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Slashing Public Sector Pay

rodento

Just wondering what would happen to the false and actual ecomany if you slashed the public sector pay/pension including semi's and the social welfare by another 30%.

Thinking in terms of loan defaults, huge drop in tax take, collapse of feeder industries like creche's and resturants etc

Would it mean that people could no longer afford to work, how would they get rid of their cars if they could no longer afford to run them:eek:

Would utility companies survive with people no longer been able to afford to pay for heat/electricity...

Not forgeting the effects on rents and mortgages

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sollar

bluewolf wrote: »

You were not "pick pocketed", you were asked to contribute a marginal amount of the cost of the pension itself.
Those pensions cost a fortune and PS contributions do not begin to cover their cost.

At this stage i think we'll just have to accept we see it differently.

Imagine halfway through that charlie mccreevy savings scheme where you put in 4 euros and get back €5 at the end of scheme etc. If Charlie has said half way through that he thought it was too generous that now he wanted you to put in €4.50 but at the end you would still only get the €5 back. How would you view that. Would you say your only contributing more towards your savings scheme or would you say he's renaged on the deal ad increased the cost to participate in it.

ardmacha

Respectable employers generally make a contribution to pensions

http://www.google.ie/intl/en/jobs/benefits.html
http://www.intel.com/jobs/ireland/bencomp/benefits.htm#Retire

perhaps McDonalds don't, but I didn't say all employers did. I referred to good practice by responsible employers.

gigino

The average Guard who put 4 pounds in to his pension 30 years ago is now retiring aged 50 with a pension pot of 1.2 million.

gigino

ardmacha wrote: »

, but I didn't say all employers did.
.

I did not say you say all employers did.

ardmacha wrote: »

,
I referred to good practice by responsible employers.

So employers are not "responsible employers" now if they do not provide a public service type pension scheme for all of their employees, in addition to paying the usual employer taxes to the goverment?

Riskymove

ardmacha wrote: »

perhaps McDonalds don't, but I didn't say all employers did. I referred to good practice by responsible employers.

think again

A Whopper of a Retirement Plan
Like with most retirement plans, McDonald's (NYSE:MCD) employees can contribute up to 50% of their pre-tax earnings in their 401(k). Most people don't. Financial planners often suggest employees contribute up to the amount employers will match in their 401(k) and then put the annual maximum in their Roth IRA (currently $5,000) and if they have anything left after paying the bills, to make a further contribution in their 401(k). The important word here is "match." Some companies won't (or don't) match their employee contributions. Not doing so is a morale deflator and to be avoided at all costs. That's not a concern at McDonalds. In fact, their match is overly generous, to the point of obscene.

The retirement savings plan provides those employees with one year of service a 300% matching contribution on the first 1% of earnings and 100% match on the next 4%. So, if you earn $50,000 annually at the Golden Arches and make a 5% or $2,500 contribution to your plan, McDonald's will kick-in $3,500. In addition, at the discretion of management, it will make a further profit sharing contribution on the next 4% in 2008. Overall, that's a 240% match. Not many can claim this privilege.

To stanch the bleeding of valuable talent, McDonald's in 2004 began offering a rich retirement savings perk. Employees who put 5 percent of their salary in the company 401(k) receive a company match of as much as 11 percent, turbocharging their savings right off the bat. To make sure employees take advantage of the program, McDonald's has made enrollment automatic. And to ease the pain of automatically deferring 1 percent of pay, the company gave managers a one-time, 1 percent salary increase.

Riskymove

gigino wrote: »

So employers are not "responsible employers" now if they do not provide a public service type pension scheme for all of their employees, in addition to paying the usual employer taxes to the goverment?

be careful, your bout of hysteria may lead to injury!

He didn't say anything about 'public service type pensions' he is talking about employer pension contributions which, as can be seen from above, happen in many companies

gigino

ardmacha wrote: »

I referred to good practice by responsible employers.

