View Full Version : Public service pension levy announced
OneRedArmy
03/03/2009, 3:56 PM
I'm a shop steward, and the opposite is the case - I've been getting more and more requests as the days go on. In times of uncertainty people go to their Trade Union rather than turn their back on it, as it is their only protection to be part of a collective rather than an individual.
The Unions I mentioned have more in common than would divide them - virtually all PSEU and AHCPS members would've been in the CPSU, and on promotion CPSU encourages people into the PSEU. Similarly IMPACT and SIPTU would generally cooperate well. It's the whole bloody point of Congress ffs!
btw Redundancies would be resisted, but there's more than one way for the Government to skin a cat. A voluntary early retirement scheme would get volunteers even if opposed by the unions (and I'm not sure it would be). In fact I think it's one of the things the Bus Unions are proposing rather than the shameful sackings of people on their probation (who've done nothing wrong) that CIE are doing.
1) Voluntary redundancies cost a huge amount of money in the short-term and generally attract a lot of people you want to keep. It leaves the poor performer issue unaddressed (the private sector will fire many of these people in a downturn).
2) Its not collective bargaining if there is no common ground on the key issues. On the levy, the only common ground appears to be flat out rejection.
paudie
03/03/2009, 3:59 PM
I can see how you could call that tax avoidance in the strictest sense of the word. But I wouldn't, and I'd guess 90% of Ireland wouldn't.
If I was earning what the top earners are making, yes, I would. I would also keep my money in Ireland and pay the full amount of tax due on it. If I didn't, I'd feel like a scumbag taking advantage of my country.
That's how I think of these people, they're scumbags. I'd prefer they didn't pay any tax in my country, and weren't allowed to call themselves Irish. Because the morals by which they live can't be good for our country anyway.
adam
But who are the "top earners"? Who are "they" and "these people"?
To someone on minimum wage a civil servant on 40-50k would qualify as a top earner. Maybe then they stop claiming medical expense relief?
To that civil servant it will be someone earning 80-100k. They should stop claiming it so, right.
No, no the person on 80k will say I'm entitled to it but the bank CEO's shouldn't claim it. And on it goes.
The fact is if you are paying tax you can probably afford not to claim those reliefs but if the person on 50k doesn't think they should do that "for the good of the country" why should somebody on considerably more?
And just for the record, you only pay PRSI up to 50k odd, so you can discount that out of you the rich pay their fair share calculation.
http://www.welfare.ie/EN/Publications/SW14/sw14_09/Pages/ClassA.aspx
Someone on A1 PRSI pays 2% over 52k with no upper limit, a reduced rate but not nothing.
Someone on class S1 (self employed/directors controlling companies) pay 5% up to 100k and 5.5% after that with no upper limit.
I don't think any one wants to go back to 70%+ top rate of tax from the 1980s. While the tax rates in Ireland could not be considered high the fact is you reach the top rate very quickly on modest income.
While it will look good politically to add new top rate for 100k+ people I don't think there are enough of them to add a significant amount to the tax take.
Avoiding tax is legal & everyone does it. Evasion is illegal.
dahamsta
03/03/2009, 6:42 PM
paudie, your ideas of who a top earner is and how they behave is just not worth arguing with. You have perceptions I frankly have difficulty believing. I'll leave it there thanks.
NeilMcD
03/03/2009, 8:24 PM
I think there are 2 things at play here. Firstly as Fintan O Toole says the internal workings of the pension levy are unjust as in someone who is on 49,000 pays less then someone on 38,000 due to the levy being on the gross income. In addition there are other unjust examples. This in not unjust as in its unjust that someone is losing their job in the private sector but unjust that it can be fixed pretty easily if the senior civil servants and the minister actually made adjustments to the levy that made if fairer across the civil service. This really is an internal public service matter and the government and the social partners messed it up in my view.
Secondly and this continues on from my last point above. The government should have presented a package of reforms, in the banking sector,. the public sector and the taxation system and other areas. THis could have been presented as a road to recovery package or whatever. Anyway it would have been a genuine attempt get across the point that we are all in this together and that we all have a contribution to make. However what they have managed to do is a piecemeal attempt and they have turned public versus private and a culture of the politics of envy.
