Government to reverse some Public Secor Pay cuts

antoobrien · 05-09-2014 4:07pm

gazzer wrote: »

There is a MASSIVE difference though even taking the 'non permanent nature'. I will give my area as an example.

Civil Service IT Staff are getting a salary of between €25,000 to €62,000 (Depending on Grade and length of service)

The salary scale for the contractors is €110,000 to €130,000.

These contracts are for 18 months with an option to extend.

TBH sounds like they are offering lower rates than private sector rates. I know of a company in Cork that were paying €500 per day (equivalent to 110k allowing 6 weeks off and no holiday or sick pay, which is afaik is standard for private contracting) in 2010.

gazzer wrote: »

As somebody who is responsible for drafting the tenders and evaluating them for contractor staff I can 100% say that we have had the same contractors for the last 6 years. When we go to tender we get a LOT of expressions of interest but when it comes to the actual applications come in we are lucky if we get 2. From feedback we have gotten the reason for the lack of responses is because the money been offered is too low.

If the role is Dublin based, yeah it's too low.

gazzer wrote: »

Myself and other Civil Service IT staff has asked to be trained up to do the work of these contractors. Obviously it is not something you can learn overnight but I have been asking for the last 6 years.

Yeah so you can retire early and then go contracting. Not even civil service management is that stupid.

gazzer wrote: »

One of the contractors gets paid the same as 3 staff at my level and grade. Its crazy the amount of money been spent.

It might seem so in the short term, but longer term it's buttons as unless you've drawn up a contract that screws the company, the contract bears all other costs.

antoobrien · 05-09-2014 4:09pm

Riskymove wrote: »

no the link to pay rises will be cut for everyone

Unless this has been superseded, then you're wrong.

Current public servants will remain in their various current ‘final salary’ superannuation schemes and will not be affected by the new career average system, which only applies to new entrants. However since few new public servants are being recruited at the moment, due to a public sector recruitment moratorium, the effect of the new scheme in the short-term will be minimal.

http://www.eurofound.europa.eu/eiro/2011/10/articles/ie1110029i.htm

noodler · 05-09-2014 4:20pm

I am a new entrant so sadly I have :

- the career average earnings despite being better qualfiied than many at or below my grade and new recruits who joined as recently as 2012. It is my understanding that index-linked is also just for the 1% of new entrants who joined from 2013 onwards.

- New combined pay scales which are worse than the new entrant pay scales (which in turn were worse than the pay sclaes for pre-2011 staff).

Riskymove · 05-09-2014 4:22pm

antoobrien wrote: »

Unless this has been superseded, then you're wrong.

http://www.eurofound.europa.eu/eiro/2011/10/articles/ie1110029i.htm

thats the "final salary vs average salary" bit

the increases in the pension is a different measure which will be applying to everyone

Brian lenihan announced it some time ago but they have not implemented yet because, as I mentioned, they'd have to start now. Instead they are leaving the status quo becuase there are no pay rises and therefore no increases to pensions

as soon as it makes financial sense they will announce a cut in the link

Riskymove · 05-09-2014 4:25pm

antoobrien wrote: »

Yeah so you can retire early and then go contracting. Not even civil service management is that stupid.

unless you are over 50 you'd have to resign

retiring early is really only an option where a particular deal is offered

gazzer · 05-09-2014 5:00pm

antoobrien wrote: »

Yeah so you can retire early and then go contracting. Not even civil service management is that stupid.

You cant retire early. You can leave the job of course but you cant retire until you hit retirement age.

srsly78 · 05-09-2014 10:00pm

gazzer wrote: »

There is a MASSIVE difference though even taking the 'non permanent nature'. I will give my area as an example.

Civil Service IT Staff are getting a salary of between €25,000 to €62,000 (Depending on Grade and length of service)

The salary scale for the contractors is €110,000 to €130,000.

These contracts are for 18 months with an option to extend. As somebody who is responsible for drafting the tenders and evaluating them for contractor staff I can 100% say that we have had the same contractors for the last 6 years. When we go to tender we get a LOT of expressions of interest but when it comes to the actual applications come in we are lucky if we get 2. From feedback we have gotten the reason for the lack of responses is because the money been offered is too low.

These are the rates the contracting companies charge, not necessarily the rates the individuals get. The service company that wins the contract will usually take 15%-50% of that money. Also consider that the individual contractor suffers many of the downsides of self-employment, class-A prsi, no PAYE tax credit, accountancy fees etc. Yes they are well paid, but not quite as well as everyone thinks.

