How the government will save one billion per year relatively painlessly...

jimmmy

We all know the EU has directed our govt to cut expenditure by 4 billion this year and another 4 billion next year. Where can savings be made ?

The answer, of course, is in the area of lump-sum "gratuity" payments to retiring employees. Each public servant is entitled to a lump sum tax-free payment of 18 months salary , on retirement at completion of service. This is in addition to the pension of 50% of finishing salary, index linked.
The country cannot afford to give this lump sum tax free payment anymore. During the good times it was often nicknamed by auctioneers as the " cheque for offsprings property ". A person who worked in an auctioneers office confirmed in their experience, on this very board, that most of the people who bought holiday homes abroad were public servants, and specifically teachers. It is simply not needed. Most retiring public servants have their kids reared and educated, and their mortgages cleared. Its not that much more expensive to shop in Lidl south of the border compared to the North or Germany. Its absurd to be giving them tax free lump sums of 90 and 100 grand, and often more. To put things in context, a fine apartment in some parts of Ireland can be bought for well less than 18 months average ( never mind finishing grade ) public service salary.

The savings to the government ; if 10,000 people retire each year with a tax free lump sum of, for the sake of argument, ninety grand, that adds up to a 0.9 billion cost to the government each year. If there is a cap on the pensions the government pays out as well, of say 40 or 50 k a year, then savings of a billion a year can easily be made for the exchequer. To put things in context, average industrial wage in the worlds superpower economy, and a country where Irish people have traditionally gone to in search of well paid employment, the USA, is 41,000 dollars per year, approx 27,500 euro per year. If American workers can survive on 27,500 per year and raise their families, surely retired public servants should be able to live on 40,000 or 50,000 a year, without a lump sum payment ?

In an ideal world, such cuts would not be desirable of course, but the country cannot continue borrowing as much as it does, and lower paid public servants starting off often have kids, mortgages etc and are much less able to take cuts than todays retiring public servants. Other peoples pensions have been reduced ; why have retired public servants taken no pain at all yet ? Why should government expenditure not go somewhere towards what other governments spends on their pensions. The standard UK old age pension is less than the euivalent of a hundred euro a week / 5k a year....and they are one of the G7 countries and the second biggest contributer to the EC. Few of them buy holiday homes with their pensions;)

wandatowell

jimmmy wrote: »

Each public servant is entitled to a lump sum tax-free payment of 18 months salary , on retirement at completion of service.

Thats just WRONG, Its senior public servants who get the 18 month tax free gratutity. Good try though.

ei.sdraob

so on top of a guaranteed job, cushy pension

they also get a golden parachute bonus?

jebus christ the PS have more in common with bankers than the average worker

ei.sdraob

wandatowell wrote: »

Thats just WRONG, Its senior public servants who get the 18 month tax free gratutity. Good try though.

why do they get it in first place?

eoinbn

?
AFAIK everyone can take out a lump sum tax free, so I don't see why you are targetting public sector workers on this one. It's also something I wouldn't agree with in general- it's part of their pension fund, so why tax it? What's next, taxing all pension payments?

jimmmy

eoinbn wrote: »

?
AFAIK everyone can take out a lump sum tax free, so I don't see why you are targetting public sector workers on this one.

Because government / public sector pensions come from the government, and the government cannot afford it.
Few private sector workers have pensions. Those private sector workers who do have pensions have largely seen the value to them decimated. If the employer can afford to give big pensions to the retiree employee, good luck to them, as long as its not coming out of my pocket.

Riskymove

jimmmy wrote: »

public servant is entitled to a lump sum tax-free payment of 18 months salary , on retirement at completion of service. This is in addition to the pension of 50% of finishing salary, index linked.

If they have 40 years service..otherwise its pro-rata

During the good times it was often nicknamed by auctioneers as the " cheque for offsprings property ".

