Should the government stop interfering in the pensions market ?

jimmmy

Its costing the citizens of the country tens of billions to
(A) pay high pensions to its own employees
(B) give tax relief to everyone who takes out a private organised pension.

Given the current budget defecit of 25,000,000,000.00 euro this year alone, this position is unsustainable. Employees should have to pay the full cost of their pensions. No tax relief or subsidies from now on. If they want one, they pay the economic cost of it, private or public. This will level the playing field. People can decide to put their savings in a post office or bank, in stocks or shares, or property, or unit linked funds...whatever. People would still be entitled to normal old age pension.

The_Conductor

While you're at it- why is the PRSI contributory old age pension only 3 Euro more than the non-contributory means tested old age pension? Surely after working your arse off for 40 years you deserve recognition of it?

3DataModem

jimmmy wrote: »

Employees should have to pay the full cost of their pensions. No tax relief or subsidies from now on.

OK - as long as they don't have to pay CGT or income tax on the benefits at the other end.

jimmmy

3DataModem wrote: »

OK - as long as they don't have to pay CGT or income tax on the benefits at the other end.

Everyone who looks after their own pension ( who has invested in a buy to let property for example ) at the moment has to pay CGT and income tax whenever due....as well as stamp duty buying the property for example. Why should govt employees get subsidised pensions, many politicians huge pensuon, and tax breaks given to those who buy private pensions from pension providers ?

3DataModem

jimmmy wrote: »

Everyone who looks after their own pension ( who has invested in a buy to let property for example ) at the moment has to pay CGT and income tax whenever due....

Not true. If you set up a small self-administered scheme and hold the property as an asset of the scheme you don't have to pay income tax or CGT either.

If you have a property that you bought for a pension you should take some advice and do the same... save you a lot of money. If you're not going to do that then it's nobody's fault but yours.

jimmmy wrote: »

Why should govt employees get subsidised pensions, many politicians huge pensuon,

It's part of their benefits package. Same as the great pension in the banks, or the free mobile phone, or cheap gym membership. It's part of their deal.

If you think politicians get paid too much then vote for ones who'll agree to reduce it (e.g. socialist party etc).

jimmmy wrote: »

and tax breaks given to those who buy private pensions from pension providers ?

As I said above, you don't have to buy a pension from a pension provider to get huge tax breaks. You can just set up a scheme in trust and all the assets attract the lovely tax breaks.

Why doesn't everyone do this? Answer:

you can't touch the money till you retire.

jimmmy

The fact is most people who do own investment property do pay income tax and c.g.t. if they sell it....and they did pay income tax ( on the deposit ) and stamp duty when they bought it. ( plus vat on professional fees etc ). Accountants who try to give varying advice on how to pay these taxes / how to manage it all will charge vat on that not inexpensive service. Many of these landlords are now in negative equity and cannot sell their empty properties. Do govt employees ever face such problems with their pensions ?

Yes, you can try to justify the huge pensions the government give themselves and their employees as "part of their benefits package"...but my point is the country cannot afford this massive "benefits package" to be given to one section of the community any more.

NewDubliner

jimmmy wrote: »

Employees should have to pay the full cost of their pensions. No tax relief or subsidies from now on.

The contributory social welfare pension is subsidised out of current expenditure as the cost bears no relation to the PRSI contributions originally paid in.

In a way, public pension schemes work like insurance plans. Those who don't survive to collect are partly subsidising those who do.

But let's go with your idea. Private pension plans for all. Where would people invest the money? Who would be responsible for guaranteeing it is managed in a proper manner and that excessive fees are not extracted? How to avoid your investments being asset-stripped? How to avoid the government raiding the funds in a recession?

It might be a better idea to have lots of children in the hope that some of them, at least,might support you in your old age. (If you're nice to them....).

jimmmy

NewDubliner wrote: »

In a way, public pension schemes work like insurance plans. Those who don't survive to collect are partly subsidising those who do.

Public sector pensions are not anything to do with those who don't survive to collect are partly subsidising those who do. The ordinary citizen of the country - the non public servant - is paying the taxes that pay the public service. Without those taxes, the government would have no income. Ireland inc earns its money and pays some of it in tax to the government to run the country, provide the infrastructure etc.

NewDubliner

jimmmy wrote: »

Public sector pensions are not anything to do with those who don't survive to collect are partly subsidising those who do. The ordinary citizen of the country - the non public servant - is paying the taxes that pay the public service. Without those taxes, the government would have no income. Ireland inc earns its money and pays some of it in tax to the government to run the country, provide the infrastructure etc.

