The cause of and the answer to our recession RANT

NOGMaxpower

EPIC RANT reader beware!

Was just reading an artice in the Irish Times and this one sentance struck me like a bolt of lightening.

"The exchequer spent just over €9 billion this year on public sector pensions, as well as those paid through the social welfare system".

So our country is on her knees, we're being bled from every orafice by greedy corrupt banks and investors. Our country is being sold off to the lowest bidder, over 500,000 people are unemployed, destitute, homeless, bankrupt and in December the government will be looking to take a further 4 billion out of our society to pay for mistakes made by them. Yet here it is, the golden egg €9 billion in pensions being paid out in just 1 year to the public sector and the social welfare. Meanwhile everyone else in the REAL world has no pension, can't afford pension payments yet those who sat by in government and let the recession happen and in some cases made it worse still has their pension paid for by the tax payer.

It seems to me that ALL public sector payments need to be halted while we sort out our finances. Its almost like a double payment for the tax payer to maintain the public sectors cushy life styles (1/3 of the workforce might I add those who have). Lets not beat about the bush here, sure not all of public sector are the blame the Central Bank and the Financial Regulator are at the epicentre of our recession. However now is not the time for but he did x etc, every single facet of our public sector is questionable. FAS, Health, Education, Army, Garda, all have been corrupted over the last 10 years and none are doing what they are being paid to do - "Provide Irish citizens with a service that reflects their wages and pensions". We have been failed on all fronts by our Government and Public Services. Why should we continue to pay their pensions while also taking on a further 4 billion in cuts?????? Invariably the Public Sector will CRY we didn't cause the recession!!!! ME HOLE YIS DIDN'T.

Before the boom years, it was those in the Public Sector who could afford homes while the rest of us earned **** all. Average wage in the Private sector in 2001 was €1500 per month compared to 2.5k in the Public sector. Also with the security of a job for life banks gave them all mortgages on their primary homes but soon later realised they could afford another holiday home. Soon this market became the buy to rent market that fuelled our property boom. Sure the private sector hierarchy as always were always able to invest in property. But now a new found wave of over night property investors flowed through our credit system - The public sector cronies. Soon supply couldn't meet the demand of these wood be investors and property prices rose. At around the 2001/3 prices crept up to record levels to around 250k. the disparity of Private and Public sector wages was aparant at the time and the Public sector looked for more money to fule their double mortgage repayments. Of course these figures were take on an average earning, bolstered by massive pay for Senior Management, Directors and partners. This meant their new pay soared from an average of 36k per year to 46+. Meanwhile the status quo remained and the grunts in the private sector did get an increas in average pay in 2004 figures were at 36k what was previously the average wage int he public sector. Meaningless figures really until you look at how this money fuelled the property boom to exponential numbers.

So while the Public sector investors who bought their homes for 100k could now sell it at 250k to the new wave of Private sector workers salary increase. Over night these investors doubled their investments and made profits of 150k on one home. From their they reinvested their gains into more property, funnily enough in new development zones signed off by their government buddies and controlled by the FR. Soon house prices rose to 430K on average in Dublin, it was roughly in 2008 when prices hit this level that mr and mrs private sector could no longer afford to purchase property at these prices since their bosses would never entertain further wage increases. Both Private and Public sector workers who got in early made fortunes over night. However it would be easy to see that their public sector buddies were sitting pretty since their salaries and packages were protected and they had sold off most of their investments pre 2008. Leaving the massive decline in sales and drop in prices and the bubble had finally burst.

All along the while, mr Financial Regulator (I duno what a tracker mortgage is was their only ever public image) signed off on grossly over valued properties. That only lined the pockets of the most senior public sector employees. Banks along with likes of Sherry Fitz valued homes at crazy prices. If it was valued at X and the banks were willing to lend Y happy days for them. Meanwhile our revenue coffers were bulging with the core are of our tax - stamp duty. So the FR and Government were never gona say "hooo ha there banks and Sherry Fitz what do you think you're doing? A house in Bally brack that cost 5k to build in 1980 is not worth 410k in 2008 are you mad?" No they were quite happy to make their revenues.

So I say again why should we the general tax payer who makes up 2 thirds of the work force continue to pay 9 billion to the 1 third of the work force who were the cause of our recession. At the very least welfare pensions should be paid - they need to be cut but still paid. While EVERYONE in the public sector has their pensions frozen until we are at the 3% debt we told the EU we'd get to. You can bet your bottom dollar the public sector workers also have a private pension so they will not lose out on much even if its only frozen for 2-4 years.