The public sector could simply employ IT professionals themselves and bypass these service companies, but no such positions are advertised (no experienced professional is going to sign up for e25000).

kippy · 05-09-2014 10:16pm

srsly78 wrote: »

These are the rates the contracting companies charge, not necessarily the rates the individuals get. The service company that wins the contract will usually take 15%-50% of that money. Also consider that the individual contractor suffers many of the downsides of self-employment, class-A prsi, no PAYE tax credit, accountancy fees etc. Yes they are well paid, but not quite as well as everyone thinks.

The public sector could simply employ IT professionals themselves and bypass these service companies, but no such positions are advertised (no experienced professional is going to sign up for e25000).

This is a big point and something I have seen a lot of.
A lot of public service workers' particularly in the IT sector only interaction with IT workers in the private sector is with contractors.
Contractors salaries are generally nowhere near what the headline rate is. They also, generally have extremely specialist skills.
I'd ask why public sector IT workers don't move over to the contracting roles IF the conditions are so attractive.......

There are many IT jobs in the private sector that don't pay anywhere close to some of the roles in the public sector.

kippy · 05-09-2014 10:24pm

gazzer wrote: »

There is a MASSIVE difference though even taking the 'non permanent nature'. I will give my area as an example.

Civil Service IT Staff are getting a salary of between €25,000 to €62,000 (Depending on Grade and length of service)

The salary scale for the contractors is €110,000 to €130,000.

These contracts are for 18 months with an option to extend. As somebody who is responsible for drafting the tenders and evaluating them for contractor staff I can 100% say that we have had the same contractors for the last 6 years. When we go to tender we get a LOT of expressions of interest but when it comes to the actual applications come in we are lucky if we get 2. From feedback we have gotten the reason for the lack of responses is because the money been offered is too low.

Myself and other Civil Service IT staff has asked to be trained up to do the work of these contractors. Obviously it is not something you can learn overnight but I have been asking for the last 6 years. One of the contractors gets paid the same as 3 staff at my level and grade. Its crazy the amount of money been spent.

The amount of money paid to contractors in general is crazy.
But two or three things necessitate their use (from what I can see) and tbf this would depend on the area they are contracting in:
1. The hiring freeze on permanent staff. This is as it is.
2. The sometimes short term nature of a specific project were a very limited but specialised skill set is needed for a short period of time. Sometimes it just aint worth "training someone up" for a specialised piece of work. However some of the Project Management and Business Process' are so poor in the public sector that a lot of these "short term" projects end up in development and indeed maintenance stage for far to long, leading to the issues you may have encountered.
3. The lack of suitable qualified and experienced staff in house. This is a major issue in the public sector. From what I have seen IT staff are not always coming from a background of IT. They may have no formal qualifications in it and are essentially pulled from the business. The grade itself determines your "suitability" for the role, not the role requirements. Then you have the issues of "training". Training is all well and good but to be of major value you need to have experience also. You don't tend to gain much experience in the Public sector, you need to spend some time moving around in employment to gain that.

barneystinson · 06-09-2014 1:08am

Brussels Sprout wrote: »

Labour party minister Brendan Howlin announces that some of the Public Sector pay cuts implemented over the past number of years will be reversed. No details of which ones or when exactly this will happen.

Is there really any merit for this at a time when the budget is still being adjusted to try and make expenditure match income?

Is this a political stunt by the Labour party in the runup to the 2016 general election to match Michael Noonan's talks about cutting income tax?

link

I think the 1,000th post is a good time to go back to the OP, especially since Fliball seemed to believe somehow he had "won" the argument, by steadfastly refusing to acknowledge how stats work.

I do agree with one thing he said though, which is that the thread is effectively pointless and should be closed. But for a different reason.

Howlin said that the Govt will have to enter talks with PS unions next year about what will happen when HRA ends. That's just common sense, everyone should welcome that happening. We can, and will, disagree about what the outcome should be but it'd be very foolhardy at this stage to reckon that the Govt should just let HRA expire without having agreed what comes after.

I think I'm done with this thread now, since it seems to have delved off into the usual old chestnuts.

chopper6 · 11-09-2014 1:17pm

kippy wrote: »

You don't tend to gain much experience in the Public sector, you need to spend some time moving around in employment to gain that.

What?

noodler · 11-09-2014 2:54pm

Riskymove wrote: »

thats the "final salary vs average salary" bit

the increases in the pension is a different measure which will be applying to everyone

Brian lenihan announced it some time ago but they have not implemented yet because, as I mentioned, they'd have to start now. Instead they are leaving the status quo becuase there are no pay rises and therefore no increases to pensions

as soon as it makes financial sense they will announce a cut in the link

It has been implemented.