OneRedArmy
03/03/2009, 9:35 PM
Very accurate assessment Neil (IMO).
It all smacks of panic thinking.
I think there are 2 things at play here. Firstly as Fintan O Toole says the internal workings of the pension levy are unjust as in someone who is on 49,000 pays less then someone on 38,000 due to the levy being on the gross income. In addition there are other unjust examples. This in not unjust as in its unjust that someone is losing their job in the private sector but unjust that it can be fixed pretty easily if the senior civil servants and the minister actually made adjustments to the levy that made if fairer across the civil service. This really is an internal public service matter and the government and the social partners messed it up in my view.
Secondly and this continues on from my last point above. The government should have presented a package of reforms, in the banking sector,. the public sector and the taxation system and other areas. THis could have been presented as a road to recovery package or whatever. Anyway it would have been a genuine attempt get across the point that we are all in this together and that we all have a contribution to make. However what they have managed to do is a piecemeal attempt and they have turned public versus private and a culture of the politics of envy.
Not keen on quoting an entire post but a very good assessment.
The fact is the government have no plan of recovery. They talk about the budget deficit all the time yet seem unwilling to actually take action as I think they want someone to take the fall. Ironically if they actually focused as hard on their budgets over the last 5 years the situation would not be so bad.
passinginterest
04/03/2009, 2:09 PM
Got my first pay slip with a pension levy deduction today. It's not quite as bad as expected, we also got a handy email explaining how to calculate it (this pay date only takes in the first five days). Overall I think I'll lose about €50 a fortnight, money I'd prefer to have in my pocket, but not something worth bringing the country to a standstill for. I still think the weighting of the levy could be fairer and when tax increases hit after this emergency budget it'll still make for a fairly substantial decrease in disposable income (compensated for somewhat by lower mortgage and fuel costs). It's a difficult time for the country as a whole and unfortunately we don't seem to have a government with any kind of clue how to get it moving in the right direction again.
Private Sector pension numbers (http://www.irishtimes.com/newspaper/finance/2009/0304/1224242232662.html)
For those lucky to have a pension.
PENSION FUNDS continued to lose significant value last month, with the average Irish group managed fund shedding a further 5.7 per cent of its value.
The longer-term picture provides little comfort, with the average fund worth more than one-third less than in February 2008. Over the past three years, the average fund has weakened by 14 per cent each year.
Any one in last 5 years before retirement is going to find it very difficult to make back those loses.
monutdfc
04/03/2009, 2:48 PM
Any one in last 5 years before retirement is going to find it very difficult to make back those loses.
Normally funds are shifted to cash in the last 5 years before retirement.
Of more concern for retirees would be the present low interest rates at which they have to purchase an annuity
Normally funds are shifted to cash in the last 5 years before retirement. Of more concern for retirees would be the present low interest rates at which they have to purchase an annuity
While I am sure a lot of money would have been in cash it would be unrealistic to have all money in cash for the last 3 years.
monutdfc
04/03/2009, 4:16 PM
While I am sure a lot of money would have been in cash it would be unrealistic to have all money in cash for the last 3 years.
Typical mix say 20 years before retirement is 80% equity, 15% bonds and 5% cash (which may be contributions waiting to be invested rather than a strategic asset allocation.) As retirement approaches the fund is moved out of equities into bonds and cash. Obviously not a pile of cash gathering dust in the corner, but cash on deposit in an interest bearing account. Virtually no equities in the last 5 years I would say. (I'm not a pensions expert but I used to work in that area.)
1) Voluntary redundancies cost a huge amount of money in the short-term and generally attract a lot of people you want to keep. It leaves the poor performer issue unaddressed (the private sector will fire many of these people in a downturn).
My understanding is that although it'd cost in the short term, redundancy and retirement payments are exempt from the Stability and Growth Pact calculations. So yes, the money would have to be found, but it wouldn't effect the 18.5bn deficit they've said to the ECB, and surely the Financial Markets would look beyond the short term cost towards the long term cost savings?
2) Its not collective bargaining if there is no common ground on the key issues. On the levy, the only common ground appears to be flat out rejection.