Do you think McDonalds is a responsible employer. They have actually won many awards.

http://www.mcdonalds.ie/a-great-place-to-work/best-employer.aspx

And yet do you think their employees enjoy public service type pensions ?

lol.

In addition to their annual pension, the average public servant gets their fax free "gratuity" of 18 months salary, which is enough in these times to buy the guts of not one but two brand new 2-bedroom apartments in some parts of the country.

N>B> WE ARE TALKING ABOUT IRELAND, NOT AMERICA !!! lol.

P. Breathnach

Drumpot wrote: »

Yes, finally we are getting closer to some sort of normal arrangement , but its still a perk that is not completely funded by the contributions of its members.

http://www.finfacts.ie/irishfinancenews/Irish_Economy/article_1022173_printer.shtml

I followed the link. It does not seem to relate to current arrangements. It's a bit naughty to present it as evidence in support of your assertion.

Count Dooku

ardmacha wrote: »

This point is often overlooked, or more likely deliberately ignored. Most people retiring now do not receive the OAP, so appearing to get bigger pensions. If they did receive the OAP state expenditure would be the same, but the PS pension bill less.

they didn't pay PRSI in full and it will take ages before post-96 will start to retire in mass

Riskymove

Count Dooku wrote: »

they didn't pay PRSI in full and it will take ages before post-96 will start to retire in mass

most changes to pension arrangements, by their nature, take a long time to see results

the same applies to companies which changed from defined benefit, it usually applies to people who join after a certain date

Drumpot

P. Breathnach wrote: »

I followed the link. It does not seem to relate to current arrangements. It's a bit naughty to present it as evidence in support of your assertion.

You think since Jan 2010 the bridge has been gapped ?

:rolleyes:

gigino

Riskymove wrote: »

he is talking about employer pension contributions which, as can be seen from above, happen in many companies

He was talking about America. Ireland is a different country lol

Not too many employers in Ireland can or do afford pensions for employees , never mind public service type golden pensions. Even look at McDonalds Ireland, winner of best Employer.
http://www.mcdonalds.ie/a-great-place-to-work/best-employer.aspx

Riskymove

gigino wrote: »

He was talking about America. Ireland is a different country lol

?

so let me get this straight, you dont believe that McDonalds, Intel or Google, or indeed other firms make any employer contributions to pensions in Ireland?

Not too many employers in Ireland can or do afford pensions for employees , never mind public service type golden pensions.

again I dont see anyone suggesting that such companies gave employers the same kind of pensions

although they have up until recently of course (Banks, Insurance companies etc)

Riskymove

gigino wrote: »

Even look at McDonalds Ireland, winner of best Employer.

are you listening?

McDonalds have a Retirement Plan

P. Breathnach

Drumpot wrote: »

You think since Jan 2010 the bridge has been gapped ? :rolleyes:

The piece you linked does not relate to the current pensions regime in the public service.

gigino

Riskymove wrote: »

?
so let me get this straight, you dont believe that McDonalds, Intel or Google, or indeed other firms make any employer contributions to pensions in Ireland?

Some employers are lucky enough to be in a position to contribute to employee pensions ( in addition to employer taxes ) , but most do not, and certainly not public service type golden pensions. Well over a million of the people in the private sector have no pension....never mind a golden pension. Yet some public sector posters here think their employers are not " respectable or responsible" In the real world, many businesses are struggling - and some closing down - to pay us something ( golden pensions ) which in many cases they cannot afford for themselves.

Riskymove

gigino wrote: »

Some employers are lucky enough to be in a position to contribute to employee pensions

thanks for that (grudging) admission

Well over a million of the people in the private sector have no pension

yes, that remains an issue of great concern

Drumpot

sollar wrote: »

At this stage i think we'll just have to accept we see it differently.