Legisaltion was passed in late 2012 /early 2013 (everyone joing after implementation has career average earnings).

As a measure then it is an absolute joke and will not affect 99% of public servants but will discriminate against newer entrants.

Riskymove · 12-09-2014 9:11am

noodler wrote: »

It has been implemented.

you are talking about something else - the "pension based on average earnings" bit

the change in how existing pensions are increased has not yet been implemented

noodler · 12-09-2014 9:15am

Riskymove wrote: »

you are talking about something else - the "pension based on average earnings" bit

the change in how existing pensions are increased has not yet been implemented

Misread your post.

I thought as a 'new' new entrant that I was stuck with index-linkage to the CPI though.

Godge · 12-09-2014 10:14am

noodler wrote: »

Misread your post.

I thought as a 'new' new entrant that I was stuck with index-linkage to the CPI though.

No, there has been no decision on how the pensions of those who retire with a "new" pension should be treated in retirement.

Neither has there been a decision on how those who retire with an "old" pension will be treated in future. Until now they have been linked to earnings. While the pensions were cut, they were not cut as much as salaries were under the FEMPI Acts, so arguably, the link has been broken already and what happens next is up for grabs.

Ironically, had public sector pensions been linked to the CPI, anyone who retired since 2008 would have been better off.

noodler · 12-09-2014 10:19am

Godge wrote: »

No, there has been no decision on how the pensions of those who retire with a "new" pension should be treated in retirement.

Neither has there been a decision on how those who retire with an "old" pension will be treated in future. Until now they have been linked to earnings. While the pensions were cut, they were not cut as much as salaries were under the FEMPI Acts, so arguably, the link has been broken already and what happens next is up for grabs.

Ironically, had public sector pensions been linked to the CPI, anyone who retired since 2008 would have been better off.

Yup, and that would have been the only period in history.

Riskymove · 12-09-2014 11:54am

Godge wrote: »

Ironically, had public sector pensions been linked to the CPI, anyone who retired since 2008 would have been better off.

which is why they didn't implement this...but they will in due course imo

Godge · 12-09-2014 12:36pm

noodler wrote: »

Yup, and that would have been the only period in history.

Would have to look up the stats but there are two other candidate periods:

Late 1980s with the pay freeze under MacSharry.
Hyperinflation in the 1970s.

Overall though, retired public servants have been better off with the current system.

Loire · 12-09-2014 1:00pm

Hi,

New to all this, but one thing that doesn't get mentioned much is the tax-free lumpsum that public servants get on retirement. 1.5 times final salary for full service.

Lets assume someone finishes on 60k with 40 year's service. It's highly likely that that person started on a much lower salary over the 40 years and so the annual contributions would have been small for most of their contributions. But even discounting this - let's say the person was always earning 60k and paid 6.5% on this.

This means that they would have paid 156,000 towards their pension (60,000 * 0.65% * 40). Taking away the lumpsum of 90,000 you are left with a net contribution of 66,000.

So 66,000 for half your final salary (30,000) per annum, index-linked for the rest of your life.

Sounds pretty good to me

Loire.

Head The Wall · 12-09-2014 1:24pm

noodler wrote: »

It has been implemented.

Legisaltion was passed in late 2012 /early 2013 (everyone joing after implementation has career average earnings).

As a measure then it is an absolute joke and will not affect 99% of public servants but will discriminate against newer entrants.

So we will start to see savings from this in 30-40 years time. That's ok though, there's no need for any money to be saved right now :-)

Godge · 12-09-2014 1:31pm

Loire wrote: »

Hi,

New to all this, but one thing that doesn't get mentioned much is the tax-free lumpsum that public servants get on retirement. 1.5 times final salary for full service.

Lets assume someone finishes on 60k with 40 year's service. It's highly likely that that person started on a much lower salary over the 40 years and so the annual contributions would have been small for most of their contributions. But even discounting this - let's say the person was always earning 60k and paid 6.5% on this.

This means that they would have paid 156,000 towards their pension (60,000 * 0.65% * 40). Taking away the lumpsum of 90,000 you are left with a net contribution of 66,000.

So 66,000 for half your final salary (30,000) per annum, index-linked for the rest of your life.

Sounds pretty good to me

Loire.

Basic private pension schemes employer match employee's contribution.
Really good private pension schemes employer doubles employee's contribution.

Using your example, matching contributions would give a pension fund of 222,000, enough for the pension for retiring at 65 to last until 72/73. If the person was post-95 in a co-ordinated scheme, the pension would only be €18,000 meaning the 222,000 would last until they were 77/78.

