployment rate?

Diarmuid

_Kooli_ wrote: »

Almost everyone gets a defined benefit pension.
Its called the state pension.
Then you provide for your own private pension to add to that.

Ok I'm good with that. Now you can get your public sector colleagues to agree to the same and we are all happy. Seems like a "fair" solution, as the bearded breather would say.

_Kooli_

Diarmuid wrote: »

Ok I'm good with that. Now you can get your public sector colleagues to agree to the same and we are all happy. Seems like a "fair" solution, as the bearded breather would say.

How childish to assume that someone interested in fairness is public sector.

P. Breathnach

Diarmuid wrote: »

Total tax/GNP take might be low but (income tax or VAT) / GNP is not. Our PRSI and corporation taxes are low

You seem to be keen on raising taxes, so I guess you are talking about PRSI and corporation. Do you think it will impact on the labour market? Will an increase in tax improve or dis-improve our unemployment rate?

You guess wrong.

Diarmuid

P. Breathnach wrote: »

You guess wrong.

Don't leave us hanging!

deise blue

irish_bob wrote: »

a recent figure brought it home for me , in order for a private sector worker to build up a pension which is equal to what a guard recieves on retirement , the private sector worker would have to set aside 48% of thier income each year for said pension :eek:

With the exexption of Bankers.
BOI staff pre 2007 pay a contribution of 2% of salary for a 2/3rds pension on retirement.
AIB staff pre 1995 have a similar pension arrangement.
On attaining the age of 66 they also receive the OAP unlike public sector workers.
Both Banks now operate a hybrid DB/DC scheme which is actuarially calculated to provide a 2/3rds pension on retirememt.
And both Banks have paid rhe 3% increase under the national wage agreement towars 2016.
Now there's gold plated pensions for you!

Diarmuid

_Kooli_ wrote: »

How childish to assume that someone interested in fairness is public sector.

Where did you see me make that particular assumption?

I assumed based on the tone of your posts that you were employed in the public sector. If I'm wrong then my apologies. You can re-read my sentence as "Now you can get the public sector employees to agree to the same and we are all happy." and address that point.

Count Dooku

deise blue wrote: »

With the exexption of Bankers.

Now banks are nearly state bodies, after all those cash injections from taxpayers money

NewDubliner

deise blue wrote: »

With the exexption of Bankers.
Now there's gold plated pensions for you!

So they get 2/3rds final play plus the OAP?:eek:

Did they have to sufffer a pay cut or pension levy this year?

And, they're nearly state-owned?

Mr. Incognito

I say leave their wages alone and just lay off the layabouts that are in practically every governmnet department- I'd be going through health to start

_Kooli_

Diarmuid wrote: »

Where did you see me make that particular assumption?

I assumed based on the tone of your posts that you were employed in the public sector. If I'm wrong then my apologies. You can re-read my sentence as "Now you can get the public sector employees to agree to the same and we are all happy." and address that point.

Diarmuid wrote: »

Ok I'm good with that. Now you can get your public sector colleagues to agree to the same and we are all happy. Seems like a "fair" solution, as the bearded breather would say.

Spot the difference. Its even on the same page fgs. :rolleyes:

deise blue

NewDubliner wrote: »

So they get 2/3rds final play plus the OAP?:eek:

Did they have to sufffer a pay cut or pension levy this year?

And, they're nearly state-owned?

Yes 2/3rds of final salary plus the OAP.
All for 2% of annual salary contributed to a DB scheme , in the case of BOI staff this will apply to all staff who retire up to 2052 and in the case of AIB up to 2041 , staff after that date will retire on the terms of the hybrid DB/DC scheme.
The only differential in their pay in recent times was the 3% increase under the national wage agreement towards 2016.