I disagree, the common ground is that they want a fairer system as part of an overall plan. They all sit around the Congress table. The ones outright opposing it that I've heard are the cops, who aren't at the congress table anyway, and possibly the INO (but they were more concerned with overtime and allowance cuts)
Paudie - All I would be looking for is that all earners pay the same as a PAYE worker, both tax and PRSI. I repeat, I don't see what is so wrong with that? End all tax shelters, and actively pursue any new loopholes that are uncovered on an ongoing basis. Mind you, the Government clearly agree's with you, with the spin they've been coming out with, so I wouldn't panic if you or yours would be effected by actually asking those earning many multiples of the average industrial wage to pay a fair contribution.
I know it is not the responsibility of the Unions to come up with a pension levy scheme but given they are complaining so much should they not make an alternative suggestion?
Dodge
05/03/2009, 11:56 AM
I know it is not the responsibility of the Unions to come up with a pension levy scheme but given they are complaining so much should they not make an alternative suggestion?
AFAIK they have asked D/Finance for the relevant figures to make a detailed submission. Not sure if they have received them
Bald Student
06/03/2009, 2:48 AM
The junior doctor's have balloted over their overtime being cut, whilst being expected to do the same work. Surely that's a no brainer for anyone.It's a no brainer if their aim is to protect their own salaries. The claim being made here and in other media is that they're willing to take a bigger cut again in favour of lower paid workers. It's this contradiction between their words and actions which has my brain addled.
It's a no brainer if their aim is to protect their own salaries. The claim being made here and in other media is that they're willing to take a bigger cut again in favour of lower paid workers. It's this contradiction between their words and actions which has my brain addled.
In fairness, its two seperate issues. The doctors haven't voted for any action on the pension levy so you can't say whether they're willing to accept it or not (the implication, if any, is that they're willing to accept it).
If they're being asked to work hours without pay (as the overtime ban would indicate) then thats a totally different story
Bald Student
07/03/2009, 8:54 AM
In fairness, its two seperate issues. The doctors haven't voted for any action on the pension levy so you can't say whether they're willing to accept it or not (the implication, if any, is that they're willing to accept it).
If they're being asked to work hours without pay (as the overtime ban would indicate) then thats a totally different story
Possibly,
I don't think in terms much more complicated than more money or less money. In one hand, they want more money and in the other, less. Everything in between is pointless talking as far as I'm concerned.
Would the doctors be happier taking the same amount of cutback but with a different name attached to it?
Teachers next in line to approve industrial action. Statement implies this is a protest against the pension levy & government handling of the economy but it is obvious it has little to do with economy.
Being unhappy with the governments handling of the economy is not a reason to strike. That is why we have elections & local representatives.
Possibly,
I don't think in terms much more complicated than more money or less money. In one hand, they want more money and in the other, less. Everything in between is pointless talking as far as I'm concerned.
Would the doctors be happier taking the same amount of cutback but with a different name attached to it?
The junior doctors issue goes back a lot longer. This would be happening whether there was a pension levy or not - it predates it.
Teachers next in line to approve industrial action. Statement implies this is a protest against the pension levy & government handling of the economy but it is obvious it has little to do with economy.
Being unhappy with the governments handling of the economy is not a reason to strike. That is why we have elections & local representatives
But the union side has constantly highlighted the need for an overall plan, Going back to the start of the sham talks at the end of January. Unless this is some kind of wind up to ignore the main thrust of the Union side of the debate?
But the union side has constantly highlighted the need for an overall plan, Going back to the start of the sham talks at the end of January. Unless this is some kind of wind up to ignore the main thrust of the Union side of the debate?
The likelihood is this is just a strike about the pension levy so why dress it up as a political protest?
Dodge
09/03/2009, 10:40 AM
The likelihood is this is just a strike about the pension levy so why dress it up as a political protest?
because thats what strikes in public service are?
The likelihood is this is just a strike about the pension levy so why dress it up as a political protest?
Because it is about the wider issues? Private sector unions are also balloting. SIPTU is 2/3's private sector and is balloting on action.
Bald Student
09/03/2009, 3:12 PM
The junior doctors issue goes back a lot longer. This would be happening whether there was a pension levy or not - it predates it.I don't know if that fully squares the circle. If the doctors have some pay dispute pre-dating the pension levy to add to the current dispute then it remains the case they they're protesting for both less money and more money at the same time.
