Private vs Public

jinish · 07-03-2021 1:49am

AndrewJRenko wrote: »

Good point. OP might want to clarify which pension he qualifies for currently.

I am on single pension scheme (post 2013)

AndrewJRenko · 07-03-2021 1:51am

jinish wrote: »

I am on single pension scheme (post 2013)

Are you sure that the pension comparison you did earlier was based on the Single Pension Scheme? It's really not a great scheme.

jinish · 07-03-2021 2:03am

AndrewJRenko wrote: »

Are you sure that the pension comparison you did earlier was based on the Single Pension Scheme? It's really not a great scheme.

I didnt do deep maths, just a broad calculation.
I started at HSE during 2013. If I continue to work for HSE until I am 68, ( with an average salary of 60k), I would be getting around 75k lumpsum and 26k Annual pension( Including the 12k state pension).
To match these figure, I should be paying around between 900-1000 (Less tax benefit around 600) per month.
Again these all are just broad numbers that I remember.
Currently the pension contributions are around 300 per month.

AndrewJRenko · 07-03-2021 2:06am

jinish wrote: »

I didnt do deep maths, just a broad calculation.
I started at HSE during 2013. If I continue to work for HSE until I am 68, ( with an average salary of 60k), I would be getting around 75k lumpsum and 26k Annual pension( Including the 12k state pension).
To match these figure, I should be paying around between 900-1000 (Less tax benefit around 600) per month.
Again these all are just broad numbers that I remember.
Currently the pension contributions are around 300 per month.

How many years service will you have at retirement?

07-03-2021 2:06am

So you would be paying that 900 or 1000 a month nett or gross?

Id say that 600 tax is a relevant enough figure to be clear about

Edit: you arent presuming your private employers might match contributions also?

Edit 2: take the 12k COAP from the 26k also. Its yr prsi pays for that

So if im reading right your private sector pension needs to match a 75k lump sum and a pension of 14k, and you may get employer contributions towards that

I don't think yr comparisons on the pension costs/benefits are at all accurate tbh and id look again to be sure of my understanding if i were you

Padraig1888 · 08-03-2021 5:32pm

Works out an extra €5k after tax, although the bonus added, but I'd stay with the HSE for job security and pension.

salonfire · 08-03-2021 10:58pm

Deleted User wrote: »

A lot of private sector firms match contributions up to 11, 12% and with tax benefits its not the difference that the propaganda machines would have you believe

And what the propaganda machine of the public sector don't tell you is that their pension contributions do not apply to the total of their salary, only the amount above a threshold, €35000 for the ASC contribution.

Employees having matching 11% contributions in the private sector have that amount applied to their whole salary.

The "10-16% contribution" spin we hear from public sector is not their actual % contribution of their salary.

PS pensions also are guaranteed, linked to increases in current employee salaries and with spouse entitled to half in the case of death.. Now recalculate what the private workers' contribution needs to be to have these benefits as well.

namenotavailablE · 08-03-2021 11:07pm

My Excel spreadsheet might be useful for doing net pay calculations:

http://taxcalc.eu/monthlyss/Employee%20PAYE%20calculator.xlsm

Uses macros so for Windows only and minimum version of Excel is 2010

JPup · 08-03-2021 11:14pm

Is the potential private sector employer not offering a pension match? It's common that if you put in 5% of your gross salary a month (3% net approx) that the employer will top that up by 10% of your gross pay. Worth checking and redoing the sums.

Before you turn them down, it's also worth asking if they will give you the €80k pay before bonus which is what you thought was being offered. If they give you a €80k salary, plus 10% pension match, plus health insurance, plus bonus potential then you might be on to a winner.

bilbot79 · 08-03-2021 11:34pm

60k in public is a nice place to be.

09-03-2021 3:59pm

salonfire wrote: »

And what the propaganda machine of the public sector don't tell you is that their pension contributions do not apply to the total of their salary, only the amount above a threshold, €35000 for the ASC contribution.