Rant over.

scr123

One of the better rants with some effort to put it together. Plenty of valid and invalid points. I do wish it was easy to blame one group or another for recessions but economic history tells a better story. Economic activity builds up to a peak over a period. Inflation always accompanies what we call a boom and if there is one word that scares the daylight out of a true economist or senior public official its the word "inflation" Recessions are triggered by prolonged and severe inflation. Crazy prices, crazy costs, crazy expectations have to be brought to a halt. Weaknesses that were in the economy during the boom are exposed instantly when recession hits. In our case jobs that were dependent on a boom were the first to be hit with the contruction industry clearly the main victim of the recession. We can go on and on about public service costs, banks, politicians and countless other areas but until inflation is under control we are all wasting our breath. We are in a deflationery process and from what I can gather there is high resistance to the measures the State is taking and this will prolong the agony.
Its such a pity people do not shut up and go back to basic economics to understand what is happening and get on with life

NOGMaxpower

scr123 wrote: »

One of the better rants with some effort to put it together. Plenty of valid and invalid points. I do wish it was easy to blame one group or another for recessions but economic history tells a better story. Economic activity builds up to a peak over a period. Inflation always accompanies what we call a boom and if there is one word that scares the daylight out of a true economist or senior public official its the word "inflation" Recessions are triggered by prolonged and severe inflation. Crazy prices, crazy costs, crazy expectations have to be brought to a halt. Weaknesses that were in the economy during the boom are exposed instantly when recession hits. In our case jobs that were dependent on a boom were the first to be hit with the contruction industry clearly the main victim of the recession. We can go on and on about public service costs, banks, politicians and countless other areas but until inflation is under control we are all wasting our breath. We are in a deflationery process and from what I can gather there is high resistance to the measures the State is taking and this will prolong the agony.
Its such a pity people do not shut up and go back to basic economics to understand what is happening and get on with life

Love your last sentance!

I didn't mean to point blame to just one entity, merely stating the Central Bank and Financial Regulators **** up. Ultimately we the people are to blame for not evoking change. However the one department taxed with governing our markets/economy is the financial regulator who did nothing to control the boom and history has told us this was economic suicide waiting to happen.

Also to my core point:

Why are we the tax payer paying 9 billion a year into pensions when we are stone cold broke and our national finances are in ruin?

Assum 1/3 of the 9 bilion is welfare pensions - lets say we leave that alone.

So the 2/3 or the 6 billion euro in one year could:
1: Remove the need for 4 billion cuts in spending - ie what we all earn each month.
2: Restore confidence back to the markets.
3: Get the IMF off our backs

By 2011 we will need to make a further 4 billion in cuts if do nothing this year. So if we froze the public sector pension contributions for 2 years. We would have saved 12 billion, which would have promoted growth, freed up disposable income and boosted our spending.

All of this leads to increase revenue on taxes and an increase in new businesses further increasing growth and finally getting us out of the recession.

Why we wont entertain freezing Public Sector pensions for 2 years is beyond me when ultimately its the golden egg we need to get out of this mess.

Penions for me is an added benefit to the job, if the job is under performing then pensions need to relfect that change. And since we're crippled the natural choice is to freeze all contributions and redirect these monies to where its needed.

bamboozle

regarding the pensions, over in the last 2 years and over the next 4 years we can probably expect to see a sizeable number of public and civil servants taking early retirement to secure their tax free lump sums upon retirement so we can probably expect to see state pension costs rising..

T runner

NOGMaxpower wrote: »

EPIC RANT reader beware!

Was just reading an artice in the Irish Times and this one sentance struck me like a bolt of lightening.

"The exchequer spent just over €9 billion this year on public sector pensions, as well as those paid through the social welfare system".

So our country is on her knees, we're being bled from every orafice by greedy corrupt banks and investors. Our country is being sold off to the lowest bidder, over 500,000 people are unemployed, destitute, homeless, bankrupt and in December the government will be looking to take a further 4 billion out of our society to pay for mistakes made by them. Yet here it is, the golden egg €9 billion in pensions being paid out in just 1 year to the public sector and the social welfare. Meanwhile everyone else in the REAL world has no pension, can't afford pension payments yet those who sat by in government and let the recession happen and in some cases made it worse still has their pension paid for by the tax payer.

It seems to me that ALL public sector payments need to be halted while we sort out our finances. Its almost like a double payment for the tax payer to maintain the public sectors cushy life styles (1/3 of the workforce might I add those who have). Lets not beat about the bush here, sure not all of public sector are the blame the Central Bank and the Financial Regulator are at the epicentre of our recession. However now is not the time for but he did x etc, every single facet of our public sector is questionable. FAS, Health, Education, Army, Garda, all have been corrupted over the last 10 years and none are doing what they are being paid to do - "Provide Irish citizens with a service that reflects their wages and pensions". We have been failed on all fronts by our Government and Public Services. Why should we continue to pay their pensions while also taking on a further 4 billion in cuts?????? Invariably the Public Sector will CRY we didn't cause the recession!!!! ME HOLE YIS DIDN'T.

