Can Ireland learn from New Zealand?

skafish

Godge wrote: »

Revenue rules allow for a maximum defined benefit pension of two-thirds final salary. If a lump sum of 1.5 times final salary is paid, the pension can only be half final salary.

You were assuming civil servants got both a lump sum and two-thirds pension. That is not the case.

As for teachers, here is the agreement:


https://www.education.ie/en/Education-Staff/Services/Retirement-Pensions/pen_pcw_voluntary_early_retirement_55_35.pdf

Teachers can get a pension at 55 but it is not the full pension as it is based on actual service and you cannot have 40 years service at 55 unless you started teaching at 15.

But hey, lets ignore the truth and twist another random thread into an anti PS rant

Geuze

femur61 wrote: »

As far as the lump sum is concerned for people in the PS, I just don't understand it.

Typical private sector DB pension is 66% of wages.

Typical PS pension DB is 50% of wages plus 150% lump-sum.

The lump-sum is deemed to be equivalent to the 16.67% of annual salary.

Geuze

femur61 wrote: »

Secondary school teacher earns NZ73,000 which is €43,000 https://www.teachnz.govt.nz/teaching-in-new-zealand/salaries/in
Ireland they get €60,000 https://www.teachnz.govt.nz/teaching-in-new-zealand/salaries/

You would need to be a long time teaching in Ireland before you reach 60k, but yes, it is possible.

http://www.asti.ie/pay-and-conditions/pay/salary-scales/

http://www.asti.ie/pay-and-conditions/pay/salary-scales/salary-scale-for-teachers-appointed-after-january-2011/

The max point on post 2011 salary scale is 59,359, and that's after 27 years.

Geuze

femur61 wrote: »

Retire at 54 a lump sum and two thirds of their salary for life.

Again, this is incorrect.

Teacher can, in limited circumstances, retire at 55, but you must have 35 years pensionable service.

Your pension will not be 2/3 salary, that's incorrect.

robp

femur61 wrote: »

Fair enough, it may not be a full pension, but the majority of people cannot retire till 65-67. So in theory if they live into their 80's they will be receiving a pension longer than the years they worked.

As far as the lump sum is concerned for people in the PS, I just don't understand it.

Lumps are the norm in the private sector too, a lump is allowed to be withdrawn from personal pensions tax free.

kazamo

Geuze wrote: »

Typical private sector DB pension is 66% of wages.

Typical PS pension DB is 50% of wages plus 150% lump-sum.

The lump-sum is deemed to be equivalent to the 16.67% of annual salary.

What percentage of private sector workers have access to a DB pension.
The more realistic statistic (if available) would be the average pension of all private sector workers.

Making comparison against a minority of the private sector who have DB schemes is misleading

kazamo

robp wrote: »

Lumps are the norm in the private sector too, a lump is allowed to be withdrawn from personal pensions tax free.

Yes they are the norm.
I know 3 people in the private sector who have taken out their lump sums this year and there is nothing left to fund an ongoing pension.

Geuze

kazamo wrote: »

What percentage of private sector workers have access to a DB pension.
The more realistic statistic (if available) would be the average pension of all private sector workers.

Making comparison against a minority of the private sector who have DB schemes is misleading

I accept that for young private sector staff, DB pensions are very rare.

kazamo

Geuze wrote: »

I accept that for young private sector staff, DB pensions are very rare.

Not just young private sector staff. The majority of private sector employers have never unwritten the pension liabilities of its workers.

I worked in a multinational and the DB scheme there closed in 1999 and the pension funding requirements for 2023 will more than likely kill off many existing schemes for those already in a DB scheme.

kazamo

Geuze wrote: »

I accept that for young private sector staff, DB pensions are very rare.

Did a bit of digging on the pension authority website.
based on their 2014 report there are 703 DB schemes which are either active or frozen which currently employ 137,357.
Given a potential workforce of about 2.1 million with about 300k of them in the public sector, it would seem more than the young missed the DB schemes.

glacial_pace71

kazamo wrote: »

Did a bit of digging on the pension authority website.
based on their 2014 report there are 703 DB schemes which are either active or frozen which currently employ 137,357.
Given a potential workforce of about 2.1 million with about 300k of them in the public sector, it would seem more than the young missed the DB schemes.