You're correct, although you omit that private sector salaries are paid for by others too. For example, the people who work in the supermarket where you buy your groceries. Without mark-up in supermarkets, there would be no salaries.

But, I'm responding, with due respect, to your proposal that everyone should rely on a private pension plan, pointing out that the merits of social plans and highlighting the risk of trusting to pure capitalism to provide for your retirement.

The_Conductor

jimmmy wrote: »

Public sector pensions are not anything to do with those who don't survive to collect are partly subsidising those who do. The ordinary citizen of the country - the non public servant - is paying the taxes that pay the public service. Without those taxes, the government would have no income. Ireland inc earns its money and pays some of it in tax to the government to run the country, provide the infrastructure etc.

The public sector also pay taxes, and provide services that in many cases the private sector is unable or unwilling to do, such as Gardai, teachers etc- so its not fair to suggest that the private sector is the only wealth generating sector- and that the taxes paid by the private sector are the sole funds running the government........

The average public servant along with paying the selfsame PRSI as all Class A PRSI contributors, also pays between 8 and 10% of gross pay, along with the public pension levy, into a number of different superannuation schemes.

Without the taxes the private sector pay- the government would not function. Without the services provided by the public sector- the private sector would not function. Its very much a symbiotic relationship.

S.

BroomBurner

Why would anyone want to get rid of the tax incentive for having a private pension? Talk about shooting oneself in the foot.

The_Conductor

BroomBurner wrote: »

Why would anyone want to get rid of the tax incentive for having a private pension? Talk about shooting oneself in the foot.

Its irrelevant as a incentive longterm- as you have to pay tax when exiting. Its a handy way of saving a lumpsum- but the taxman gets his pound of flesh in the end.....

NewDubliner

smccarrick wrote: »

Its irrelevant as a incentive longterm- as you have to pay tax when exiting. Its a handy way of saving a lumpsum- but the taxman gets his pound of flesh in the end.....

Don't forget the fund-managers.

Having just seen peoples pension funds wiped out, it's a brave person (the OP) who suggests the abolition of the Social Welfare pension and that everyone should depend on private pension plans.

BroomBurner

I think perhaps the OP may have bitten off more than he could chew with this one.

In fact, looking at his posts, his real intent may have been to start a new "I hate the public sector and their lovely pension" row.

The_Conductor

NewDubliner wrote: »

Don't forget the fund-managers.

Having just seen peoples pension funds wiped out, it's a brave person (the OP) who suggests the abolition of the Social Welfare pension and that everyone should depend on private pension plans.

Tell me about it- my parents were relying on dividends from BOI shares, which have lost 99% of their capital value, and are unlikely to pay a red cent for several years to, thats if it actually manages to survive as a going concern......

The_Conductor

BroomBurner wrote: »

I think perhaps the OP may have bitten off more than he could chew with this one.

In fact, looking at his posts, his real intent may have been to start a new "I hate the public sector and their lovely pension" row.

I think the penny is beginning to drop that the grass may not be greener on the other side....... The big problem the public sector have is they never dispute the bizarre and often wholly inaccurate reports in the media- which the public at large then accept as gospel truth. I am jealous of any public sector employee employed prior to 1995- their rights are wholly different to those of anyone employed anywhere in the public sector since. This distinction is rarely alluded to in the media.

jimmmy

BroomBurner wrote: »

Why would anyone want to get rid of the tax incentive for having a private pension? Talk about shooting oneself in the foot.

It may surprise you that others think of the welfare of the country first. The relief costs the country billions.

jimmmy

BroomBurner wrote: »

I think perhaps the OP may have bitten off more than he could chew with this one.

Do you think the renumeration system / pension system in the country is as fair as can be ? Lucky you.

jimmmy

NewDubliner wrote: »

Don't forget the fund-managers.

Having just seen peoples pension funds wiped out, it's a brave person (the OP) who suggests the abolition of the Social Welfare pension and that everyone should depend on private pension plans.

Read the original post again. You misread it
"No tax relief or subsidies from now on. If they want one, they pay the economic cost of it, private or public. This will level the playing field. People can decide to put their savings in a post office or bank, in stocks or shares, or property, or unit linked funds...whatever. People would still be entitled to normal old age pension.

NewDubliner

jimmmy wrote: »

Read the original post again. You misread it
"No tax relief or subsidies from now on. If they want one, they pay the economic cost of it, private or public. This will level the playing field. People can decide to put their savings in a post office or bank, in stocks or shares, or property, or unit linked funds...whatever.