Before the boom years, it was those in the Public Sector who could afford homes while the rest of us earned **** all. Average wage in the Private sector in 2001 was €1500 per month compared to 2.5k in the Public sector. Also with the security of a job for life banks gave them all mortgages on their primary homes but soon later realised they could afford another holiday home. Soon this market became the buy to rent market that fuelled our property boom. Sure the private sector hierarchy as always were always able to invest in property. But now a new found wave of over night property investors flowed through our credit system - The public sector cronies. Soon supply couldn't meet the demand of these wood be investors and property prices rose. At around the 2001/3 prices crept up to record levels to around 250k. the disparity of Private and Public sector wages was aparant at the time and the Public sector looked for more money to fule their double mortgage repayments. Of course these figures were take on an average earning, bolstered by massive pay for Senior Management, Directors and partners. This meant their new pay soared from an average of 36k per year to 46+. Meanwhile the status quo remained and the grunts in the private sector did get an increas in average pay in 2004 figures were at 36k what was previously the average wage int he public sector. Meaningless figures really until you look at how this money fuelled the property boom to exponential numbers.

So while the Public sector investors who bought their homes for 100k could now sell it at 250k to the new wave of Private sector workers salary increase. Over night these investors doubled their investments and made profits of 150k on one home. From their they reinvested their gains into more property, funnily enough in new development zones signed off by their government buddies and controlled by the FR. Soon house prices rose to 430K on average in Dublin, it was roughly in 2008 when prices hit this level that mr and mrs private sector could no longer afford to purchase property at these prices since their bosses would never entertain further wage increases. Both Private and Public sector workers who got in early made fortunes over night. However it would be easy to see that their public sector buddies were sitting pretty since their salaries and packages were protected and they had sold off most of their investments pre 2008. Leaving the massive decline in sales and drop in prices and the bubble had finally burst.

All along the while, mr Financial Regulator (I duno what a tracker mortgage is was their only ever public image) signed off on grossly over valued properties. That only lined the pockets of the most senior public sector employees. Banks along with likes of Sherry Fitz valued homes at crazy prices. If it was valued at X and the banks were willing to lend Y happy days for them. Meanwhile our revenue coffers were bulging with the core are of our tax - stamp duty. So the FR and Government were never gona say "hooo ha there banks and Sherry Fitz what do you think you're doing? A house in Bally brack that cost 5k to build in 1980 is not worth 410k in 2008 are you mad?" No they were quite happy to make their revenues.

So I say again why should we the general tax payer who makes up 2 thirds of the work force continue to pay 9 billion to the 1 third of the work force who were the cause of our recession. At the very least welfare pensions should be paid - they need to be cut but still paid. While EVERYONE in the public sector has their pensions frozen until we are at the 3% debt we told the EU we'd get to. You can bet your bottom dollar the public sector workers also have a private pension so they will not lose out on much even if its only frozen for 2-4 years.

Rant over.

Careful, there are woodpeckers about......

R P McMurphy

I heard recently that private saving in the Republic have approached 100 billion. I have no link to verify that figure as I think I heard it on the radio. That seems like an astonishing figure and if is anywhere near the truth then is a resource that would need to be tapped. Not through exappropriation but through some other means

Amhran Nua

R P McMurphy wrote: »

I heard recently that private saving in the Republic have approached 100 billion. I have no link to verify that figure as I think I heard it on the radio. That seems like an astonishing figure and if is anywhere near the truth then is a resource that would need to be tapped. Not through exappropriation but through some other means

The only realistic way to tap that is to convince people to spend, but they won't do that after the disasters of the last ten years, and who could blame them? The banks are far too central to the economic structure as it stands and this is clearly a dangerous way to run the economy. If you could have people investing their own money directly into limited companies via credit card we might be on to something.

P. Breathnach

NOGMaxpower wrote: »

... Why we wont entertain freezing Public Sector pensions for 2 years is beyond me when ultimately its the golden egg we need to get out of this mess....

So how am I, a public service pensioner, to feed and clothe myself, and keep warm? And pay for internet access so that I can see what is being proposed for me?

NOGMaxpower

P. Breathnach wrote: »

So how am I, a public service pensioner, to feed and clothe myself, and keep warm? And pay for internet access so that I can see what is being proposed for me?

1st off as a retired Public sector worker, thank you for your years of service.

I would assume you claim benefits from 2 pensions? Therefore I would suggest you would default to your standard state pension.

However thats extreme and something I wouldn't like to suggest changing. I believe you'vd paid your dues and therefore like other pensioners should be exempt of any type of cut.