This is interesting. However, there's an element of comparing apples and oranges. Most public sector DB scheme members are forced to pay from their 20s onwards. Most private pension schemes and personal pension plans are only started by the time people are in their 30s and 40s. The actuarial differences a decade of contributions makes would be enormous if seeking to make comparisons.

One other element of the public sector pensions is that the DB is designed for those working and contributing for 40 years into the scheme. Although this is theoretically possible for those professions that are largely public sector (nurses, Gardaí, teachers) it does not work well for the clerical, administrative or managerial grades.

Take the fictitious €60k earner. If they'd a period of career breaks for child-rearing or for caring for elderly relatives, plus a period of job-sharing, then the whole time equivalent (WTE) years might be say 25 years. At 25 * 1/80th for each WTE of service they'd end up with a notional €18,750. However, as the €60k pay rate is one for the post-1995 A-class PRSI contributor, the notional pension benefit is coordinated to the state pension, so you'd need to deduct the €233 per week, which - allowing for the budget changes - is 52.75 weeks? That's €12,300 of the €18,750. So a residual pension of €6,500 or so. What would you need to buy an annuity of €6,500 upon retirement? Probably a fund in the region of €150,000. Hardly demanding if you've been contributing from your 20s.

DB schemes penalise with actuarial reductions for retiring early, whereas if you were contributing to your own pension plan you've the benefit of compound interest still working in your favour for any years lost to child-rearing etc. DB schemes are fine for teachers, who'll essentially be with the same employers for their entire careers. For those entering or leaving the public sector the DB scheme is just another tax, as there's unlikely to be any benefit accruing.

The original thread hijacker with the fictitious 2/3 salary pension scheme etc did however point out something useful in terms of Ireland and New Zealand comparisons. For example it has been the source of much grumbling by D/ES and D/PER that teachers with a range of qualifications are in effect paid on the double, i.e. that they don't start on the first point of the scale and that they still get a qualifications allowance. It'd appear that the NZ situation is identical. Similarly, one other matter that's caused much civil service grumbling has been the issue of posts of responsibility. There have been arguments that if the duties are of a non-teaching nature, e.g. administrative or managerial, then they should be 'civilianized' in the manner the Garda desk jobs are being culled. However, it'd appear from the NZ links that posts of responsibility are a feature of their system too.

I think one issue missed in the comparison of salaries was that the €60,000 teacher is paying a PRD in the region of €4-5,000 per annum, and since 2009 they've paid 7 years of this.
http://www.irishstatutebook.ie/eli/2013/act/18/section/11/enacted/en/html

You might say the €30-€35k paid could help fund the salary breaches by Ministerial advisers but it's poor governance to have public servants' salaries available as a slush fund for political expenditure of that nature.

In my own case, having worked in public and private sector, in Ireland and abroad, I am in the position of having on/off public sector pension contributions for nearly 2 decades but within the next 2 years my extremely modest AVC scheme will overtake it in terms of any benefit accruing. And I've 2-3 decades of work ahead (whether in the public or private sector).

One other point that might have been missed in the 50% salary versus 2/3rd salary comparisons is that many pension plans incorporate the state pension into that 66% calculation, i.e. there's the €12k co-ordinated, just like the post-1995 public servants. The increases in the state pension are often trousered by the fund managers, i.e. the coordinated element is at the expense of the contributors' notional benefit.

kazamo

glacial_pace71 wrote: »

This is interesting. However, there's an element of comparing apples and oranges. Most public sector DB scheme members are forced to pay from their 20s onwards. Most private pension schemes and personal pension plans are only started by the time people are in their 30s and 40s. The actuarial differences a decade of contributions makes would be enormous if seeking to make comparisons.

One other element of the public sector pensions is that the DB is designed for those working and contributing for 40 years into the scheme. Although this is theoretically possible for those professions that are largely public sector (nurses, Gardaí, teachers) it does not work well for the clerical, administrative or managerial grades.

