Public Pay Talks - see mod warning post 4293

This whole "pension pot worth X" thing is complete bollocks. There is no pot. It's just a handy way for the media to turn a non-story into a story.

Retirement age should have remained at 60 with full entitlements once the officer had 40 years service. Pre 04 are blessed.

We are down 6.5% over the last deal compared to inflation, you’re right, that should be day one. An increase like that on day one of a pay deal to the best of my knowledge has never happened. We can talk about how right it is but I don’t believe it’s realistic.

My view on spreading out a deal over the course of a deal was always on the unsaid assumption that there was no inequality before. Nobody ever made that point and it’s one I would have conceded.

I may be wrong on this, but that 34,000 includes the state pension which everyone gets. So really the Gardaí get a pension 20,000 extra. Pensions are generally calculated at 4% of your pension pot, so that 20,000 would come from a pot of 500,000, plus the lump sum of 102,000, so a total pot of 602,000. That is the equivalent of a private sector worker contributing 500 a month over 30 years to a pension pot (average growth rate of 7%). Let's assume, they are on an average of 50,000 salary for those 30 years. Employer contributions of 5% would contribute €208 of that leaving €292 for the employee to contribute. After tax relief, that is only €175 a month. So way less than the headline figure and very achievable for every private sector worker

Problem with these figures is they are bogus, and I've a fair suspicion you are fully aware of it.

Take for example the civil servant retiring on a pension of 20,000.

To calculate the value of this, we take the value of the contributory OAP to which all eligible workers (whether private or public) will be entitled. So we get €20000 - €14458 = €5,542 per annum.

Now, we take retirement age of 65 from the average life expectancy in the country (which is 82). This gives us 17 years.

17 years x annual occupational pension of €5,542 = €94,214.

Now, let's assume the the IT quoted lumpsum of €60,000 is correct. We add this to our figure of €94,214, and we get a total value, in real terms, of €154,214.

So, this public servant has a pension, with a real value of €154,214. Yet the Irish Times gives a value of €765,965.

How does the Irish Times overestimate the value of the pension so much?

There are two reasons.

Firstly, it includes, within it's calculations, the OAP to which the retiree would be entitled had they worked in the private sector. So they add an extra €14,500 per annum to the value of a public servant's pension. Yet they don't do this when calculating the value of a private sector worker's pension. Strange that.

Secondly, when calculating the pension value, they opt for the worst value annuity they can find to support their misrepresentations of public sector pensions. Annuities in generally are notoriously bad value, and in practice, a tiny tiny proportion of pensioners will purchase an annuity as they are such awful value. They will instead opt for an Approved Retirement Fund, as they are better value, can be bequeathed and tend to continue gaining returns in retirement. Yet the Irish Times selects the worst value fund possible when trying to put a value on public sector pensions. I hope whoever put those figures together doesn't work in pensions, as they clearly would give the worst advice possible.

It just irks me so much to see the repeated misrepresentations of public sector pensions and these people are never brought to task over these falsehoods. And then you have people like the poster I quoted who will happily lap this nonsense up.

And that's before we even consider the Sibgle Scheme which is worse again.

Edit: corrected typo.

Note that the post 2013 staff also pay a much lower rate of pension levy / ASC - ~3% from €34k as opposed to 10+% for earlier staff (they keep that quiet don't they!). I believe the intention is that it allows them to invest the difference in an AVC to attempt to match the old staff.

Also, some PS (non CS) schemes do pay employer contributions - my employer pays a 20% pension contribution on top of my pension and ASC contributions even though I'm pre 2013 (for a total overall contribution of nearly a third of gross salary). Nope, doesn't make sense to me either....

To be fair you probably don't understand how public service pensions work, while the "experts" you quote deliberately misrepresent the position.

There is a big difference between a collective pension scheme and an individualised pot.

A Garda retiring at 60 with a €102,000 lump sum and €34,000 pension might have the pot valued at €1.8m but if he dies the day before retirement, that pot is worth €0. All of his contributions will pay for someone else's pension. That is one example of how it is impossible to compare the two.

Back to the subject? Perhaps you've misread the thread title. The subject isn't pensions.

Nor am I aware of any pension element to the current talks.