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29-02-2012, 22:59   #1
n97 mini
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PS: Early retirement (29th Feb) vs Increments

Was talking to a couple of friends in the PS today. One is quite close to retirement (38 years), but isn't retiring as he still has 2+ years worth of increments to get. He says his pension will be higher in 2 years' time than it would be if he retired today (before the pension cut) due to increments.

Later on I heard a nurse on the radio saying basically the same thing. She had reached the top of her scale increments-wise, and said she would have stayed on if she had 2 or more years of increments left.

So it seems to me that the people retiring today are only those who have reached the top of their grade, and probably would have retired in 2 years anyway.

Thoughts?
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29-02-2012, 23:04   #2
woodoo
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Originally Posted by n97 mini View Post
Was talking to a couple of friends in the PS today. One is quite close to retirement (38 years), but isn't retiring as he still has 2+ years worth of increments to get. He says his pension will be higher in 2 years' time than it would be if he retired today (before the pension cut) due to increments.

Later on I heard a nurse on the radio saying basically the same thing. She had reached the top of her scale increments-wise, and said she would have stayed on if she had 2 or more years of increments left.

So it seems to me that the people retiring today are only those who have reached the top of their grade, and probably would have retired in 2 years anyway.

Thoughts?
If they worked there for the last 15, 20, 30, 40 years they will not be getting increments. They must have only joined up in the last 10 years or so.

Old stories like that are no good. Give us some verifiable info or link.
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29-02-2012, 23:08   #3
NinjaTruncs
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If they worked there for the last 15, 20, 30, 40 years they will not be getting increments. They must have only joined up in the last 10 years or so.

Old stories like that are no good. Give us some verifiable info or link.
It could also be people who had been promoted and hadn't yet reached the top of their new payscale.
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29-02-2012, 23:50   #4
n97 mini
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Originally Posted by woodoo View Post
If they worked there for the last 15, 20, 30, 40 years they will not be getting increments. They must have only joined up in the last 10 years or so.

Old stories like that are no good. Give us some verifiable info or link.
As NinjaTruncs said, anyone who has been promoted in recent times is probably not at the top of their scale.

There are people in the PS that are talented and get promoted.
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01-03-2012, 00:08   #5
Paulzx
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You'll probably find that by waiting two years and getting 40/80ths of the post paycut salary its more than 38/80ths of the pre paycut salary.


It's as simple as that.

The amount of people getting increments after 38 years service would be minimal. A late promotion in their career would be the only reason for it
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01-03-2012, 00:15   #6
barneystinson
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Originally Posted by n97 mini View Post
Was talking to a couple of friends in the PS today. One is quite close to retirement (38 years), but isn't retiring as he still has 2+ years worth of increments to get. He says his pension will be higher in 2 years' time than it would be if he retired today (before the pension cut) due to increments.

Later on I heard a nurse on the radio saying basically the same thing. She had reached the top of her scale increments-wise, and said she would have stayed on if she had 2 or more years of increments left.

So it seems to me that the people retiring today are only those who have reached the top of their grade, and probably would have retired in 2 years anyway.

Thoughts?
My first thought is that what you've said there is basic common sense on the part of the individuals concerned, I mean it's hardly "news" is it?! I mean you're unlikely to see people in their 40s or younger, with 20-30 years service, a mortgage to service and kids under their feet, deciding to take their chances on finding work in the private sector the way things are these days.

From what I've seen at first hand, most (if not all) of the people who've gone early have been at the top of their payscale and unlikely to get a promotion in the years remaining to them. But having said that I know of plenty of people who're leaving after 34 / 35 years, and are in their early 50s. But they are people who are mortgage-free empty nesters, and / or have a spouse with a good secure income.
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01-03-2012, 00:21   #7
barneystinson
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So it seems to me that the people retiring today are only those who have reached the top of their grade, and probably would have retired in 2 years anyway.
Oh yeah.

And surely it can only be a good thing that the people most incentivised to leave are those who haven't been promoted since promotion on merit rather than seniority became the norm in the last decade - surely some of the deadwood is in there.
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01-03-2012, 00:23   #8
n97 mini
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My first thought is that what you've said there is basic common sense on the part of the individuals concerned, I mean it's hardly "news" is it?! I mean you're unlikely to see people in their 40s or younger, with 20-30 years service, a mortgage to service and kids under their feet, deciding to take their chances on finding work in the private sector the way things are these days.
You're absolutely right and this is really the crux of it. This scheme was supposed to save the exchequer money, but since the majority of those going were up for retirement soon anyway, it doesn't look as if anything will be saved.