The only logical area to cut spending is servicing those who are not in retirement. Anyone caught in the 2 year trap would need to take early retirement.

So to be specific, freeze all pension contributions to those who are currently employed by the state. Having said that it should also be means tested for those who have multiple pensions (there are many). For instance past government ministers who pull a state pension and hold other private ones. There is no reason why we the tax payer should pay their pensions if they are secured by their own privately held ones.

Likewise to any minister who was dismissed they should have their contributions stopped also.

Citizen_Cutback

Perhaps a look at CSO Exchequer Figures for 2004-2009 could help inform our discussion of this topic:
http://www.cso.ie/releasespublications/documents/economy/2009/nie_2009.pdf



PRSI Pensions are approximately €4.5 billion
Public Servant Retirement Pensions must be covered under "Imputed Pensions received from Employees" at €442 million considering that current serving Public Servants pay 80% of the pensions of those retired.

Lenihan speak here:
http://www.irishtimes.com/newspaper/breaking/2010/1012/breaking1.html

scr123

NOGMaxpower wrote: »

Love your last sentance!

I didn't mean to point blame to just one entity, merely stating the Central Bank and Financial Regulators **** up. Ultimately we the people are to blame for not evoking change. However the one department taxed with governing our markets/economy is the financial regulator who did nothing to control the boom and history has told us this was economic suicide waiting to happen.

Also to my core point:

Why are we the tax payer paying 9 billion a year into pensions when we are stone cold broke and our national finances are in ruin?

Assum 1/3 of the 9 bilion is welfare pensions - lets say we leave that alone.

So the 2/3 or the 6 billion euro in one year could:
1: Remove the need for 4 billion cuts in spending - ie what we all earn each month.
2: Restore confidence back to the markets.
3: Get the IMF off our backs

By 2011 we will need to make a further 4 billion in cuts if do nothing this year. So if we froze the public sector pension contributions for 2 years. We would have saved 12 billion, which would have promoted growth, freed up disposable income and boosted our spending.

All of this leads to increase revenue on taxes and an increase in new businesses further increasing growth and finally getting us out of the recession.

Why we wont entertain freezing Public Sector pensions for 2 years is beyond me when ultimately its the golden egg we need to get out of this mess.

Penions for me is an added benefit to the job, if the job is under performing then pensions need to relfect that change. And since we're crippled the natural choice is to freeze all contributions and redirect these monies to where its needed.

Plenty of merit in what you say about the central Banl, Financial Regulator, Public Service Pensions and a thousand other things one can throw in about the economy. One could get the Government Income and Expenditure accounts and sort out the deficit very easily. Billions could be axed from the expenditure without impacting on the individual. If the worse came to the worse the state could raid the 100b a poster says is in bank accounts. I reckon the cash lying "idle" is closer to 200b. The retiring CEO of NTMA only said last year we are well capable of paying our way as a nation. Another little thing rarely spoken about is that there is 20b of the borrowed money under wraps. In the 70's and 80's we had a shocking problem as did many countries with inflation. Eventually this had to be dealt with and the tool used was the best tool of all, human fear. The fear of god was put in to us and we were convinced the country was on the verge of collapse. The noughties saw another crazy period of inflation and what again is the tool used right now, human fear. Until that inflation is removed we can talk about a million things regarding the details of the economy but its falling on deaf ears, the state must do what the state must do.
Tell you what bothers me. Using France for my example. In the 70's the idea of going to France for a holiday was quickly killed when the prices of such a holiday were mentioned. France was out of control with inflation rate and inflated expectations. Just like we were till the crash. To the best of my knowledge France has never allowed the problem to arise again. France unemployment rate for years and years never went below 11%. House prices as an instance are in reality a fraction of ours. In other words the French have ensured they did not have the same experience of the 70's. My fear is that this country will follow the same path and it will be the government who makes sure there is no repeats of our noughties.
Inflation is the name of the game and we can have as much fun as we like talking about economics and finances and who is right and who is wrong but its the government who is right all the time

Permabear

This post has been deleted.