No it wasn't...it was referred to as that last week...by you

To put things in context, a fine apartment in some parts of Ireland can be bought for well less than 18 months average ( never mind finishing grade ) public service salary.

apartments for €75,000 ? I hadn't realised that the market had gone so low

Other peoples pensions have been reduced ; why have retired public servants taken no pain at all yet ?

because decisions need to be taken...but not on the basis of revenge or spite?


My view...

this form of retirement pension is common to defined benefit pensions, both in public service and private sector

it has been changing over time and I have no doubt it will change in the near future for new entrants

however....I stand by my view about changing pension entitlements for current public servants...that it would be very difficult to just change with a stroke of a pen the system when people have been told that this is what they are getting and they are not allowed fund their own pension scheme

jebus christ the PS have more in common with bankers than the average worker

I understand that the banks defined contribution pension is even more generous

jimmmy

wandatowell wrote: »

Thats just WRONG, Its senior public servants who get the 18 month tax free gratutity.

You think only "senior" public servants can "can take out a lump sum tax free", as eoinbn says ?

Do not forget the reason many Gardai , teachers, hospital workers etc are retiring early this year is because they fear changes to their pension arrangements in the forthcoming budget.;)

jimmmy

Riskymove wrote: »

If they have 40 years service..otherwise its pro-rata

Its less than 40 years for certain sections of the public service...eg 30 years for Gardai, 15 years for judges etc. And yes it is pro-rato : nobody suggests 22 year olds could retire on full pension after only a few years work ( yawn ).

Riskymove wrote: »

No it wasn't...it was referred to as that last week...by you

And also by some auctioneers.

Riskymove wrote: »

apartments for €75,000 ? I hadn't realised that the market had gone so low

And even less in some parts of the country eg on this board last week or the week before, there was a link to a fine apartment of 1000 sq.feet for sale in Moville, Co. Donegal.


I am sure if / when the IMF moves in it will cut public service pensions back to realistic, sustainable levels even less than that I am proposing...

Riskymove

jimmmy wrote: »

And yes it is pro-rato : nobody suggests 22 year olds could retire on full pension after only a few years work ( yawn ).

i didn't suggest that you did but dont let that get in the way of a good yawn

my point was more about that people can retire at 60 or 65 or whatever without 40 years service and hence wouldn't get full benefits

eg 30 years for Gardai, 15 years for judges etc.

Guards are a small proportion of pensioners and its related to the requirements of the job (or least the traditional view of that, which can be debated)

judges are appointed relatively late on in life and can hardly be expected to serve for 40 years

And also by some auctioneers.

one link or source..please.....it never happened...you know it




My solution to this and the pension is to have a reasonable cap limit

I dont think too many public servants will debate that someone getting €200k or €300k lump sums or pensions over €100,000 is crazy

OMD

Riskymove wrote: »

my point was more about that people can retire at 60 or 65 or whatever without 40 years service and hence wouldn't get full benefits

Yes they can get a full pension if they have done less than 40 years. They simply "buy" extra years. This is where they pay a very small amount of money to get a larger pension. This practice needs to be abolished immediately.

jimmmy

Riskymove wrote: »

i didn't suggest that you did but dont let that get in the way of a good yawn

my point was more about that people can retire at 60 or 65 or whatever without 40 years service and hence wouldn't get full benefits

Thats common sense ; if someone joins the public service at 50 + retires at say 60 they only get pro-rato pension ie only a proportion of the amount someone who has completed their years of service ( be it 15, 30 or 40 ) would get.



"The country cannot afford to give this lump sum tax free payment anymore. During the good times it was often nicknamed by auctioneers as the " cheque for offsprings property ".

Riskymove wrote: »

one link or source..please.....it never happened...you know it

You say "it never happened" ? How can you say with authority what every auctioneer has said or not said ? As I also said, a person who worked in an auctioneers office confirmed in their experience, on this very board, that most of the people who bought holiday homes abroad were public servants, and specifically teachers.

To get back to the point, do you not agree that this billion can be raised relatively painlessly, as the group of people concerned largely have their kids reared, houses they bought 30 or 40 years ago paid off , etc ?