Take the fictitious €60k earner. If they'd a period of career breaks for child-rearing or for caring for elderly relatives, plus a period of job-sharing, then the whole time equivalent (WTE) years might be say 25 years. At 25 * 1/80th for each WTE of service they'd end up with a notional €18,750. However, as the €60k pay rate is one for the post-1995 A-class PRSI contributor, the notional pension benefit is coordinated to the state pension, so you'd need to deduct the €233 per week, which - allowing for the budget changes - is 52.75 weeks? That's €12,300 of the €18,750. So a residual pension of €6,500 or so. What would you need to buy an annuity of €6,500 upon retirement? Probably a fund in the region of €150,000. Hardly demanding if you've been contributing from your 20s.

DB schemes penalise with actuarial reductions for retiring early, whereas if you were contributing to your own pension plan you've the benefit of compound interest still working in your favour for any years lost to child-rearing etc. DB schemes are fine for teachers, who'll essentially be with the same employers for their entire careers. For those entering or leaving the public sector the DB scheme is just another tax, as there's unlikely to be any benefit accruing.

The original thread hijacker with the fictitious 2/3 salary pension scheme etc did however point out something useful in terms of Ireland and New Zealand comparisons. For example it has been the source of much grumbling by D/ES and D/PER that teachers with a range of qualifications are in effect paid on the double, i.e. that they don't start on the first point of the scale and that they still get a qualifications allowance. It'd appear that the NZ situation is identical. Similarly, one other matter that's caused much civil service grumbling has been the issue of posts of responsibility. There have been arguments that if the duties are of a non-teaching nature, e.g. administrative or managerial, then they should be 'civilianized' in the manner the Garda desk jobs are being culled. However, it'd appear from the NZ links that posts of responsibility are a feature of their system too.

I think one issue missed in the comparison of salaries was that the €60,000 teacher is paying a PRD in the region of €4-5,000 per annum, and since 2009 they've paid 7 years of this.
http://www.irishstatutebook.ie/eli/2013/act/18/section/11/enacted/en/html

You might say the €30-€35k paid could help fund the salary breaches by Ministerial advisers but it's poor governance to have public servants' salaries available as a slush fund for political expenditure of that nature.

In my own case, having worked in public and private sector, in Ireland and abroad, I am in the position of having on/off public sector pension contributions for nearly 2 decades but within the next 2 years my extremely modest AVC scheme will overtake it in terms of any benefit accruing. And I've 2-3 decades of work ahead (whether in the public or private sector).

One other point that might have been missed in the 50% salary versus 2/3rd salary comparisons is that many pension plans incorporate the state pension into that 66% calculation, i.e. there's the €12k co-ordinated, just like the post-1995 public servants. The increases in the state pension are often trousered by the fund managers, i.e. the coordinated element is at the expense of the contributors' notional benefit.

I don't know where to start with this tbh.

This comparison of public and private DB schemes is a diversion and on the face of it both schemes are by and large the same. The issue I have is that when the public sector DB scheme is raised, some automatically wish to benchmark it against the private DB schemes which as I pointed out last night only applies to about 135,00 people.
So we have the situation whereby 300k public servants are benchmarking themselves against 135,000 who have similar pension arrangements.
With 2.1 million workforce it's 14% of the workforce comparing themselves against 6% of the workforce and conveniently ignoring the other 80% of the potential labour market as it doesn't suit.

Re the private DB schemes having entrants in their 30's and 40's. That is true, but then they have lost out on the earlier years and only some are lucky enough to be able to buy back the lost years.

Re the 6k per anum pension costing 150k.
The annuity rates are much worse than that. For another thread a few months ago I looked up the annuity rates and based on a 75 year old retiring I think it took 17 years to get the full pension pot back.....Seeing as the life expantancy for an Irishman is under 80, quoting a circa 6% annuity rate for a 75 year old illustrates how penal these rates are.