NOGMaxpower

scr123 wrote: »

Plenty of merit in what you say about the central Banl, Financial Regulator, Public Service Pensions and a thousand other things one can throw in about the economy. One could get the Government Income and Expenditure accounts and sort out the deficit very easily. Billions could be axed from the expenditure without impacting on the individual. If the worse came to the worse the state could raid the 100b a poster says is in bank accounts. I reckon the cash lying "idle" is closer to 200b. The retiring CEO of NTMA only said last year we are well capable of paying our way as a nation. Another little thing rarely spoken about is that there is 20b of the borrowed money under wraps. In the 70's and 80's we had a shocking problem as did many countries with inflation. Eventually this had to be dealt with and the tool used was the best tool of all, human fear. The fear of god was put in to us and we were convinced the country was on the verge of collapse. The noughties saw another crazy period of inflation and what again is the tool used right now, human fear. Until that inflation is removed we can talk about a million things regarding the details of the economy but its falling on deaf ears, the state must do what the state must do.
Tell you what bothers me. Using France for my example. In the 70's the idea of going to France for a holiday was quickly killed when the prices of such a holiday were mentioned. France was out of control with inflation rate and inflated expectations. Just like we were till the crash. To the best of my knowledge France has never allowed the problem to arise again. France unemployment rate for years and years never went below 11%. House prices as an instance are in reality a fraction of ours. In other words the French have ensured they did not have the same experience of the 70's. My fear is that this country will follow the same path and it will be the government who makes sure there is no repeats of our noughties.
Inflation is the name of the game and we can have as much fun as we like talking about economics and finances and who is right and who is wrong but its the government who is right all the time

The French put in place a true regulator with teeth to ensure that sort of thing never happend again. also they have a clear line of accountability in their ranks, unlike here.

Scratch the surface of all our issues and the FR are to blame 99/100.

Riskymove

there is absolutely no way the cost per annum is €9 billion

the figure for last year was under €2 billion

EDIT: are you saying its €9 billion for PS occupational Pensions and welfare pensions together?

in that case fyi the split is about €2 billion and €7 billion

and the contributions of working PS cover the PS pension costs

Riskymove

donegalfella wrote: »

This post has been deleted.

its an inherited system from olden times!!

You would have to ask the Govt why it never changes

PS workers are precluded from having a private scheme

NOGMaxpower

Riskymove wrote: »

there is absolutely no way the cost per annum is €9 billion

the figure for last year was under €2 billion

EDIT: are you saying its €9 billion for PS occupational Pensions and welfare pensions together?

in that case fyi the split is about €2 billion and €7 billion

and the contributions of working PS cover the PS pension costs

Yes as the 1st line states in the OP they are combined

Godge

NOGMaxpower wrote: »

1st off as a retired Public sector worker, thank you for your years of service.

I would assume you claim benefits from 2 pensions? Therefore I would suggest you would default to your standard state pension.

However thats extreme and something I wouldn't like to suggest changing. I believe you'vd paid your dues and therefore like other pensioners should be exempt of any type of cut.

The only logical area to cut spending is servicing those who are not in retirement. Anyone caught in the 2 year trap would need to take early retirement.

So to be specific, freeze all pension contributions to those who are currently employed by the state. Having said that it should also be means tested for those who have multiple pensions (there are many). For instance past government ministers who pull a state pension and hold other private ones. There is no reason why we the tax payer should pay their pensions if they are secured by their own privately held ones.

Likewise to any minister who was dismissed they should have their contributions stopped also.

Do you understand anything about pensions? Your post if full of contradictions and misunderstanding.

Firstly, no public servant employed before 1995 has access to the State contributory pension so they only have one pension on retirement.

Secondly, if you are proposing to leave the likes of P. Breathnach's pension alone, you are not going to make any dent in the 9 billion.

Thirdly, because public service pensions are paid on a "pay-as-you-go" basis, no ongoing contributions are made by the State to a pension fund, except for the National Pension Reserve Fund, to which we have stopped contributing and which is being used in any event to fund Anglo Irish Bank.

What exactly are you intending to cut?

Riskymove

NOGMaxpower wrote: »

Yes as the 1st line states in the OP they are combined

the wording and particularly the comma confuses the issue

that being said we are therefore not paying €9 billion to a third of the workforce......retirees are not in the workforce

the welfare bill is now a few billion more than the PS pay bill...the €7 billion on pensions is a case in point

it needs major tackling

PS pension reform has occurred but given its nature takes a while to take affect, in time PS pensions will not be as high as they are now. The question of a cut in current rates remains on the table obviously

Riskymove

Godge wrote: »

Secondly, if you are proposing to leave the likes of P. Breathnach's pension alone, you are not going to make any dent in the 9 billion.

again, to be clear....PS pensions account for less than €2 billion

the €7 billion are welfare payments

NOGMaxpower

Riskymove wrote: »

the wording and particularly the comma confuses the issue

that being said we are therefore not paying €9 billion to a third of the workforce......retirees are not in the workforce

the welfare bill is now a few billion more than the PS pay bill...the €7 billion on pensions is a case in point

it needs major tackling

PS pension reform has occurred but given its nature takes a while to take affect, in time PS pensions will not be as high as they are now. The question of a cut in current rates remains on the table obviously

Soooo

What contributions from taxes goes towards public sector pensions (lets focus on those who are currenlty employed) out of that 9 billion? For me that is what I would propose needs to be stopped NOW and those pensions frozen.