In fact it might be the opposite, as 9,000 or so lump sums could amount a balloon payment we don't have the money for at the moment.

And co-incidentally there's talk of a mini budget this summer....
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01-03-2012, 00:51   #9
barneystinson
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You're absolutely right and this is really the crux of it. This scheme was supposed to save the exchequer money, but since the majority of those going were up for retirement soon anyway, it doesn't look as if anything will be saved.

In fact it might be the opposite, as 9,000 or so lump sums could amount a balloon payment we don't have the money for at the moment.

And co-incidentally there's talk of a mini budget this summer....
How can it not save the exchequer money?

Take the people with 38 years service - as you said they'd be retiring in 2 years time anyway - and getting a lump sum in 2 years time anyway.

Lets look at a rough example, my understanding may be patchy so feel free to correct me:

Say the worker is 58, has 38 years service, and is at the top of their scale on 60k.

If they leave today:
They get a lump sum of 95k and a pension of 31,667 (assuming they took a 10% paycut their pension is based on 38/80 of pre-cut final salary of 66,667?).

So the cost of that person in the next 5 years is:
95k + (31,667 x 5) = 253,333


If they stay on for the next 2 years:
2 years salary, followed by a lump sum of 90k (60k x 1.5), and a pension of 30k (60k x 40/80).

The cost over the next 5 years is:
90k + (2 x 60k) + (3 x 30k) = 300k

So that's 16% less over a 5 year time horizon, unless I missing something?


And bear in mind that there are plenty of people who as I said, are in their early 50s, with about 35 years service; running the same calculation as above, assuming a retirement at 40 years service, it suggests a cost of €233k over 5 years if they go now, compared to €390k if they stay. That's 40% less.

Last edited by barneystinson; 01-03-2012 at 00:53.
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01-03-2012, 10:10   #10
Riskymove
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it doesn't look as if anything will be saved.
we save half or more of the salary until they would have retired.

You are also overlooking a fact that is often not taken onboard...that many people work beyond the date that they could retire on full service. Many people crunching the numbers on savings overlook this.

e.g. there are people with 40 years at 60 who work until they have to retire at 65

there was an example last night of a retiring Headmaster with 44 years service

There are probably a lot of PS who retired by yesterday who could have worked for up to 5 more years or so on full salary.
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01-03-2012, 10:32   #11
antoobrien
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Are there any figures available as to how many
a) have retired
b) will be (temporarily) hired back
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01-03-2012, 10:44   #12
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And bear in mind that there are plenty of people who as I said, are in their early 50s, with about 35 years service; running the same calculation as above, assuming a retirement at 40 years service, it suggests a cost of €233k over 5 years if they go now, compared to €390k if they stay. That's 40% less.

You actually underestimate the saving in this case. Because they are under 60, in order to claim the pension now, they have to take it as actuarilly reduced so while it might be initially based on 35/80, that will be reduced further by an actuarial factor to account for their younger age.
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01-03-2012, 10:55   #13
barneystinson
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You actually underestimate the saving in this case. Because they are under 60, in order to claim the pension now, they have to take it as actuarilly reduced so while it might be initially based on 35/80, that will be reduced further by an actuarial factor to account for their younger age.
I thought as part of the scheme that people between 50 and 60 don't have their pension actuarily adjusted? But anyway, my point was that I was taking a conservative view, and my figures showed a substantial saving, which if you're right would be even greater.
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01-03-2012, 11:00   #14
barneystinson
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Are there any figures available as to how many
a) have retired
b) will be (temporarily) hired back
Tried Google?

a) "Mr Howlin said the latest information across the public service indicated that 7,464 people had applied to retire in the first two months of this year. The sectoral breakdown was: health, 2,567; education, 2,058; Civil Service, 1,236; local authority, 931; defence, 362; Garda, 310." http://www.irishtimes.com/newspaper/...312523098.html

b) Not many, relative to the 7,500 gone.
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01-03-2012, 11:03   #15
Riskymove
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You actually underestimate the saving in this case. Because they are under 60, in order to claim the pension now, they have to take it as actuarilly reduced so while it might be initially based on 35/80, that will be reduced further by an actuarial factor to account for their younger age.
actually it wont, that was the point of this scheme, noone would have taken it otherwise
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