Why would anyone want to invest in banks, stocks or shares?

jimmmy wrote: »

People would still be entitled to normal old age pension.

Why? The normal old age pension that you refer to is subsidised out of current expenditure and its retention is inconsistent with your proposal:

jimmmy wrote: »

Employees should have to pay the full cost of their pensions. No tax relief or subsidies from now on. If they want one, they pay the economic cost of it, private or public.

jimmmy

NewDubliner wrote: »

Why would anyone want to invest in banks, stocks or shares?

People could also invest in gold, property, art or fine wine if they wanted. If and when there is a rebound you may regret you did not invest in different sectors of the market. Do you think the national pensions board put all its eggs in one basket ?

NewDubliner wrote: »

Why? The normal old age pension that you refer to is subsidised out of current expenditure :

out of current taxes

NewDubliner wrote: »

and its retention is inconsistent with your proposal:

Its not ; if it applies to all. There must be a safety net ( means tested or not - that is a different argument ) to avoid some people starving.
"No tax relief or subsidies from now on. If they want one, they pay the economic cost of it, private or public. This will level the playing field. People can decide to put their savings in a post office or bank, in stocks or shares, or property, or unit linked funds...whatever.People would still be entitled to normal old age pension. "

NewDubliner

jimmmy wrote: »

People could also invest in gold, property, art or fine wine if they wanted. If and when there is a rebound you may regret you did not invest in different sectors of the market. Do you think the national pensions board put all its eggs in one basket ?

Somebody just stole all the eggs in case you have not noticed.

Explain the ethical difference between paying people pensions out of taxation and paying people pensions out investments. In either case, somebody else pays. It's always somebody else's money.

jimmmy

NewDubliner wrote: »

Somebody just stole all the eggs in case you have not noticed..

And who is most affected by the eggs being stolen ...private sector or public sector ? I know some people almost suicidal having worked all their lives damn hard ( harder than the 6 hours 27 minutes a day the c.s. works net ), little holidays , etc and who are coming up to retirement age and who now have little or nothing left. They are not public servants.
And who was appointed to oversee things ? - were they not people paid by the government - regulator and politicians + central bank ?

NewDubliner wrote: »

Explain the ethical difference between paying people pensions out of taxation and paying people pensions out investments In either case, somebody else pays. It's always somebody else's money.

If a person has invested in the investments themselves ...and they repaid or get a return at a future date...it is their money. At the moment that is taxed eg if someone buys a "buy to let " property ( rightly or wrongly - that is a different argument ). Fair enough. Why should some of that tax go towards subsidising those who get huge public service pensions, or those who took out a company pension ?

NewDubliner

Let's set aside your attacks on the PS and deal with your proposal.

jimmmy wrote: »

I know some people almost suicidal having worked all their lives damn hard and who are coming up to retirement age and who now have little or nothing left.

Why would anyone want to invest in the same way they did?

jimmmy wrote: »

If a person has invested in the investments themselves ...and they repaid or get a return at a future date...it is their money.

The source of the investment is money which they got by charging extra for their products and services and the 'return'....how is that generated exactly? Who pays for that?

jimmmy

NewDubliner wrote: »

Let's set aside your attacks on the PS and deal with your proposal.
Why would anyone want to invest in the same way they did?

Who is "they" that you refer to ? Those foolish people who had no option of a public sector pension, and who foolishly slaved long hours to put money away in banks, stocks, shares, property, art, stamp collections or
the post office savings....just to pay for their rainy day in old age or to pay for their kids education .... you ask "Why would anyone want to invest in the same way they did? " You work that one out for yourself.
You are quite right of course. Everyone should aspire to a big public sector pension ( not to mention the sick pay benefits etc along the way ).

NewDubliner wrote: »

The source of the investment is money which they got by charging extra for their products and services and the 'return'....The source of the investment is money which they got by charging extra

What do you mean " The source of the investment is money which they got by charging extra "....if someone flips burgers and makes a living that way, or works in an American multinational assembling widgets, or milks cows 7 days a week, or works in a shop for the minimum wage or not much more....they earned that money fair + square, so what is your question ?

NewDubliner

jimmmy wrote: »

Those foolish people.....

You proposed that everyone should invest in the stock market etc, even though you admit that many people have lost a lot of money as a result. Why would you want more people to lose money in this way? If you're going to propose an alternative way of funding pensions, propose one that works.

jimmmy wrote: »

What do you mean " The source of the investment is money which they got by charging extra "....if someone flips burgers and makes a living that way, or works in an American multinational assembling widgets, or milks cows 7 days a week, or works in a shop for the minimum wage or not much more....they earned that money fair + square, so what is your question ?