Imagine halfway through that charlie mccreevy savings scheme where you put in 4 euros and get back €5 at the end of scheme etc. If Charlie has said half way through that he thought it was too generous that now he wanted you to put in €4.50 but at the end you would still only get the €5 back. How would you view that. Would you say your only contributing more towards your savings scheme or would you say he's renaged on the deal ad increased the cost to participate in it.

yes, that would of happened if we had entered a depression when the monies was maturing. You see this whole sense of entitlement allows public servants to ignore the financial situation facing this country.

The only way our government can pay salaries and perks in the public service is by either reducing them in line with what it actually has to spend or tax the rest of us to keep it inflated. If you are an employee of any company, you cannot expect your employer to continue to honor your contract if they cannot simply afford it.

Drumpot

P. Breathnach wrote: »

The piece you linked does not relate to the current pensions regime in the public service.

Oh, so you refer soley to the new pension arrangement for new employees ? When there have been few, if any new entrants to the public service ?

You do understand that the need for cuts is immediate ? Not something we can wait to bear fruit in 30 years ?

kippy

Jaysus, are we back here again - almost 3 years later trying to sort out the mess.
1. Not all public servants get this "Gold Plated pension" and like I said two years ago by the time the dust has settled a public service job/pension wont be of the same value as it was in the past.
2. A public service pension is also made up of the OAP pension - the component that is made up of just working in the public service isnt as high as the usual figures bandied about.
3. This figure is made up of an employee contribution (which has increased over the past few years), an employeer contribution, which, despite what some people say is relatively common place (maybe not as much of a percentage) for permanent full time employees of private sector companies as well. A portion of this pension is also made up of the aptly named spouse and childrens pension contribution.
4. There is no "opt out" of the scheme and the benefits drasticilly decrease if your time in the service is not full term (fair enough obviously)
Theres a few more negatives to it but predominately it is better than MOST offerings in the private sector.

Now, I dont think it's fair or indeed equitable AT ANY TIME, not just now, that a pensioner can walk away with one and a half times their salary tax free. Thats just wrong. I also dont think its fair that public sector pensioners have not seen their salary scale linked pensions fall in line with the salary scales cuts that have happened.
This has to change, but so to do pensions and they way they are managed in this country.
Everyone is bickering and arguing that we cant afford this any more - too right we cant - we've just blown approx 20+ billion of NPR funds on propping up dead, zombie banks - instead of using it to generate jobs and fund consistent revenue generating projects.
An increment freeze should have been the first thing any government does in times such as these - and a proper PDS system would have seen many of the useless wasters (there are a few of them) and pointless management posts eradicated long ago. As a country we are useless at doing this type of work though, it'll have to be forced on us.

The jobs for life, gold plated pensions are on the cusp of disappearing well, for the low to mid paid public servants anyway - not that thats a bad thing.

dan_d

The point that public service workers (except maybe the older ones..) seem to miss is that traditionally, the PS was always the poorly paid option for workers. The trade-off against that was a job for life and a bullet proof, generous pension.

In terms of pensions, the PS pension is one of the best ones there is. There is no equivalent in terms of how much an employee is required to contribute relative to how much they will receive on retirement.

Benchmarking brought PS pay levels to match those in the private sector, and then some. Things are now bad. The private sector has taken quite a large hit, but the PS are having their cake and eating it too. I'm NOT starting this Public vs Private crap again, but the point I am trying to make is that way back, the trade off was not-great-pay for job security and an excellent pension. There's no dressing that up, and there's little or no equivalent in private industry.

Riskymove

dan_d wrote: »

but the PS are having their cake and eating it too.

what exactly do you mean here?

there have been paycuts and reforms to pensions and most PS expect more, how exactly are they 'having their cake and eating it too"?

kippy

dan_d wrote: »

There's no dressing that up, and there's little or no equivalent in private industry.

Eh - that really depends on when you retired, the type of investments your pension fund was invested in and what level you worked at.
DB is definetly a great great pension but DC schemes can and have performed well at certain times - its all down to when your retire and the value of what you've it invested in.