Employees having matching 11% contributions in the private sector have that amount applied to their whole salary.

The "10-16% contribution" spin we hear from public sector is not their actual % contribution of their salary.

PS pensions also are guaranteed, linked to increases in current employee salaries and with spouse entitled to half in the case of death.. Now recalculate what the private workers' contribution needs to be to have these benefits as well.

Correct to a large extent- but i was keeping it relevant to questioning the poster's understanding of their own figures to be sure to be giving them good advice.

Seeing as we dont know about the scheme they are on i cant likewise be certain of either the contributions made nor the exact benefits.

But if you're asking me is my pension great, yeah its ****ing brilliant, thanks!

Edit: for my own interest and because its good to know i spose:

Leaving out PRSI and the 12k COAP so:

Pension contributions total roughly 8.5/9% of my salary.

Seeing as that 12k paid for through PRSI (amongst other things, ofc) on current figures comprises almost a half of my final annual pension, then id have said that whatever type of angle you took at it youd be fair in allowing a couple of percent *at least* in trying to account for it.

No propaganda there, im sure youd accept? So yeah, on my scheme, with my benefits, id think well over 10% of salary safely goes to pension.

OP and anyone else in the situation just needs to know what they currently pay and get, and what the private offer encapsulates, but for anyone post 2013 as stated a decent matching offer from an employer is imo not something that you should just handwave away.

jinish · 11-03-2021 9:52am

Thank you all for the valuable contributions.
Its very helpful.
Il

floorpie · 11-03-2021 11:35am

Can someone sum up the private vs public pensions (post 2013) topic, for someone trying to understand pensions for the first time.

It seems that public sector employees pay pension contributions + PRSI, but don't receive the state pension, whereas a private employee who paid both would receive state pension + private pension. If the amount an average employee pays into pension + PRSI is equal throughout their career, is the private employee getting more in retirement, generally?

Do public pensions fluctuate with markets in the same way pension funds seem to?

I've seen posters say "I'm going to retire when my pension pot reaches x", do public employees have this same mechanism for making use of their pension?

Posters also say that public sector pensions are more safe than private. Safe in what sense? I'm looking at a report about expected future costs of public pensions (https://assets.gov.ie/7297/b20cd73e5e714136be88bd828aea7667.pdf) and it says they're unsustainable and lists permissible ways to cope with this, e.g. linking pension increases to CPI rather than pay parity. This seems to expose employees to the same economic risks that private employees are exposed to, except public pension can't be touched until retirement? That doesn't seem very safe

maxsmum · 11-03-2021 11:43am

Public sector employees get state pension too.

floorpie · 11-03-2021 11:51am

maxsmum wrote: »

Public sector employees get state pension too.

So the state pension and occupational (?) pension are integrated for public sector employees? Is this to their benefit or detriment, or makes no difference?

The_Conductor · 11-03-2021 5:04pm

floorpie wrote: »

So the state pension and occupational (?) pension are integrated for public sector employees? Is this to their benefit or detriment, or makes no difference?

It really depends.

A public sector employee earns 2/80ths of their pension for every year of service (aka it takes 40 years to reach a full pension).

A full pension typically is 1.5 times final salary as a tax free lumpsum + half career average salary as an annual pension.

The annual pension is reduced by the prevailing rate of the contributory old age pension using a formula known as COPC.

So- depending on when someone joins the public sector and the pension scheme they find themselves on- they find themselves on- it would not be out of the ordinary for someone to find themselves in this situation:

Final salary 60k

Lumpsum 90k
Pension rights 30k of which 17.5k is a public sector pension and the remainder is the COAP.

The contributory old age pension does not vest until 67- and its thought it could increases to 70 or even higher in future years (I don't think people realise just how bankrupt our pension system is).

Potentially on retirement the employee could have their 90k lumpsum, and a pension of 17.5k for a number of years- before the COAP would vest.

For this- depending on circumstances and the scheme they are on- they pay between 9.2% and 16.1% (assuming a gross salary of 60k). The percentage will vary depending on a number of different circumstances.