They earned the money invested in their pensions by charging over and above their basic living costs. The employer contributed too by inflating prices. The customers are paying their pensions. Why should you have a problem with paying public sector pensions, when you're quite happy to pay your bank manager's pension and that of the people who serve your junk food?

Now explain this bit you mentioned earlier about 'return on investment', you've been very evasive about how this works and who picks up the tab for it.

jimmmy

NewDubliner wrote: »

You proposed that everyone should invest in the stock market etc, even though you admit that many people have lost a lot of money as a result..

People can save in whatever they want to : be it the stock market, post office bonds, bank deposits etc. There are relative risk free options at the moment too you know.

NewDubliner wrote: »

Why would you want more people to lose money in this way? .

I do not want people to lose money in any way.

NewDubliner wrote: »

If you're going to propose an alternative way of funding pensions, propose one that works.

Diversified investment has always worked over long time periods.

NewDubliner wrote: »

Why should you have a problem with paying public sector pensions, when you're quite happy to pay your bank manager's pension and that of the people who serve your junk food?

Public sector pensions cost many many billions each year to fund. I can shop around for my bank to do business with, or indeed not use a bank at all. I doublt the average waiter who serves food has a pension, or certainly not one as generous as a public sector pension. What a food waiter or bank teller does with their own earnings is their own business. If they overcharge me I can always go elsewhere.

Now New Dubliner, you have still not made any attempt to answer the questions from posts back:
And who is most affected by the eggs ( you mentioned ) being stolen ...private sector or public sector ? And who was appointed to oversee things ? -

BroomBurner

Jimmmy, stop using veiled attempts at getting a discussion going just to bring it back around to how much you hate the public sector.

And get your facts right about the public sector also.

jimmmy

BroomBurner wrote: »

Jimmmy, stop using veiled attempts at getting a discussion going just to bring it back around to how much you hate the public sector..

The public sector is a very important part of our political infrastructure. The country cound not function without a public sector. We all need ( at some time or another ) schools, hospitals, police / Gardai, roads etc. Some of my best friends work in the public sector.

BroomBurner wrote: »

And get your facts right about the public sector also.

You clarify what facts I got wrong so : I suggest you go for the ball, not the player.

The_Conductor

The public sector is not in fact part of our political infrastructure- it is nominally wholly independent of the political infrastructure (much to the chagrin of politicians).

The original question posed- is 'Should the government stop interfering in the pensions market'. The obvious answer is no- were the government to stop all interference in the pensions market people would stop planning for their old age and simply rely on the social welfare infrastructure to fund their old age.

PRSI contributions are amalgamated into a central kitty for all pension disbursements and employment insurance payments. This central kitty is not funded- its run on a 'pay-as-you-go' basis. Its been in a deficit situation for the last 18 months, and its acknowledged it will be bankrupted by the end of 2009. Thus- contributory and non-contributory pensions, along with dole payments will have to be met from day-to-day borrowing going forwards. The intention of the fund administered by the NTMA was to act as a means of drawing an annuity for covering future payments (I don't think the intention was to draw on this fund before 2020).

The contributory OAP and the non-contributory OAP are both government measured and government interference in the market. They act as a distortion by removing the necessity for an employee to provide for their future.

Public sector employees pay their Class A PRSI contributions, the same as every other PAYE employee, along with making seperate superannuation contributions of ~8% and now a pensions levy too. Lower paid public sector employees do not get anything whatsoever in lieu of their contributions- the first 22,880 of salary is reckonable solely for a PRSI related contributory OAP- which is automatically deducted from a public servants pension (irrespective of whether they are entitled to claim it or not- under the 2002 Act). This is the principle argument that the CPSU- who represent the lower grades in the civil service, have against the pension levy. If you talk to higher paid people in the public sector- while they disagree with the levy- for the most part they would agree with a pay cut in recognition of the straightened times we are in. This was decided against- as the government didn't have the balls to do it. It would impact on existing public sector pensioners whose pensions are linked to current public sector salaries. They got benchmarking (on their pensions) on the way up- surely its only fair that they get a reciprochal reduction on the way down again?

Moving away from the public sector and its pensions- certainly people can save- wheresoever they choose, but the fact of the matter is- people don't (save). They borrow and spend money they don't have. Private sector debt is already well in excess of 200% of GDP, and rising. It is a sad reality that we have to clear our debts before we can save- and at current rates of repayment- private sector debt will never ever be repaid. When you factor deflation into the equation- our personal debts increase by 2-4% outside of any interest or other payments, on an annualized basis.