Again though, I think pensions should be overhauled altogether, theres no real reason that Private sector workers on a similiar level to public sector workers cant receive a similiar pension - PROVIDED the public sector workers pensions come down/they pay tax on the lump etc.......

Riskymove

kippy wrote: »

PROVIDED the public sector workers pensions come down/they pay tax on the lump etc.......

PS and private sector both have the same tax liabilities in this case

a private fund can pay a once-off tax free lump sum too

although the recent changes brought in a €200,000 cap i think

Drumpot

Riskymove wrote: »

are you listening?

McDonalds have a Retirement Plan

I can tell you I worked for a bank and and an Assurance company and i was getting no contributions to my pension plans.

You can pick certain companies that are a tiny represenatation of the wider private sector workforce that may indeed offer small contributions to their employees plans (in some cases 1%, seldom more then 5%), but in general, the majority of the private sector does not enjoy anything near the kind of contributions that would bring them anywhere near what the value of the public service pension is.

Drumpot

Riskymove wrote: »

PS and private sector both have the same tax liabilities in this case

a private fund can pay a once-off tax free lump sum too

although the recent changes brought in a €200,000 cap i think

But employees cannot avail of 1.5 times salary unless the are in an occupational pension plan (that many employers choose not to have) or an Executive Pension plan (that is only available to specified employees). They will however be entitled to potentially 25% of their retirement pot that is dependent on what they put in and how their fund has performed (less guarantees, more variables that make it difficult to plan for retirement).

That aside, the tax free lump sum comes out of the money used to buy them a Pension. So the more tax free lump sum they take, the less a pension they can purchase.

Riskymove

Drumpot wrote: »

the majority of the private sector does not enjoy anything near the kind of contributions that would bring them anywhere near what the value of the public service pension is.

no one said the majority did...tbh...there is constant moving of the goalposts on this point

sure I could say no PS will get close to Michael Fingleton's pension pot...what would that achieve?

as mentioned following the recent reforms PS now pay

c.7% contribution
another c.7% levy
PRSI
USC

and then a c.5% levy when they actually get the pension...plus the USC and any taxes that are liable

The average PS pay is €47 which corresponds to a pension of €23.5k (if you have 40 years service and not for new entrants)

of which €12k will be OAP and 11.5k the pension

[Deleted User]

sollar wrote: »

At this stage i think we'll just have to accept we see it differently.

Imagine halfway through that charlie mccreevy savings scheme where you put in 4 euros and get back €5 at the end of scheme etc. If Charlie has said half way through that he thought it was too generous that now he wanted you to put in €4.50 but at the end you would still only get the €5 back. How would you view that. Would you say your only contributing more towards your savings scheme or would you say he's renaged on the deal ad increased the cost to participate in it.

This is a ridiculous comparison.
Slightly more accurate would be putting in 1.50 and getting 5 back if you are still on the salary you are on now, but you'll get 10 back if you get a promotion in the meantime - still only having paid 1.50. Then they say okay can you pay 2.

The average PS pay is €47 which corresponds to a pension of €23.5k (if you have 40 years service and not for new entrants)

of which €12k will be OAP and 11.5k the pension

and 70k tax free gratuity, yes?

I don't know why the OAP is being deducted here; the same is true for standard private DB

Head The Wall

Riskymove wrote: »

5. new entrants will have a 10% further reduciton in salary and will have a pension based on average salary as opposed to final salary meaning reduced pensions in the future

Reduced pensions "when" in the future? 30 or 40 years maybe, that'll do a lot for our current deficit

Riskymove

bluewolf wrote: »

and 70k tax free gratuity, yes?

if you had 40 years yes, but that is being discussed seperatelky here...but just to be clear I have no problem with changes to that element of the system

I don't know why the OAP is being deducted here; the same is true for standard private DB

My understanding is that a private sector worker can recieve his pension and the OAP

with regard to PS (post 95) the occupational pension is reduced by the amount for the OAP (i.e,. the aggregate is half final salary)