Riskymove

NOGMaxpower wrote: »

. While EVERYONE in the public sector has their pensions frozen until we are at the 3% debt we told the EU we'd get to.

PS pensions are frozen...no increases

You can bet your bottom dollar the public sector workers also have a private pension so they will not lose out on much even if its only frozen for 2-4 years.

PS workers cannot have a private pension fund

Riskymove

NOGMaxpower wrote: »

Soooo

What contributions from taxes goes towards public sector pensions (lets focus on those who are currenlty employed) out of that 9 billion? For me that is what I would propose needs to be stopped NOW and those pensions frozen.

we do not make contributions to a PS pension fund ( at present....the idea is for the NPRF to take over both PS and welfare pensions at some point in the future)

the pensions are paid directly from state each year (basically like a salary)

currently under €2 billion a year in total

The working PS workers contribute more than this amount in tax, pension levey and supperannuation payments

Citizen_Cutback

Riskymove wrote: »

again, to be clear....PS pensions account for less than €2 billion

the €7 billion are welfare payments

http://www.irishtimes.com/newspaper/breaking/2010/1012/breaking1.html

The exchequer spent just over €9 billion this year on public sector pensions, as well as those paid through the social welfare system.

The above statement is misleading but it is intended to be so.

Prediction: All pensioners will be hit in the 2011 Budget but Public Sector pensioners will be affected more so than PRSI pensioners .

Geuze

2008 DSFA annual stats report:

http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Pages/2008stats.aspx

http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Documents/2008stats.pdf

A quote:

"Expenditure on State Pensions increased by 10.9% to €4.3 billion. Payments were made to over 364,000 people in this area."

Riskymove

Citizen_Cutback wrote: »

The above statement is misleading but it is intended to be so.

.

wow I assumed it wasa the OPs typing but to see that in the Times...shocking

Citizen_Cutback

NOGMaxpower wrote: »

Soooo

What contributions from taxes goes towards public sector pensions (lets focus on those who are currenlty employed) out of that 9 billion? For me that is what I would propose needs to be stopped NOW and those pensions frozen.

I think the figure is €422 million for 2009 but I am certain the figure is between €300-€500 million.

NOGMaxpower

Riskymove wrote: »

wow I assumed it wasa the OPs typing but to see that in the Times...shocking

Eh I did say while reading the Irish Time and I put it in quotation marks?

Geuze

2007 and 2008 old-age spending data from DSFA, plus % rise:


State Pension (Contributory) 2,754,749 3,118,029 13.2%
State Pension (Transition) 79,070 92,107 16.5%
State Pension (Non-Contributory) 920,167 973,047 5.7%
Pre-Retirement Allowance 124,490 117,666 -5.5%

Total Older People 3,878,476 4,300,849 10.9%

2008 = all 4 schemes = 4.3 bn.

NOGMaxpower

Some really good posts so far keep them coming. I am learning lots about how the Public Sector make pension payments.

So I am clear.

As I understand it PS pensions make the employee contribue 7% of their gross salary towards their pension and the government ie the tax payer matches the 7%?

Is that the current situation?

If so why are we the tax payer paying that 7% shouldn't that be stopped and those finances redirected into other areas of our economy that need it more?

While i may have a basic understanding the principles of my post should be easy to follow.

NOGMaxpower

Ok so the some numbers flying around...

Pension contributions to those who are still working made by the state =

4.3 billion

or is it more like .5 billon as per another post?

Citizen_Cutback

Geuze wrote: »

2008 DSFA annual stats report:

http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Pages/2008stats.aspx

http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Documents/2008stats.pdf

A quote:

"Expenditure on State Pensions increased by 10.9% to €4.3 billion. Payments were made to over 364,000 people in this area."

These figures are cumulative for the PRSI Contributory and the Non-Contributory Social Welfare Pensions; these are not Public Sector Pensions.

Geuze

2010 public service pension cost = 2.35 bn.

http://www.finance.gov.ie/documents/publications/reports/2010/payanal0510.pdf


SUMMARY

2008 DSFA pensions (4 schemes) = 4.3bn
2010 public service pensions = 2.35 bn

Geuze

UPDATE: I found the 2009 DSFA data on State pensions:

http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Pages/2009stats.aspx

http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Documents/2009stats.pdf


2008 (all 4 schemes) = 4.3 bn on State pensions

2009:
"Expenditure on State Pensions increased by 6.3% to €4.6 billion. Payments were made to almost 379,000 people in this area;"

Geuze

NOGMaxpower wrote: »

So I am clear.

As I understand it PS pensions make the employee contribue 7% of their gross salary towards their pension and the government ie the tax payer matches the 7%?