People rely on their contributory pension for their retirement, in the main. This is funded on a pay-as-you-go basis. The fund is bankrupt. Those are hard facts. The government has to borrow to pay its weekly payments to pensioners (and social welfare payments to recipients etc). Pull this net from under their feet and a vast tract of the population will be in penury.

S.

jimmmy

smccarrick wrote: »

The public sector is not in fact part of our political infrastructure- it is nominally wholly independent of the political infrastructure

Apologies if I did not choose my words carefully - what I mean is it is part of our infrastructure , which everything depends on. Society as we know it could not function without schools, hospitals, roads, Gardai etc.

smccarrick wrote: »

The original question posed- is 'Should the government stop interfering in the pensions market'. The obvious answer is no- were the government to stop all interference in the pensions market people would stop planning for their old age and simply rely on the social welfare infrastructure to fund their old age.

So you think nobody would set aside a few bob for a rainy day / the future, save money, invest in private pensions, accumulate savings, invest in property (there would be no rental market ), buy a few shares etc ? I thought us Irish were quite fond of saving...witness our hunger for eircom shares / property etc

smccarrick wrote: »

Moving away from the public sector and its pensions- certainly people can save- wheresoever they choose, but the fact of the matter is- people don't (save).

Oh yes they ( many people ) do. Even those who do not can still ( rightly ) get the old age pension.

The_Conductor

jimmmy wrote: »

Apologies if I did not choose my words carefully - what I mean is it is part of our infrastructure , which everything depends on. Society as we know it could not function without schools, hospitals, roads, Gardai etc.

Certainly.
So- are we in agreement? - The public sector provides public good services that society in general relies upon, and from experiments elsewhere, are unlikely to be universally provided by any other method or means.

jimmmy wrote: »

So you think nobody would set aside a few bob for a rainy day / the future, save money, invest in private pensions, accumulate savings, invest in property (there would be no rental market ), buy a few shares etc ? I thought us Irish were quite fond of saving...witness our hunger for eircom shares / property etc

Not 'nobody'. Lots of people do. Society in general however does not. Historically the Irish public was in fact among the top 5 savers per capita, in the world. Unfortunately we took very bad example from our US cousins and went on a 15 year credit binge. At least part of the government's current predicament is the problems with raising tax- given how indebted the public at large are. Its a similar problem with saving- its very hard to put away a few quid for a rainy day- when you are heavily burdened with debt taken on in better times- and have just had your net take home pay significantly reduced (as is the case in both the public and private sectors).

I really don't think that people's recent memories of property or Eircom shares are going to inspire confidence in the average saver- by any means- in all probability the opposite. Why save- (in shares or property), when you're money is going to vanish in a puff of smoke at some random point in the future. Do you know anyone who made money from Eircom shares (other than members of the ESOP)? I certainly don't.

jimmmy wrote: »

Oh yes they ( many people ) do. Even those who do not can still ( rightly ) get the old age pension.

Those who do- can claim the contributory old age pension- if they have paid sufficient stamps. Those who have not paid sufficient stamps will have their savings counted against them when determining eligibility for the means tested non-contributory OAP.

jimmmy

smccarrick wrote: »

Why save- (in shares or property), when you're money is going to vanish in a puff of smoke at some random point in the future. Do you know anyone who made money from Eircom shares (other than members of the ESOP)? I certainly don't.

So you think nobody should save or put aside a few cents for their raindays / old age ? We cannot all be public servants / rely on the state. That has been tried before , and failed miserably.

NewDubliner

jimmmy wrote: »

Even those who do not can still ( rightly ) get the old age pension.

Not according to your proposal that people should fund their own pensions 100%. And not, if the National Pension Reserve Fund has been raided by the government to compensate banks that made bad lending decisions.

The_Conductor

jimmmy wrote: »

So you think nobody should save or put aside a few cents for their raindays / old age ? We cannot all be public servants / rely on the state. That has been tried before , and failed miserably.

What are you talking about
Over 80% of retirees rely on the state for their old age- most notably via the contributory old age pension.

I never said, or implied, that people should not save or put money away for a rainy day or old age. I merely pointed out that at present- its simply not feasible for a vast majority of the productive population to do so, in a manner that they might have done in bygone years. Even in the 1980s when the country went bankrupt- private sector debt was below 30% of our then GDP- unlike the 208% it currently is, of our current GDP. People do not have the capacity to save as we did previously- because we are sinking in private debt (totally ignoring public debt).