The pre-1995 staff- are a completely different kettle of fish- and are not entitled to claim the PRSI based COAP- but get their pension after 40 years of years of service anytime from age 60 onwards, as a single pension for the public sector, administered by DSP as a separate scheme payment.

What is key really- is when the person joined the public sector- anyone from pre-1995 has a far better pension arrangement- than post 1995- and there are a number of key dates post 2000 on which pension schemes changes (always to the detriment of the employee).

The public sector schemes you hear about in the media the whole time- tend to be the pre-1995 schemes (and most certainly not the current scheme- which is no-where near as generous).

salonfire · 11-03-2021 7:38pm

The_Conductor wrote: »

Potentially on retirement the employee could have their 90k lumpsum, and a pension of 17.5k for a number of years- before the COAP would vest.

That's not true. Public sector workers are - disgracefully - paid a supplementary pension as a replacement for the rising OAP, in affect raising the OAP impacts private workers only

The_Conductor wrote: »

For this- depending on circumstances and the scheme they are on- they pay between 9.2% and 16.1% (assuming a gross salary of 60k). The percentage will vary depending on a number of different circumstances.

That's a complete lie. Someone on 60k in the post 1995 scheme pays about 7.8% of their total salary in contributions, legacy and asc.

There are thresholds below which no deduction is applied, (€24000 for the net deduction, €34000 for the asc deduction), apart from the 1.5% gross.

It's astounding how people in the civil and public sector on Boards continue to peddle lies and mistruths on how much they contribute to their pensions.

floorpie · 11-03-2021 7:48pm

The_Conductor wrote: »

It really depends.

A public sector employee earns 2/80ths of their pension for every year of service (aka it takes 40 years to reach a full pension).

etc.

This is really helpful, thanks

shesty · 11-03-2021 7:55pm

It's like this OP.......you can lose that private sector job.
Having worked in both, that little fact creates a very different atmosphere in a private sector office.You do have this thing always hanging over you that you have to put your best foot forward all the time, and do whatever that may require.It is not the same in the public sector.I have never really lost that feeling myself.
For that pay, you will have to give quite a lot to be honest. Are you in a personal position to do that, with your kids??
I mean the private sector isn't bad, a lot of nonsense that goes on in the public sector isn't there, but I would think very carefully about that move.You would probably get back in ok, having watched a good few people move back and forth over the years.

beauf · 11-03-2021 8:21pm

You've also got to consider if you'll get 40yrs service and/or be able to buy back years if short.

The_Conductor · 11-03-2021 9:21pm

beauf wrote: »

You've also got to consider if you'll get 40yrs service and/or be able to buy back years if short.

The cost of purchasing back years (notional service) is prohibitive- and actually, from a monetary perspective, costs more than you are likely to be disbursed when it comes due. Seriously- the tables are staggeringly expensive. Most public sector employees buy AVCs in the private sector (Lyons Financial do a special one for the public sector for example) rather than purchasing notional service.

They revise the tables on which the price of notional service is based periodically. Following one such review (back in 2003) the number of public sector employees availing of the option to purchase notional service fell off a cliff. Its only gotten even more expensive since.

AVCs are popular in the public sector- notional service, not anymore. Anyone who bought notional service prior to 2004- got a sweetheart deal- that will never ever be repeated again.........

11-03-2021 9:27pm

salonfire wrote: »

That's not true. Public sector workers are - disgracefully - paid a supplementary pension as a replacement for the rising OAP, in affect raising the OAP impacts private workers only

That's a complete lie. Someone on 60k in the post 1995 scheme pays about 7.8% of their total salary in contributions, legacy and asc.

There are thresholds below which no deduction is applied, (€24000 for the net deduction, €34000 for the asc deduction), apart from the 1.5% gross.

It's astounding how people in the civil and public sector on Boards continue to peddle lies and mistruths on how much they contribute to their pensions.