Riskymove

OMD wrote: »

Yes they can get a full pension if they have done less than 40 years. They simply "buy" extra years. This is where they pay a very small amount of money to get a larger pension. This practice needs to be abolished immediately.

its not a small amount of money to buy additional service, its actually quite expensive....it usually takes the form of funding a long-term AVC scheme in a pension scheme

97i9y3941

one thing makes me bloody sick is,alot this hypocrites in the dáil are teachers that are still on "leave" and get a bloody pension from that too,so how come no one has attacked them on that,urgeing them they could save the country money to giveing up the pensions trevor sargent did,and i dont want to hear of this because they are entitled to rubbish,if that was the case,a person who claimed welfare fraudulently *like those who are legit way by doing sub work and claiming pensions*,should say im entitled to it too.

OMD

Riskymove wrote: »

its not a small amount of money to buy additional service, its actually quite expensive....it usually takes the form of funding a long-term AVC scheme in a pension scheme

Relative to the money they get back in pension and lump sum it is a small amount. An AVC scheme is slightly different and usually much worse value for money. Indeed an AVC is like a private pension and compared to a public service pension you are right it is very expensive.

OMD

Fred83 wrote: »

one thing makes me bloody sick is,alot this hypocrites in the dáil are teachers that are still on "leave" and get a bloody pension from that too,so how come no one has attacked them on that,urgeing them they could save the country money to giveing up the pensions trevor sargent did,and i dont want to hear of this because they are entitled to rubbish,if that was the case,a person who claimed welfare fraudulently *like those who are legit way by doing sub work and claiming pensions*,should say im entitled to it too.

It is worse than that. Up to the last budget teachers who became TDs were on leave as you say. They were replaced obviously by a temporary teacher. If that temporary teacher was entitled to a lower rate of pay (as they usually were) the TD got the difference. Some did not claim it many (eg Frank Fahey) did. Thankfully this was abolished in last year.

Riskymove

Fred83 wrote: »

one thing makes me bloody sick is,alot this hypocrites in the dáil are teachers that are still on "leave" and get a bloody pension from that too,

I dont agree with that 'on leave' thing

however teachers obviously retain service actually given, e.g. if someone was a teacher for 10 years and then leave, they keep 10 years service and will get a pension based on that (obviously significantly reduced benefits)

(though given the nature of TDs pensions I dont think they need to worry about that)

wandatowell

jimmmy wrote: »

You think only "senior" public servants can "can take out a lump sum tax free", as eoinbn says ?

The OP said each public servant is entitled to a lump sum tax-free payment of 18 months salary which is 100% untrue.

20goto10

It's just plain wrong to go messing with a persons pension. I am in the private sector and do not get a pension but I do have a prsa. If someone was to come along at the end of my career and tell me there's a change of conditions, we're going to hold back x amount of your pension because things are pretty tough and our profits have taken a battering. They'd more than likely get a violent reaction out of me.

Btw, are you sure the lump some is in addition to their pension? I am entitled to a lump sum on my prsa but it cones out of my pension. I assumed all pensions were like this?

wandatowell

jimmmy wrote: »

Do not forget the reason many Gardai , teachers, hospital workers etc are retiring early this year is because they fear changes to their pension arrangements in the forthcoming budget.;)

Of course they are retiring!!!! Why would they stay only to recieve less gratutity??? Doesn't make sence to me. And since there no promotions how is the Government planning on replacing these people???

97i9y3941

the guards and the teachers will be back working on their own time when retired,its well known that they do be doing security work and sub work,some even do taxi's

OMD

20goto10 wrote: »

It's just plain wrong to go messing with a persons pension. I am in the private sector and do not get a pension but I do have a prsa. If someone was to come along at the end of my career and tell me there's a change of conditions, we're going to hold back x amount of your pension because things are pretty tough and our profits have taken a battering. They'd more than likely get a violent reaction out of me.

Btw, are you sure the lump some is in addition to their pension? I am entitled to a lump sum on my prsa but it cones out of my pension. I assumed all pensions were like this?

It is a fair point about not changing terms of pension arrangements already in force. The lump sum could be taxed however.