Certainly we cannot all rely on the state to take charge of us in our old age- however its very much inaccurate to imagine that the public sector are but a small percentage of the overall total relying on the public purse in their old age.

Keep in mind- the PRSI fund is empty- so all payments to pensioners- contibutory or otherwies- are from government borrowings.........

With respect of your comment about government provision of pensions 'failing miserably'- would you care to clarify what you mean? Pensions have been paid by the exchequer for well over a hundred years- since before independence.......

jimmmy

smccarrick wrote: »

Certainly we cannot all rely on the state to take charge of us in our old age

People know that already. Only the lucky few get big pensions. Politicians, government employees, public servants. These pensions are paid by everyones taxes / borrowing. The ordinary person relies on the old age pension. If they want a little bit of luxury in their old age, or they want to save for kids third level fees, or for an emergency, they save. As I said, they can save anywhere they want. You wrote earlier "Why save- (in shares or property), when you're money is going to vanish in a puff of smoke at some random point in the future. Do you know anyone who made money from Eircom shares (other than members of the ESOP)? I certainly don't."

smccarrick wrote: »

With respect of your comment about government provision of pensions 'failing miserably'- would you care to clarify what you mean? Pensions have been paid by the exchequer for well over a hundred years- since before independence.......

Did I write "about government provision of pensions 'failing miserably'" ?????? if so, where? in what context ?

jimmmy

NewDubliner wrote: »

Not according to your proposal that people should fund their own pensions 100%.

I did not say that. See my original post:

"Its costing the citizens of the country tens of billions to
(A) pay high pensions to its own employees
(B) give tax relief to everyone who takes out a private organised pension.

Given the current budget defecit of 25,000,000,000.00 euro this year alone, this position is unsustainable. Employees should have to pay the full cost of their pensions. No tax relief or subsidies from now on. If they want one, they pay the economic cost of it, private or public. This will level the playing field. People can decide to put their savings in a post office or bank, in stocks or shares, or property, or unit linked funds...whatever. People would still be entitled to normal old age pension. "

BroomBurner

Jimmmy, your proposal for the government not to interfere with the pensions market is very incoherent.

Is it that you don't want the government to give tax relief to private pensions?

Soldie

The government to stop interfering in the market? Does not compute.

The_Conductor

jimmmy wrote: »

People know that already. Only the lucky few get big pensions. Politicians, government employees, public servants.

The pensions paid to the above are a portion of their final salary (typically half). This is less than in some parts of the private sector (notably the IT and Financial industry- where industry norm is 2/3).

I think we can agree than politicians are highly overpaid- the same is not true for all government employees nor public servants. Politicians used to be paid according to the HEO salary scale in the civil service (reasonable but by no means extravagant). They were unhappy with this- and over the years- totally aside from benchmarking and other exercises- have decided they are now worth more than Principle Officers. This is then used as a marker for ministers and the Taoiseach- which is why the Irish political leader is the best paid in the whole world. The argument that the US President has the White House as part of his remuneration is complete and utter bull.

I don't disagree with the manner in which their pensions are calculated- I disagree with what they are paid.

jimmmy wrote: »

These pensions are paid by everyones taxes / borrowing.

Actually this is not true. All public servants since 1995 pay into a variety of superannuation schemes. These are funded on a pay-as-you-go basis- so today's worker pays for today's pensioner and so ad-infinitum.....

jimmmy wrote: »

The ordinary person relies on the old age pension.

Along with any pension they have paid into- which is not a million miles away from what happens in the public sector- full PRSI + 8.6% of gross + Pensions levy.......

jimmmy wrote: »

If they want a little bit of luxury in their old age, or they want to save for kids third level fees, or for an emergency, they save.

As do everyone else. Whats your point?

jimmmy wrote: »

As I said, they can save anywhere they want. You wrote earlier "Why save- (in shares or property), when you're money is going to vanish in a puff of smoke at some random point in the future. Do you know anyone who made money from Eircom shares (other than members of the ESOP)? I certainly don't."

You used a number of examples of manners in which people can save- I pointed out what would have happened if many of those had been chosen- along with the fact that people do not currently have the same capacity to save that we previously had. I stand by my previous comments.

jimmmy wrote: »

Did I write "about government provision of pensions 'failing miserably'" ?????? if so, where? in what context ?