The point about contributing to your own pension plan has an advantage over a DB scheme. As one of those soldiers, I did find your point amusing. No DB employee is ever going to swap their situation with a DC equivalent so that tells it's own story.

60k teachers paying 4-5k per anum to their pension.
I pay 20% on a similar salary and have no safety net.
I agree the money shouldn't be in a slush fund for politicans. This should be separated out and put into a separate pool and used to pay existing pension liabilities of public servants. The sooner we split out this effective Ponzi scheme from the state books the more transparency we will have on this black hole which we keep ignoring.

Your last point re the state pension being incorporated into figures when it suits. The same applies to the pension regulator calculator which assumes the state pension will always be there. And the calculator assumes uniform wage growth and wildly optimistic performance returns. If tax relief was done away with in the morning, the pension industry would die a quick death imo.

I am in a DC scheme and have always been but not by choice.
I look at the DB schemes both private and public and look on in amazement as how 20% of the workforce in Ireland assume the money will be there. They are great schemes if they pay out but will they pay out when the time comes.

I only posted here when I saw the rose tinted glasses coming out and posters pretending that PS pensions are the norm. They have downsides no doubt, but they are above the norm.

glacial_pace71

kazamo wrote: »

I don't know where to start with this tbh.

This comparison of public and private DB schemes is a diversion and on the face of it both schemes are by and large the same. The issue I have is that when the public sector DB scheme is raised, some automatically wish to benchmark it against the private DB schemes which as I pointed out last night only applies to about 135,00 people.
So we have the situation whereby 300k public servants are benchmarking themselves against 135,000 who have similar pension arrangements.
With 2.1 million workforce it's 14% of the workforce comparing themselves against 6% of the workforce and conveniently ignoring the other 80% of the potential labour market as it doesn't suit.

Re the private DB schemes having entrants in their 30's and 40's. That is true, but then they have lost out on the earlier years and only some are lucky enough to be able to buy back the lost years.

Re the 6k per anum pension costing 150k.
The annuity rates are much worse than that. For another thread a few months ago I looked up the annuity rates and based on a 75 year old retiring I think it took 17 years to get the full pension pot back.....Seeing as the life expantancy for an Irishman is under 80, quoting a circa 6% annuity rate for a 75 year old illustrates how penal these rates are.

The point about contributing to your own pension plan has an advantage over a DB scheme. As one of those soldiers, I did find your point amusing. No DB employee is ever going to swap their situation with a DC equivalent so that tells it's own story.

60k teachers paying 4-5k per anum to their pension.
I pay 20% on a similar salary and have no safety net.
I agree the money shouldn't be in a slush fund for politicans. This should be separated out and put into a separate pool and used to pay existing pension liabilities of public servants. The sooner we split out this effective Ponzi scheme from the state books the more transparency we will have on this black hole which we keep ignoring.

Your last point re the state pension being incorporated into figures when it suits. The same applies to the pension regulator calculator which assumes the state pension will always be there. And the calculator assumes uniform wage growth and wildly optimistic performance returns. If tax relief was done away with in the morning, the pension industry would die a quick death imo.

I am in a DC scheme and have always been but not by choice.
I look at the DB schemes both private and public and look on in amazement as how 20% of the workforce in Ireland assume the money will be there. They are great schemes if they pay out but will they pay out when the time comes.

I only posted here when I saw the rose tinted glasses coming out and posters pretending that PS pensions are the norm. They have downsides no doubt, but they are above the norm.