Employee = 6.5% contribution before recent pension levy

Employer = No contribution, as there is no fund, it is a PAYG system

Is that the current situation?

There is no fund, the 6.5% just goes to the general pot to pay current public spending.

..

Citizen_Cutback

Geuze wrote: »

2010 public service pension cost = 2.35 bn.

http://www.finance.gov.ie/documents/publications/reports/2010/payanal0510.pdf


SUMMARY

2008 DSFA pensions (4 schemes) = 4.3bn
2010 public service pensions = 2.35 bn

So if Public Service Pensions paid out is €2.35 billion,
and contributions paid in by Public Servants is approximately €1.8 billion,
then the State contribution is approximately €422 million.

ixoy

The issue with pensions for the public servants was how it was linked to the salary of the role that they were in when they left. If the salary of that role went up by 50%, then so too did their pension. At the moment, since that salary isn't increasing, that's not as big as issue but it certainly rapidly increased pension costs when public sector salaries shot up over the last decade.

Geuze

But, when the workers took 2 pay cuts, the corresponding pensions were not cut.

They should have been.

ixoy

Geuze wrote: »

But, when the workers took 2 pay cuts, the corresponding pensions were not cut.

They should have been.

Agreed but OAPs are always the sacred cows in these things. Nobody basically wants to see their granddad lose money after working 40 years. Also the first wasn't a "cut" to the wage but a levy, so it was a nice workaround for the government.

Geuze

If my grandad has:

• 700 pw pension
• income tax = NIL
• income and health levy = NIL
• a medical card
• free travel
• free TV licence
• subsidised elec and telecom

from paying 6.5% pension contribution, 0.9% PRSI, 2% Health levy while working, then I think they can afford a cut.

Indeed, Grandad would probably agree.

P. Breathnach

Geuze wrote: »

If my grandad has:

• 700 pw pension
• income tax = NIL
• income and health levy = NIL
• a medical card
• free travel
• free TV licence
• subsidised elec and telecom

from paying 6.5% pension contribution, 0.9% PRSI, 2% Health levy while working, then I think they can afford a cut.

Indeed, Grandad would probably agree.

He would probably agree on those conditions, knowing that he would never be in such a situation. Pensions are not tax-free or exempt from PRSI and levies.

Citizen_Cutback

Geuze wrote: »

If my grandad has:

• 700 pw pension
• income tax = NIL
• income and health levy = NIL
• a medical card
• free travel
• free TV licence
• subsidised elec and telecom

from paying 6.5% pension contribution, 0.9% PRSI, 2% Health levy while working, then I think they can afford a cut.

Indeed, Grandad would probably agree.

But if your Grandad has a pension of €36,200 per annum:

he should pay Income Tax

and

he is not entitled to a Medical Card.

mari2222

One of the lesser known oddities is that there are two rates of pay in some jobs: one is "ppc (paying a pension contribution) and one is "non-ppc". the ppc wage is typically 5% more than the non-ppc, due to the "ppc" people having to be deducted the pension contribution, so for example

ppc wage, 42000 pa...and 2000 is deducted towards lumpsum gratuity
which is 3/80 multiplied by final salary multiplied by years worked (max 40) and towards annual pension which "tops up" the contributory OAP to a value which is 1/80 multiplied by final salary multiplied by years worked (max 40)
non-ppc wage 40000 pa...no deduction....lumpsum and pension same as above.

All very complicated, laid down in law by our law-makers, the government.
Simplifying the system would surely save a lot of money in time for administration as much as the payouts

ardmacha

Just one point, most people drawing PS pensions now are pre '95 and so they do not draw the Old Age pension but receive one pension payment only. So under modern arrangements the old age pension figure should be higher and the PS pension figure lower.

Citizen_Cutback

ardmacha wrote: »

Just one point, most people drawing PS pensions now are pre '95 and so they do not draw the Old Age pension but receive one pension payment only. So under modern arrangements the old age pension figure should be higher and the PS pension figure lower.

By the time post '95ers- those who began working in the PS after 1995- begin to retire they will receive the equivalent of the Contributory Old Age pension plus a top-up to account for the number of years they are employed in the PS up to a maximum of 40/80ths of their Pensionable salary.

Liam Byrne

scr123 wrote: »

Inflation is the name of the game and we can have as much fun as we like talking about economics and finances and who is right and who is wrong but its the government who is right all the time

What ?????

Maybe in their own deluded world.

As for your suggestion about raiding everyone's bank account, well they've pretty much ensured that most of us don't have anything in there, and some people don't even have bank accounts - do they get off scot-free (again) ?

Godge

NOGMaxpower wrote: »

Some really good posts so far keep them coming. I am learning lots about how the Public Sector make pension payments.