For private pensions the lump sum comes out of pension fund. As it is tax free people take out as much as they can. The remainder of the pension can be taxed subject to income thresholds.

In public pensions the lump sum is defined. Usually 3/80s of final salary per year reckonable service. So someone with 40 years will get a lump sum tax free of 1.5 years salary. Then they will get a yearly pension of 40/80s (ie half) of their final salary.

S.L.F

Fred83 wrote: »

the guards and the teachers will be back working on their own time when retired,its well known that they do be doing security work and sub work,some even do taxi's

And so do lots of people when they retire.

Personally I applaud them for being productive after they retire.

jimmmy

S.L.F wrote: »

And so do lots of people when they retire.

Personally I applaud them for being productive after they retire.

The point is, can the state afford to give them such absurd amounds of money as well, far more than they ever dreamt of in their wildest dreams when they started working all those years ago. And certainly much more than they need. Its a billion extra the state should not be borrowing to give to pamper these people. 30 to 50 k should be the max state pension + leave it at that. No lump sum "gratuities".

97i9y3941

well,i feel sorry for the taxi drivers and the security people who make an honest living,been oust over by some of these folks who retire with their pension,i mean some of these people dont have a pension after all their years of service..

MaceFace

Hey Jimmy, here is another way the government can get another billion painlessly - just raid peoples bank accounts.
Its as hairbrained an idea as yours.

How exactly would it be painless? There are many people who are expecting this over the next few years and it is completly wrong to just shaft them.

BTW: I am not defending this payment - I think it is crazy, but I also think just scraping it in one foul swoop is just as crazy.

irish_bob

Fred83 wrote: »

the guards and the teachers will be back working on their own time when retired,its well known that they do be doing security work and sub work,some even do taxi's

the local seargeant where i live , retired in 2005 , a month later he was working as a labourer for a local building contractor , he lost five stone within three months , as many pointed out , he only began working at 52

jimmmy

MaceFace wrote: »

I am not defending this payment - I think it is crazy, but I also think just scraping it in one foul swoop is just as crazy.

People would still have up to € 30,000 to € 50,000 per annum to have as their public service pension : this should be enough for them to live on. Its a lot more than most people in the private sector get to live on, especially as many shares collapsed last year " in one foul swoop " for those lucky enough to have shares in the first place, and considering how property value have gone in to negative equity in for many people who were expecting to rely on a loittle bit of rent as their income. Then the govt , after charging up to 9% stamp duty in the first place, now introduces a property tax "in one foul swoop" on anyone who has an apartment as a pension...and the landlord is already paying income tax on the rent as it is.
"In one foul swoop" someday either our minister or else the IMF will reduce or eliminate this tax free 18 months "gratuity" that retiring public servants get. The sooner the better for the rest of us. Save the billion a year.

S.L.F

jimmmy wrote: »

The point is, can the state afford to give them such absurd amounds of money as well, far more than they ever dreamt of in their wildest dreams when they started working all those years ago. And certainly much more than they need. Its a billion extra the state should not be borrowing to give to pamper these people. 30 to 50 k should be the max state pension + leave it at that. No lump sum "gratuities".

First I was replying to another poster.

Second the agreement was made some years ago to do this. The only reason this is a problem now is because of the big pay offs which I should point out I reall don't agree with any more than you do.

Most public and civil servants do not get the super duper pensions it's usually only the big boys who get the really fantastic pensions so basically I'm saying I agree with you about putting a cap on the amount to be paid every year to between 30 and 50 k.

However the lump sum should stay but have a cap on that too.

S.L.F

Fred83 wrote: »

well,i feel sorry for the taxi drivers and the security people who make an honest living,been oust over by some of these folks who retire with their pension,i mean some of these people dont have a pension after all their years of service..

What do you mean they should be discriminated against?

No dogs

No Irish

No public servants need apply

Absurdum

jimmmy wrote: »

far more than they ever dreamt of in their wildest dreams when they started working all those years ago

Actually it was in their contracts all those years ago.