I'd take issue with your presumption that the PRD is a contribution towards a pension. It's a levy on salary for those who are in the public sector scheme. The superannuation contributions are separate, about 6-6.5% of salary, depending upon how the final percentages are coordinated against the state pension element of the calculation.
Btw there are dozens of simple calculators out there that - even if dishonest to the extent of overpromising on wage and growth calculations - can still give a reasonable yardstick, e.g.
http://www.annuities.ie/calculators.cfm
It's not unreasonable to take the 7% of salary example in the link above for comparative purposes of the 6-6.5% contribution by post-1995 public servants. With the state pension being increased again it admittedly temporarily skews the figures for the next few years but salary growth calculations are also a bit off in terms of the low inflation era we're facing. (Btw those who've been recruited in the past two years to the public sector are in a 'career average' scheme, in which they're guaranteed to lose unless their career entails several promotions early on).
On the point of swapping DB? If I could sell my public service contribution years tomorrow I'd do so in an instant: it's only really worth something if you can go the 40 year distance. Otherwise you'd be reliant upon your AVCs as being your primary pension scheme (a situation I'm almost certain to be in). The state pension age has been raised to 68, so even with increased life expectancy there's a 50 year period of adulthood to grow a pension fund. I suspect the fairest outcome would be an auto-enrolment scheme for all employees, but that'd also be a licence for pension fund managers to spend even longer weekends on London junkets, and would almost certainly see a lot of money taken out of the Irish economy, e.g. if forced into a pension scheme that money then tracks a mix of property, equities etc, most of which would be invested outside the state. No easy solution.

kazamo

glacial_pace71 wrote: »

I'd take issue with your presumption that the PRD is a contribution towards a pension. It's a levy on salary for those who are in the public sector scheme. The superannuation contributions are separate, about 6-6.5% of salary, depending upon how the final percentages are coordinated against the state pension element of the calculation.
Btw there are dozens of simple calculators out there that - even if dishonest to the extent of overpromising on wage and growth calculations - can still give a reasonable yardstick, e.g.
http://www.annuities.ie/calculators.cfm
It's not unreasonable to take the 7% of salary example in the link above for comparative purposes of the 6-6.5% contribution by post-1995 public servants. With the state pension being increased again it admittedly temporarily skews the figures for the next few years but salary growth calculations are also a bit off in terms of the low inflation era we're facing. (Btw those who've been recruited in the past two years to the public sector are in a 'career average' scheme, in which they're guaranteed to lose unless their career entails several promotions early on).
On the point of swapping DB? If I could sell my public service contribution years tomorrow I'd do so in an instant: it's only really worth something if you can go the 40 year distance. Otherwise you'd be reliant upon your AVCs as being your primary pension scheme (a situation I'm almost certain to be in). The state pension age has been raised to 68, so even with increased life expectancy there's a 50 year period of adulthood to grow a pension fund. I suspect the fairest outcome would be an auto-enrolment scheme for all employees, but that'd also be a licence for pension fund managers to spend even longer weekends on London junkets, and would almost certainly see a lot of money taken out of the Irish economy, e.g. if forced into a pension scheme that money then tracks a mix of property, equities etc, most of which would be invested outside the state. No easy solution.

My understanding was that PRD was a stopgap measure but coupled with superannuation reflected the true cost of pension provision. Long term pension provision at 6.5% is just pretending that there will be a sufficient pot at 68.

Even Using the calculator you linked illustrates this. Example 40k per annum starting at 25 with contribution of 7% leaves a sizeable gap to be filled even with state pension. Redo it without the state pension shows what 7% will achieve 6,489 per annum after paying in for 43 years.
The calculator is also misleading as it assumes 6% annual growth rate for every year and an annuity rate of 4% on retirement. These delusional assumptions need to be questioned. I also believe the state pension should be excluded from all pension calculators as the monthly pension deductions don't go into the PRSI system so it just muddies the waters.

Auto enrolment is another fancy idea and having done payroll at different times, employees will opt out unless there is a significant employer contribution. A lot of schemes have zero employer cost with 2-3 choices (with cash as one of them) and only in place as it's a legal requirement for employers to provide one.
Auto enrolment idea is not new as the late Brian Lenihan raised it in 2008 or 2009 but six years on we don't seem to be any closer to a concrete proposal. The original idea was that contributions would be sent to Revenue along with p30 returns with probably a follow up spreadsheet showing individual contributions split further into the individual funds across a few pension providers.
Now that doesn't sound complicated at all.

glacial_pace71

kazamo wrote: »

My understanding was that PRD was a stopgap measure but coupled with superannuation reflected the true cost of pension provision. Long term pension provision at 6.5% is just pretending that there will be a sufficient pot at 68.