Ive set out above in some detail where id come to an approx figure of maybe around 11 or 12% for my contributions.

I also pointed out where my advice and comments were relevant to the op and questions asked

Its been pointed out a few times that the pre 95 is a totally different beast to the post 2014 pension, why you would pick the former as if it were relevant at all to someone asking a question today is transparently obvious.

Your language is unseemly to the point of propaganda again and i doubt very much that anyone asking for an unskewed answer for their own circumstances could feel too sure of any advice based on your posts.

So what exactly is your purpose here?

11-03-2021 9:34pm

The_Conductor wrote: »

The cost of purchasing back years (notional service) is prohibitive- and actually, from a monetary perspective, costs more than you are likely to be disbursed when it comes due. Seriously- the tables are staggeringly expensive. Most public sector employees buy AVCs in the private sector (Lyons Financial do a special one for the public sector for example) rather than purchasing notional service.

They revise the tables on which the price of notional service is based periodically. Following one such review (back in 2003) the number of public sector employees availing of the option to purchase notional service fell off a cliff. Its only gotten even more expensive since.

AVCs are popular in the public sector- notional service, not anymore. Anyone who bought notional service prior to 2004- got a sweetheart deal- that will never ever be repeated again.........

It used to be am investment if you felt you were likely to advance- course, youd to balance that against your being less able to afford it in a lower grade!

With the single scheme now ive no idea whether there's a case for it at all, certainly couldnt be a cheap option at all as you say

The_Conductor · 11-03-2021 9:42pm

salonfire wrote: »

That's not true. Public sector workers are - disgracefully - paid a supplementary pension as a replacement for the rising OAP, in affect raising the OAP impacts private workers only

Supplementary pension, to the best of my knowledge- is only paid to the pre-1995 staff. It was phased out for new entrants a long time ago. New entrants, if they retire prior to the vesting of the OAP- are expected to claim unemployment benefit.

Heather Humphrys made a statement on this in January- where she said those who retire (both public and private) at age 65 will no longer be subject to this anachronism going forwards. I'm not sure she told DSP what she was up to- because they still haven't implemented the change- though it is early days.

salonfire wrote: »

That's a complete lie. Someone on 60k in the post 1995 scheme pays about 7.8% of their total salary in contributions, legacy and asc.

There are thresholds below which no deduction is applied, (€24000 for the net deduction, €34000 for the asc deduction), apart from the 1.5% gross.

It's astounding how people in the civil and public sector on Boards continue to peddle lies and mistruths on how much they contribute to their pensions.

There are 6 distinct schemes in place for the post 1995 staff- each scheme progressively more expensive or progressively less generous (or both) for new entrants. Simply saying post 1995 is akin to Fr. Ted looking out the window with Dougal and the toy cow- and comparing it to the cow that is far away. The percentage that public sector employees pay- varies greatly- depending on when they were first employed in the public sector (and what ground was conceded by their unions in the intervening period of time).

Pensions are a massive ticking time bomb in Ireland- and the workers of today are going to be looking back at the golden era that the pensioners of today have- wondering how come they can't have the same.

We need to have a legitimate discussion about pensions in Ireland- and how to fund them- however, we also need to realise that the largess that we are bestowing on the pensioners of today- is completely and utterly unaffordable. Our pay-as-you-go approach to pensions and social welfare- is so bust that its just not funny. And yet- we refuse to make the hard decisions- probably because whichever politician mentions it, is going to have their head handed to them on a platter.

Its not even a public versus a private debate- if the cupboard is bare, the cupboard is bare, period.

salonfire · 11-03-2021 9:42pm

Deleted User wrote: »

Its been pointed out a few times that the pre 95 is a totally different beast to the post 2014 pension, why you would pick the former as if it were relevant at all to someone asking a question today is transparently obvious.

You might want to read what I actually wrote. It was to correct The_Conducter's example.

salonfire wrote: »

Someone on 60k in the post 1995 scheme pays about 7.8% of their total salary in contributions, legacy and asc.