So I am clear.

As I understand it PS pensions make the employee contribue 7% of their gross salary towards their pension and the government ie the tax payer matches the 7%?

Is that the current situation?

If so why are we the tax payer paying that 7% shouldn't that be stopped and those finances redirected into other areas of our economy that need it more?

While i may have a basic understanding the principles of my post should be easy to follow.

No, that is not the current situation.

Most public servants make a contribution of 6.5% towards their pension (pre-1995 civil servants and guards pay less, those in the LA scheme always paid 6.5%). This 6.5% comes out of the salary that the taxpayer pays them.

Since last year, they also make a further contribution in the form of the pension levy (about 7%). That gives a total of around 13.5% paid by the employee, a relatively high amount by private sector standards.

The State takes this money and uses it for current expenditure. None of its is invested (We will come back to the NPRF). The State makes no contribution to a pension fund while a person is employed so there is no contribution that can now be "frozen". Effectively what the State does is say to public service employees, we are good for our contribution to your pension and will pay it when you retire. Charlie McCreevy thought this was a bad idea and set up the NPRF. This was designed to have money paid in every year and invested in solid investments. What has happened? We have stopped paying into the fund and the fund has invested in the banks!! Pity any public service employee who thinks their pension will be paid by that.

If you have followed all of the above, you will realise that all of the 9 billion (whatever way you divide it between public service pensioners and social welfare pensioners) goes to pensioners. It doesn't go to employees, it goes to people who are already retired.

So what is possible?

1. We can cut the pension of public service pensioners to reflect the fact that public service employees have had their pay cut and the pension levy imposed.

2. We can cut the social welfare pension and bring it closer to the European average.

From what I can tell, you have already ruled out hitting existing pensioners so this makes it impossible to save anything on the 9 billion.

Godge

P. Breathnach wrote: »

He would probably agree on those conditions, knowing that he would never be in such a situation. Pensions are not tax-free or exempt from PRSI and levies.

There are some very generous tax arrangements for over-65s that should be revisited.

Geuze

OK, when I gave my previous example, I was referring to a couple.


A couple, once one of them is aged over 65, can earn 40k tax free.

That is 769pw, this is where I get the 750pw figure.

They both get free travel, even if one is under 65.

Once one of them hits 70, they BOTH qualify for medical cards, as long as income is less than 1400 pw.

When they get the medical card, they no longer pay the Health or Income levies.

Also, at 70, they automatically qualify for the Household Benefits package of free TV licence, elec units, telecom rental.

So we return to my hypothetical couple, of which I know many. One aged 70+, the other could be 60.

Combined pensions = 750pw.

• Tax = NIL
• Health levy = NIL
• Income levy = NIL
• Free travel
• Two medical cards (even if one is under 65)
• Free TV licence
• ESB units + telecom subsidy

I know these people worked hard, reared kids, paid high marginal tax rates in the 80s, etc.

But we can't afford such generosity now.

K-9

Pension deductions are tax and PRSI deductible so the 6.5% deduction is about 3.25%. So while the Government takes the Gross 6.5% they lose half of it through tax breaks. (assuming a higher rate tax payer)

Diddler82

P. Breathnach wrote: »

So how am I, a public service pensioner, to feed and clothe myself, and keep warm? And pay for internet access so that I can see what is being proposed for me?

How many of your 4541 posts were made during normal working hours and on tax payers time Mr Breathnach?

Possibly another example of reform needed for lack of productivity within the Public Sector.

Anyway, not much I can add to this except for the fact that I don't see this as a solution to the problem. Regardless of the state of the economy I cant see why taking money in such a radical fashion from someone regardless of sector is a solution. Why not just increase the income levy to 10% for everyone for 2 years, surely that will recoup the bulk of the billions lost/owed. In my humble and uneducated opinion on the matter I see both as the exact same thing!

In my opinion the Public Sector could be run twice as efficiently with half the staff, as I said in my first comment its about productivity. Okay yes their would be redundancies and pay offs but still the dead wood needs to be cleared.

P. Breathnach

Diddler82 wrote: »

How many of your 4541 posts were made during normal working hours and on tax payers time Mr Breathnach?

None of them. And it ain't never gonna happen, because I am now retired. You really should read what you respond to: I describe myself as a public service pensioner.

Possibly another example of reform needed for lack of productivity within the Public Sector.

It looks to me more like a case of your visiting prejudices on people.

In my opinion the Public Sector could be run twice as efficiently with half the staff, as I said in my first comment its about productivity. Okay yes their would be redundancies and pay offs but still the dead wood needs to be cleared.

Given that your first comment about productivity was an unfounded attack on me, your opinion on appropriate staff levels seems not to be based on anything much,