Even Using the calculator you linked illustrates this. Example 40k per annum starting at 25 with contribution of 7% leaves a sizeable gap to be filled even with state pension. Redo it without the state pension shows what 7% will achieve 6,489 per annum after paying in for 43 years.
The calculator is also misleading as it assumes 6% annual growth rate for every year and an annuity rate of 4% on retirement. These delusional assumptions need to be questioned. I also believe the state pension should be excluded from all pension calculators as the monthly pension deductions don't go into the PRSI system so it just muddies the waters.

Auto enrolment is another fancy idea and having done payroll at different times, employees will opt out unless there is a significant employer contribution. A lot of schemes have zero employer cost with 2-3 choices (with cash as one of them) and only in place as it's a legal requirement for employers to provide one.
Auto enrolment idea is not new as the late Brian Lenihan raised it in 2008 or 2009 but six years on we don't seem to be any closer to a concrete proposal. The original idea was that contributions would be sent to Revenue along with p30 returns with probably a follow up spreadsheet showing individual contributions split further into the individual funds across a few pension providers.
Now that doesn't sound complicated at all.

You were probably on a late bus home like myself when trying to use that pension calculator: from the example of a 40k per annum you'd need to adjust down the final expected return to 50% rather than the default 66% shown. (Easier to work it from a laptop than a mobile, as I've just done now: see attached screenshot). One other adjustment would be to up the age to 28 so as to make it a 40 year contribution timeframe. So according to their (wholly misleading) calculator, a public service pension scheme would be self-funding. Albeit with no calculation for lump sum.

Of course I'm well aware of the near certainty of lower returns than in the sales projections the pensions industry use/misuse when advertising, but it's not a complete waste for comparative purposes.

On the PRD as a temporary emergency measure? Yes, it was introduced as that, but as soon as it didn't suit, e.g. NTMA started to whinge, they changed the legislation to let them off paying it, i.e. it was only a 'financial emergency measure' for plain vanilla public servants. The adjustment next year will take it below the €1 billion per annum but, if you look at the revised estimates for 2015, you can see that the public sector pensions bill was €2.8 billion for 150,000 or so people, that amount also including any lump sums paid out in the year.

http://www.per.gov.ie/en/publication-of-revised-estimates-for-public-service-2015/

Leaving aside the €500-600 million in pensions contributions per annum from the 280,000 public sector employees for a 40 year period to fund a 15 year or retirement, the figures aren't too mismatched, particularly when those currently paying in are on a wholly different set of terms and conditions that those already retired. The €1 billion PRD is really for other expenditure.

See p.21/253 for the €14.7 billion exp on pay and p.22/253 for the €2.8 billion on pensions. (The year 2015 is misleading, as every few years there'll be a 53rd week in a year to make up for the difference between 365.25 days and 52 payday weeks in a year). You need to dig down to find various dept-by-dept refs to the PRD estimates, but see p.52/253 re €950 million on D/Finance calculation.

Next year there's a small downward adjustment in the PRD to enable the emergency powers legislation to survive a legal challenge, i.e. the Govt can say that they're in the process of unwinding the legislation and so the Courts would be reluctant to grant mandamus to compel the Govt to any particular course of action.

By contrast see p.169/253 on the D/Social Protection estimates re 5.5 billion pension bill for PRSI contributors (which, over time, will include post-1995 public sector employees). There's a separate 900 million figure for certain categories of non-contributory state pension. See also the separate 600 million on invalidity pension payments.

If of any interest the public sector numbers, in whole-time equivalents, stands at 289,000 people. Doing the work of 320,000. Serving a population that's increased by 3+% since 2008. For €3 billion less in pay. All the stats can be found via the databank below:
http://databank.per.gov.ie/Public_Service_Numbers.aspx?rep=SectorTrend

It's not going to be easy to fund the state pension generally in the years to come, i.e. PSRI will probably have to increase for everyone, but the public sector pension scheme is not wildly out of control in the manner the hysterical media would suggest.

kazamo

glacial_pace71 wrote: »

You were probably on a late bus home like myself when trying to use that pension calculator: from the example of a 40k per annum you'd need to adjust down the final expected return to 50% rather than the default 66% shown. (Easier to work it from a laptop than a mobile, as I've just done now: see attached screenshot). One other adjustment would be to up the age to 28 so as to make it a 40 year contribution timeframe. So according to their (wholly misleading) calculator, a public service pension scheme would be self-funding. Albeit with no calculation for lump sum.

