20 thoughts on “ESRI Conference on Pensions”

  1. @KW
    Thank you for posting the data.

    The data produced by Gerard Hughes is a real eye-opener.

    €540 million of combined tax breaks to what appears to approx 11,500 people based on an average of €60,000 each. [I am inferring an average of about €60,000 from one of the charts, but it could be higher]

    Added to this is the fact that many of this group of people will escape the pension levy through the creation of ARF’s, even before the age of 60. [The tax firms are already plugging schemes to do this]

    Albeit that the data is from 2007, this level of reliefs to approx 11,500 people is unforgivable.

  2. Erratum. Mea Culpa.
    The combined total of tax reliefs above should be €690 million (being 150 tax +540 bik), inferring 11,500 at an average of €60,000 each.

  3. Page 27 of Pension Challenges: International Perspectives Edward Whitehouse (OECD) has Ireland as the most distant outlier for relative old age income poverty.

    (I suppose most of us looking for Ireland on graphs automatically scan the outliers at this stage.)

  4. NPRF is in the vichy_bankers’ black hole; just in case we might have forgotten in the fog of delusion.

    Policy: Rob the granny! Rob the blind, the lame and the maimed.

    Export a generation; no pensions required – neat!

    Criminal. Insane. Kleptocracy. Lemming_esque.

    & MoF hugs the hangman! tut, tut – from the land of ‘stand up and fight’ – a mewling capitulation to the forces of unconscionable expropriation.

    Bad week for the serfs, the spalpeens, and the mass of lemmings.

  5. @Joseph Ryan
    I agree with you. A very impressive document. There’s 540 million of savings by removing the bik exemption… without expropriating small pensions.

  6. A major pension injustice is the level of senior public sector employee pensions. Starting with the scandalous level and accrual rate of politicians pensions which are completely unfunded and an enormous liability against future tax revenues. We are way out of line with all other EU countries and yet I see no effort being made to correct the situation. Maybe our friends in the IMF will force action on our compromised political class.
    Who can forget the wonderful comment of the well-known FFer Martin Mansergh who said ministers pay and pensions could not be touched because they are linked to principle officers in the civil service whose pay levels are set by the same ministers!

  7. I had a reasonably healthy private pension until about 2008 but now it looks more tattered than my polytunnel does after suffering the winds over the past week. It would be nice to get one of those TD’s pensions and not have to spend a lifetime working/saving for my own only to find it doesn’t even pay for my grocery bill in retirement. They’re good those smooth-talking pensions salesmen (and women of course!). He really had me believing that it was a good thing to do, save for retirement instead of relying on the State. It seems that some are more able to rely on the State than others!

  8. @ Rob S.

    “whilst ignoring the unsustainable size of the public sector pay and pensions bill.”

    It might be worth noting that the government used to have a plan to deal with public sector pensions, i.e. the NPRF, which is in the process of being blown on the banks.

  9. @Karl Whelan
    “It might be worth noting that the government used to have a plan to deal with public sector pensions, i.e. the NPRF, which is in the process of being blown on the banks.”
    Indeed and not just the public sector.

    Which is why some of us reckon that the spend of the NPRF should be taken into account when the debt burden in 2015 is calculated. After all, the pensions problem hasn’t gone away…

  10. @All

    The public sector pension situation is a perfect pyramid scheme. those paying the levy currently pay for impressive pensions for the relatively small population already retired civil and public servants.
    This is only possible because of the huge increases in the numbers that entered the system in the last 2 decades.

    One solutions would be to pass the funding of pensions back to civil servants. a pension fund body could be estabilished which would be run essentially by the unions and other appropriate ‘stakeholders’.
    The workers & unions could then run the show.. but with their own money only and not with private sector taxes. they could chose to reduce or increase the pension levy but either way the liability of on the state would be removed.
    The fund administrators/unions etc would also have plenty of warning to fix and underfunding.

  11. @Rob S

    I note that Pat McArdle’s wish to even things up as between the private and public sectors does not extend all the way up the earnings or wealth ladder.

    The draft levy legislation contains serious anomalies. Pensions in payment from ARFs (Approved Retirement Funds) and some PRSAs are, rightly in my view, exempted.

    I should add to this that it is my understanding that all of the ARF fund will be exempted from the levy and not just “pensions in payment” as per Pat McArdle. This despite the fact that the biggest reason for putting funds into an ARF is so that one need not pay out a pension because a person has access to other income.