Deleted User wrote: »

i doubt very much that anyone asking for an unskewed answer for their own circumstances could feel too sure of any advice based on your posts.

Feel free to correct anything I calculated incorrectly then.

KaneToad · 11-03-2021 9:49pm

The_Conductor wrote: »

There are 6 distinct schemes in place for the post 1995 staff- each scheme progressively more expensive or progressively less generous (or both) for new entrants.

Can you outline these 6 scheme changes via a rough timeline? Or is there a link you could post that shows them. It would be interesting reading to see the stages of decline in the value of the pension for the public sector worker.

Thanks.

salonfire · 11-03-2021 9:51pm

The_Conductor wrote: »

Supplementary pension, to the best of my knowledge- is only paid to the pre-1995 staff.

My impression from the Irish Times is that it applies to all public service retirees. Pre-95 don't even get an OAP so it's irrelevant to them if the eligibility age goes up

Irish Times wrote:

“Supplementary pension is available, on application, to retirees in order to make up the shortfall in pension for the period between date of retirement and the age of eligibility for State Pension (Contributory) where the non-payment of Social Welfare Benefits is through no fault of the retiree,” the explanatory note for public service retirees reads.

The_Conductor · 11-03-2021 10:07pm

salonfire wrote: »

My impression from the Irish Times is that it applies to all public service retirees. Pre-95 don't even get an OAP so it's irrelevant to them if the eligibility age goes up

There was a transition pension, available to both public and private sector employees- until 2014, when DSP in their infinite wisdom, decided to close it- and force those who were eligible to retire before the age at which the old age pension vests- claim the dole instead.

It came about in 2014- and was the subject of numerous representations to the Department- such as the one from Age Action Ireland who called it 'an affront to the dignity of our elderly to force them to claim unemployment benefit until such time as the NCOAP and the COAP vests'.

The government undertook to look into it- the result of which was a statement by Heather Humphrys in January- modifying the scheme into one akin to the previous transitional pension which was abolished in 2014- whereby the recipients would not have to formally sign on and pretend they were seeking work.

The remaining o/s matter- according to Age Action Ireland- is the difference of EUR45 a week between the COAP payment and the unemployment payment- which means people on the transitional scheme will be down roughly 2.5k per annum on where they'd be if they were allowed simply claim the pension benefit.

The new transitional arrangements- are not yet in place (to the best of my knowledge- if you know better, please feel free to correct me).

The transitional scheme applies to both public and private sector recipients.

Also- public sector employees have had their age of compulsory retirement increased to 70- so they don't end up needing the scheme (in many private sector posts, including bank staff and others- no such increase in the age of compulsory retirement has yet occurred).

11-03-2021 10:15pm

salonfire wrote: »

You might want to read what I actually wrote. It was to correct The_Conducter's example.

Feel free to correct anything I calculated incorrectly then.

Youre right about pre/post 95, sorry about that.

I set my own actual percentages in a post a few days back. I repeated the figure i'd arrive at, with interpretation of what to do with the 12k COAP/PRSI. 11, maybe 12%

Id question your figures based on that. My payslip.

Thats an absolute figure so takes into account the thresholds for ASC and all that.

If the posters asking for advice are post 95 then, depending on what grade they are at (and therefore the % of their final pension that 12k would be, etc) they can start from there

If they are single scheme its not too much use to them alas but we can certainly advise them not to join the PS for the pension if that were the case.

houseyhouse · 12-03-2021 3:30pm

barrier86 wrote: »

I went from a decent paying job with great perks and career prospects to a clerical officer role in civil service. Took a fairly big pay cut but at the time I could afford to do it. I’m happy I took the job in the public sector. I had a terrible first year in the civil service but that has sorted itself out and I am delighted to have made the change.

I say stay!

I am considering something similar. Have you found you were able to progress reasonably quickly through the public sector? Were your previous experiences valuable in that respect? I want to move but don't want to be on 25k for long considering have family obligations etc.

Private vs Public

Comments