Of course I'm well aware of the near certainty of lower returns than in the sales projections the pensions industry use/misuse when advertising, but it's not a complete waste for comparative purposes.

On the PRD as a temporary emergency measure? Yes, it was introduced as that, but as soon as it didn't suit, e.g. NTMA started to whinge, they changed the legislation to let them off paying it, i.e. it was only a 'financial emergency measure' for plain vanilla public servants. The adjustment next year will take it below the €1 billion per annum but, if you look at the revised estimates for 2015, you can see that the public sector pensions bill was €2.8 billion for 150,000 or so people, that amount also including any lump sums paid out in the year.

http://www.per.gov.ie/en/publication-of-revised-estimates-for-public-service-2015/

Leaving aside the €500-600 million in pensions contributions per annum from the 280,000 public sector employees for a 40 year period to fund a 15 year or retirement, the figures aren't too mismatched, particularly when those currently paying in are on a wholly different set of terms and conditions that those already retired. The €1 billion PRD is really for other expenditure.

See p.21/253 for the €14.7 billion exp on pay and p.22/253 for the €2.8 billion on pensions. (The year 2015 is misleading, as every few years there'll be a 53rd week in a year to make up for the difference between 365.25 days and 52 payday weeks in a year). You need to dig down to find various dept-by-dept refs to the PRD estimates, but see p.52/253 re €950 million on D/Finance calculation.

Next year there's a small downward adjustment in the PRD to enable the emergency powers legislation to survive a legal challenge, i.e. the Govt can say that they're in the process of unwinding the legislation and so the Courts would be reluctant to grant mandamus to compel the Govt to any particular course of action.

By contrast see p.169/253 on the D/Social Protection estimates re 5.5 billion pension bill for PRSI contributors (which, over time, will include post-1995 public sector employees). There's a separate 900 million figure for certain categories of non-contributory state pension. See also the separate 600 million on invalidity pension payments.

If of any interest the public sector numbers, in whole-time equivalents, stands at 289,000 people. Doing the work of 320,000. Serving a population that's increased by 3+% since 2008. For €3 billion less in pay. All the stats can be found via the databank below:
http://databank.per.gov.ie/Public_Service_Numbers.aspx?rep=SectorTrend

It's not going to be easy to fund the state pension generally in the years to come, i.e. PSRI will probably have to increase for everyone, but the public sector pension scheme is not wildly out of control in the manner the hysterical media would suggest.

Regarding your calculations, I would find it hard to believe that any retiring employee would forgo a tax free lump sum in order for the pension pot to be a bit bigger.

As I have stated before, I have issues with the assumptions made in the calculator re annual performance of 6% and have also noticed that while funding the pension the inflation rate is 3% but as soon as retired the pension increases at a rate of 2%. I wasn't aware that inflation was age specific and I also found the 4% annuity rate to be very optimistic.

The calculator also factors in the old age pension as a way to prop up the numbers but there is no guarantee that it will remain in its current guise when we both retire. The state pension will probably be a two step hurdle to receive it.......first hurdle based on stamps, second hurdle based on means which will factor in any other pensions.

Re PRSI increasing, I am strongly opposed to that as the pay related aspect was disconnected two decades ago and the low paid get a free or largely free pass from having to contribute to it. If PRSI was to increase, then the old age pension must become a variable amount based on the contributions of individuals and not a standard payment.


One last thing, when you first linked that pension calculator I was using my ipad and the last screenshot you posted wasn't available to me.
I used the "pension requirements" link on the top of the same page.
My question is, can you do the same and see if you get the same result ?
I got a different number so wondering if I am being particularly dense on a Tuesday evening