You said- "We cannot all be public servants / rely on the state. That has been tried before , and failed miserably. "

I assume that you are talking about relying on the state to provide for pensions in our old age- which doesn't really make sense- which is why I requested you clarify what you meant. In the context of what you posted, it doesn't make sense to me.

GUIGuy

Firstly it is not a tax subsidy it's a tax deferral. Everyone knows this... but some some left wing politicians and commentators omit this fact. Maybe they don't like the fact that income tax is based on 'income'.

There were a few articles by Fintan O Toole recently in which he compalined about the cost of 'subsidising' private pensions. It's easy to count how much this tax 'subsidy' costs... about 2.5 billiion a year. But it's far harder to count how much it's abolition would cost!

Every current pensioner is paying income tax on their income... just like the rest of us. It is only now that their funds release an income, and that is taxed. I'd have no problem with the tax free lump sum being abolished, but that's a separate subject.

So imagine if we abolish the "tax deferral". The money can't be taxed at the other end as it already has been... So the government would loose all this tax revenue.
As the proportion of the retired population is increasing the government would be stupid to cut off this tax base.

But far more difficult to count is how many people would simply abandon their private pensions if the tax deferral were withdrawn... I don't know. But I suspect the prospect of having an extra 500,000 (very costly and labour intensive) pensionless elders under direct state care in the future scares them far more than 500,000 unemployed today.

It is the middle income earners who are hit hardest by taxes... they do the heavy lifting. Hard pressed as they are, they also are the ones who pay for private pensions and contine to give tax income even when retired.

For all our sakes please continue to encorage them to do so!

jimmmy

smccarrick wrote: »

You said- "We cannot all be public servants / rely on the state. That has been tried before , and failed miserably. "

I assume that you are talking about relying on the state to provide for pensions in our old age- which doesn't really make sense- which is why I requested you clarify what you meant. In the context of what you posted, it doesn't make sense to me.

You assumed incorrectly. When I wrote "We cannot all be public servants / rely on the state.", I meant just that. Its a two tier system. Public servants and people from the government have the best pensions. Also average public sector pay is much higher than the average industrial wage, as we all know. "We cannot all be public servants / rely on the state." It financially pays to be a public servant ( as well as usually better holidays etc ) in terms of salary, security, pension etc...but we cannot all be employed by the state. See what happened in Eastern Europe / Russia ?

The_Conductor

jimmmy wrote: »

You assumed incorrectly. When I wrote "We cannot all be public servants / rely on the state.", I meant just that. Its a two tier system. Public servants and people from the government have the best pensions. Also average public sector pay is much higher than the average industrial wage, as we all know. "We cannot all be public servants / rely on the state." It financially pays to be a public servant ( as well as usually better holidays etc ) in terms of salary, security, pension etc...but we cannot all be employed by the state. See what happened in Eastern Europe / Russia ?

You're actually incorrect.
The average public sector employee is on a salary of just under 33k- which is slightly below the average industrial wage (currently said to be 34,800- but obviously this is fluid). This varies greatly from sector to sector- if you factor in overtime for Gardai, prison officers or medical staff- it can more than double their salary. An executive officer in the civil service starts @ 32,179, a Non-consultant-hospital doctor (on which our entire hospital system is based- with their 90-100 hour weeks) has a basic salary of 36,457, a Garda starts on 27,098. It should be pointed out that the average public sector salary includes overtime for the prison service and gardai, which is quite considerable and does bring up the average, but this is counterbalanced by very low wages in other areas such as General Operatives etc.

Its actually acknowledged that pension funds operated by the banks and certain IT companies are the best in the country- insofar as some of them pay a defined benefit of 2/3 final salary plus a tax free lumpsum of the average of your final 4 years of tenure.

I'm not sure who you are talking to about holidays- have a look at publicjobs.ie- an EO, which is considered to be graduate recruitment as the AO grade is being phased out- gets 21 days annual leave- the statutory minimum. After 5 years they get an extra day- and after 10 years a further day. So- graduates can expect 23 days annual leave- unless they are promoted (which certainly isn't going to happen in the current climate). In some cases people may be able to work flexible hours and work up flexi-leave, however this is not across the board- and is not something that is in any contracts.

Security- I see 10% of Teagasc staff have been let go, and contract staff in all government departments let go as their contracts elapse.

Pension- as already discussed, but you don't seem to want to acknowledge- all public sector employees post 1995, pay full PRSI towards a contributory OAP- which forms the bulk of their pension entitlements. They also pay 8.6% into a variety of schemes as a top-up towards making the defined element of their pensions, and now they also pay the pensions levy too. You seem to be harping on and on about it- but are unwilling to acknowledge that the situation is very different from that which you are depicting. Have a look at the Department of Finance website re:pensions and publicjobs.ie re annual leave- its not the rosy picture you are painting.......