    In fact ARF’s were nothing than wealth fund for aging well to do people that was fully exempted from CGT and Income tax. This has now changed a little for people over 60 who will in effect be deemed to getting an income from the ARF, similar to anybody else that has to take out an annuity or pension. People under 60 can still create ARF’s and escape the levy. There is already significant ‘tax planning’ advice being touted regarding this.

    All ARF’s are however exempted from the levy. Rightly so according to Pat McArdle!.
    It would be interesting to have Pat McArdle respond to level of reliefs as outlined by Gerard Hughes in his paper.

  12. @davidc
    This letter refers to the cash position on public sector pensions. If you look at the actuarial position you will find that no category of public servant is making anything close to the required contribution for an indexed pension. And at the top level including judges,department secretaries etc. where they have very few years at their final salry level the funding level required is a multiple of their actual salary.
    Senior public sector pensions are a major factor in our non-competitiveness versus other countries and need to be addressed urgently.

  13. @Tom Paine

    Economically speaking, it’s nonsense to talk about pension contributions when you don’t have an individual pension fund. The question is simply one of the structure of total compensation.

  14. @tom paine

    “Senior public sector pensions are a major factor in our non-competitiveness versus other countries and need to be addressed urgently.”

    And the link between TDs, ministers, and senior civil servants remuneration will not impede this in the slightest…….

  15. It’s all in the name; you can benefit or you can contribute. Apples and oranges.

  16. @Niall Dunne

    I’m not sure what you mean by that. What I mean is that I’m a public servant. I don’t have an individually managed pension fund. Nor can I opt out of my public service pension. There is thus no substantial difference between increasing my contributions and cutting my pay (or between decreasing my contributions and increasing my pay). Or to put it another way, the contributions are nominal, a fiction created by the Department of Finance.

    For that reason, whether my contributions are enough to pay for the pension I will receive should I survive and remain working in the public sector until my retirement, is irrelevant. It has no bearing whatsoever on, well, anything.

  17. @KW

    “It might be worth noting that the government used to have a plan to deal with public sector pensions, i.e. the NPRF, which is in the process of being blown on the banks.”

    Noted. Doesn’t really change anything in the here and now.

    @davidc

    Interesting letter, the Gross pensions bill of 2.6bn in 2009 is easily confirmed. Do you know the source for the contributions though?

    And whilst I am open to correction on this, surely the Government balancing the books with regards pensions in one year hardly changes the reality that there is serious situation to tackle?

    @Joseph Ryan

    In strictly moral terms I completely agree with you. Perhaps the author was fearful of the international reaction if it was viewed to have taken money strictly classified as “savings”.

  18. @Sam

    IMHO that would be the only sustainable solution but to make it more equitable across the public service every retired public servant under the age of 68 should also be required to contribute from their pensions.

    If the the pension bill is 2.6Bn (I actually believed it was 2.3bn but perhaps it included lump sum payments) then 330,000 public servants would have to contribute an average of 7500 per annum.

    When the public sector falls to 300,000 contributions from retired Public Servants under 68 would make up the slack and help to “kick start” a fund while the work force is reducing between now and 2015. After all the first letter in NRPF stands for “national” which effectively means the entire state has “first call” on what is (IMHO) really a sovereign fund with a vote catching title.

    I do not think the Private sector/tax payer (i.e employer) would have any problem contributing to the retirement lump sum of a maximum 1.5 years after 40 years (possibly rising to 45 years by 2060)or allowing 33% tax relief on contributions provided large lump sums exceeding 80,000 Euro were subject to 33% tax in excess of that figure

    The controversial debate regarding pensions between the private sector and public sector is not going to go away and personally I feel if public servants start dealing with it now they will be less vulnerable further down the road when they are retired and less influential.

    Such a “stakeholder” system would also put an end to the “gilded cage” syndrome as many public servants would be happy enough to spend significant amounts of their working lives in the private sector and vice versa.

    A 55 year old earner is much more capable of adjusting than a 75 year old no matter how influential a public servant they may have been.

    A “public purse” system which can take away drivers form elderly people like Liam Cosgrave, Albert Reynolds and Garrett FitzGerald (Brian, Bertie and John are young enough to drive themselves) when it is in crisis can also do other things in future crises.

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