If you assume the State is a good employer and would contribute double the employee's contribution, the pension would last even longer. You are also forgetting that the unused contributions of those who died before they get a pension can be used to fund those who live longer etc.

It is not a simple calculation and it is really something that should be left to actuaries to give evidence on.

Godge · 12-09-2014 1:32pm

Head The Wall wrote: »

So we will start to see savings from this in 30-40 years time. That's ok though, there's no need for any money to be saved right now :-)

Do you know is anything being done in the UK to address their public sector pension arrangements which have an even bigger hole in them than ours. After all, it is your tax money which is paying for those big UK pensions.

noodler · 12-09-2014 1:48pm

Godge wrote: »

Do you know is anything being done in the UK to address their public sector pension arrangements which have an even bigger hole in them than ours. After all, it is your tax money which is paying for those big UK pensions.

Don't obfuscate when somebody makes a point you can't counter.

Regarding the pension lump sum, I have a deduction for that taken out of my salary every two weeks. I haven't done the maths but I assume I'd see a net benefit from it. It isn't free as such though - it is a third deduction from salary's relating to pensions.

Godge · 12-09-2014 2:09pm

noodler wrote: »

Don't obfuscate when somebody makes a point you can't counter.

.

There is no point countering it.

You cannot change pension costs overnight. Pension entitlements are a form of property right as the courts have ruled and you just can't wave a magic wand and change that.

Also we have been looking for short-term savings over the last few years rather than long-term savings.

For example, moving all public servants to the new pension scheme for all future service (i.e. you hold what you have accumulated already in line with property rights) would save much more money over a 20-30 year frameline but it would have done nothing to bring down costs in 2010 and 2011. Hence the pension levy and pay cuts.

When they are restored, it might get interesting.

Riskymove · 12-09-2014 2:09pm

Head The Wall wrote: »

So we will start to see savings from this in 30-40 years time. That's ok though, there's no need for any money to be saved right now :-)

would you rather they left it the way it was forever?

you know well they implemented other changes to reduce the current cost

Riskymove · 12-09-2014 2:10pm

Godge wrote: »

You cannot change pension costs overnight. Pension entitlements are a form of property right as the courts have ruled and you just can't wave a magic wand and change that.

unfortunately not the case for PS

Riskymove · 12-09-2014 2:12pm

Loire wrote: »

Hi,

Hi

New to all this, but one thing that doesn't get mentioned much is the tax-free lumpsum that public servants get on retirement. 1.5 times final salary for full service.

it gets mentioned all the time

So 66,000 for half your final salary (30,000) per annum, index-linked for the rest of your life.

as per other posts, PS pensions are not funded or paid for in this way

Godge · 12-09-2014 2:41pm

Riskymove wrote: »

unfortunately not the case for PS

It took a national financial emergency to legally cut the pensions in accordance with the Constitution. Once the emergency is over, the pensions will have to be restored, in accordance with Constitutional law. The only question is how quickly will the pay cuts and pensions be restored.

Head The Wall · 12-09-2014 2:48pm

Godge wrote: »

Do you know is anything being done in the UK to address their public sector pension arrangements which have an even bigger hole in them than ours. After all, it is your tax money which is paying for those big UK pensions.

We are not discussing UK pensions but here's a fact for you

In April 2013 it is estimated that on average the pay of the public sector was between 2.2% and 3.1% higher after adjusting for the different jobs and personal characteristics of the workers

After further adjusting for the different organisation sizes between the public and private sector, in April 2013 it is estimated that on average the pay of the public sector was between 1.3% and 2.4% lower than the private sector.

This is quite a bit less than the premium enjoyed in Ireland especially at the lower end of the pay scale but you'll probably choose ignore these as well

Godge · 12-09-2014 3:20pm

Head The Wall wrote: »

We are not discussing UK pensions but here's a fact for you

In April 2013 it is estimated that on average the pay of the public sector was between 2.2% and 3.1% higher after adjusting for the different jobs and personal characteristics of the workers

After further adjusting for the different organisation sizes between the public and private sector, in April 2013 it is estimated that on average the pay of the public sector was between 1.3% and 2.4% lower than the private sector.

This is quite a bit less than the premium enjoyed in Ireland especially at the lower end of the pay scale but you'll probably choose ignore these as well

But you use unadjusted comparisons for Ireland or badly constructed adjusted comparisons.

You also don't allow for the differences between Ireland and the UK - the London allowance for public servants makes a difference. When combined with the higher percentage of public sector workers in the workforce in Scotland and Northern Ireland, you are not comparing like with like with Ireland.

I could go on and on into the academic research but this thread is more focussed on tabloid-type headlines.

Government to reverse some Public Secor Pay cuts

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