People accept a lower salary to work in the public sector- particularly in technical positions. IT workers in the private sector have a far better pension and up to double the salary. They don't have the same security of tenure or family friendly policies though. Its similar across the board.

When you are suggesting that 'everyone knows' that public sector employees are paid above the average industrial wage- certainly there are lots of high profile cases- notably the politicians and staff in their quangoes (such as FAS and other state bodies). These excesses are inexcusable- but to suggest they are endemic across the public sector is factually incorrect.

I'm not going to reply any longer- as obviously you have a bone to pick about the public sector- and this thread is simply subterfuge towards that end. Perhaps posting in afterhours might get a better audience?

jimmmy

smccarrick wrote: »

You're actually incorrect.
The average public sector employee is on a salary of just under 33k- which is slightly below the average industrial wage (currently said to be 34,800- but obviously this is fluid).

When you are suggesting that 'everyone knows' that public sector employees are paid above the average industrial wage- certainly there are lots of high profile cases- notably the politicians and staff in their quangoes (such as FAS). These excesses are inexcusable- but to suggest they are endemic across the public sector is factually incorrect.

Its you that is actually incorrect again smccarrick. Check the public sector wages on the cso website ....ok I know they are 2 years out of date ( shows how efficient the c.s.o. is ! ) but they would not have decreased since 2007
http://www.cso.ie/statistics/public_sector_earnings.htm

BroomBurner

Why don't you answer my question jimmmy?

jimmmy

BroomBurner wrote: »

Is it that you don't want the government to give tax relief to private pensions?

Precisely, among other things. It currently gives tax relief to some private pensions ( those organised through a pension company ) but not those who simply save their money, buy a buy to let property, shares or whatever. Remove that - it costs the taxpayer billions per year, as Fintan O'Toole says. I am also against selected people ( government people and their employees ) getting much higher pensions than everyone else.

kippy

jimmmy wrote: »

Precisely, among other things. It currently gives tax relief to some private pensions ( those organised through a pension company ) but not those who simply save their money, buy a buy to let property, shares or whatever. Remove that - it costs the taxpayer billions per year, as Fintan O'Toole says. I am also against selected people ( government people and their employees ) getting much higher pensions than everyone else.

Would you be of the opinion that everyone, no matter what they do, should get paid the same wages as well? Thats pretty much what you are calling for here.

jimmmy

kippy wrote: »

Would you be of the opinion that everyone, no matter what they do, should get paid the same wages as well? Thats pretty much what you are calling for here.

lol lol. Absolutely not! Where did you get that idea / how did you make that out ?


Incidentally, if everyone was now paid the same wages, private sector employees would now be as well paid as public sector employees.
I believe in free market economics, not left wing communism.

kippy

jimmmy wrote: »

lol lol. Absolutely not! Where did you get that idea / how did you make that out ?


Incidentally, if everyone was now paid the same wages, private sector employees would now be as well paid as public sector employees.
I believe in free market economics, not left wing communism.

Thats strange, because in your previous post you said:

I am also against selected people ( government people and their employees ) getting much higher pensions than everyone else.

Surely, the only way to stop this happening is for everyone to get the same pension?? Can you perhaps enlighten me?

NewDubliner

jimmmy wrote: »

I did not say that. See my original post:

You said:

jimmmy wrote: »

Employees should have to pay the full cost of their pensions.

and

jimmmy wrote: »

People would still be entitled to normal old age pension.

You're ignoring the fact, brought to your attention many times, that people are not paying the full cost the old age pension.

This coupled with a crazy idea that people should invest in the stock market and a complete lack of understanding of where 'investment returns' come from, demonstrates that you'd be highly qualified for a job in FF.

jimmmy

NewDubliner wrote: »

You're ignoring the fact, brought to your attention many times, that people are not paying the full cost the old age pension..

Are you referring to the public service old age pension. Yes, you are right, it is being subsidised by the ordinary person such as the shopworker, the farmer, the factory floor employee etc

NewDubliner wrote: »

This coupled with a crazy idea that people should invest in the stock market and a complete lack of understanding of where 'investment returns' come from, demonstrates that you'd be highly qualified for a job in FF.

I said people can invest wherever they want ....be it the post office, bank, stock market, private pensions , stamp albums or fine wine... this is one of the advantages of living in a democracy. I am only too well aware of where returns on investment come from.