That contradiction seems to be present in the other groups of workers as well and it makes me skeptical of the claim that the better paid workers are willing to take a bigger cutback.
If I see doctors, teachers and nurses at the protest shouting that they're paid too much and demanding lower pay, then I'll accept that I was wrong to be skeptical of them but for the time being I'm keeping an open mind on the topic.
but for the time being I'm keeping an open mind on the topic.
really?
Bald Student
09/03/2009, 3:26 PM
really?I know which way I expect the matter to fall but I'm open to the possibility that I'm wrong. I think there's a difference between having an open mind and having an empty one.
NeilMcD
09/03/2009, 3:41 PM
Possibly,
I don't think in terms much more complicated than more money or less money.
SUrely this is your problem in a nutshell.
Bald Student
09/03/2009, 3:52 PM
SUrely this is your problem in a nutshell.
Possibly it is but I don't think the hole in the budget can be closed by renaming payments.
We got our pension reports today for 2008. Basically every cent that both myself & employer put in is gone. i.e. total sum at end of 2008 is same as end of 2007. Guaranteed pension sounds good now.
Guaranteed pension sounds good now.
Always sounded good to me
passinginterest
12/03/2009, 3:56 PM
Always sounded good to me
Exactly, there's a good reason most of us civil servants chose this career path and it involves job security and pension benefits. Now our foresight is frowned upon, no win situation really.
OneRedArmy
12/03/2009, 4:19 PM
Exactly, there's a good reason most of us civil servants chose this career path and it involves job security and pension benefits. Now our foresight is frowned upon, no win situation really.
You had your cake and ate it when you (collectively) campaigned and got benchmarked to the private sector. Now you want your cake back again.
And Macy, before you mention it again, I'm well aware the last benchmark found the civil service was comparatively well enough paid and didn't increase. The previous one was a very different story.
You had your cake and ate it when you (collectively) campaigned and got benchmarked to the private sector. Now you want your cake back again.
And Macy, before you mention it again, I'm well aware the last benchmark found the civil service was comparatively well enough paid and didn't increase. The previous one was a very different story.
But benchmarking took into account the safety of the job and pensions :confused:
Or are you accusing the benchmarking body of not doing their job properly?
Given that the pension levy didnt come around through the same benchmarking process I dont really see the relevance though.
If it did(it would probably have been done in a fairer way) I dont think many would have the right to complain
But benchmarking took into account the safety of the job and pensions :confused:
The different between public & private pensions only only factored in for 2007. That meant no benchmarking increase that year which is separate from normal cost of living or inflation linked increases.
Been doing some rough sums on my private pension. Over the last 4 years all the employer contributions have been lost. Total value = to employee contributions. If I did not have employer contributions I would be just about breaking even with tax savings. I knew I didn't want to see that statement. Officially depressed now :(
Lets see if the next round of benchmarking factors that in.
surely the 2007 benchmarking is the relevant one? Can benchmarking not decrease pay as well as increase?
Thats the impression I had. If so then surely when they took into account the pensions in the last one if the previous increases had been excessive they would have been reduced.
If not then it would seem to me that the benchmarking body arent doing their job right and it should be reviewed. I dont see how thats the fault of the public sector workers for signing up to it though
Lets see if the next round of benchmarking factors that in.
Your pension? Probably not. Bu if they factored in public vs private pensions the last time I dont see why they would do any different this time.
surely the 2007 benchmarking is the relevant one? Can benchmarking not decrease pay as well as increase?
Thats the impression I had. If so then surely when they took into account the pensions in the last one if the previous increases had been excessive they would have been reduced.
If not then it would seem to me that the benchmarking body arent doing their job right and it should be reviewed. I dont see how thats the fault of the public sector workers for signing up to it though.
I wouldn't criticise people for taking advantage of it but problem is unions not accepting the benefits. As you say if it was to mean anything wages could come down too. This was created under the mighty leadership of Bertie who just wanted to be friends with everyone.
One of the other major flaws is that it assumes for comparison sake that all private sector workers actually have pensions.
And Macy, before you mention it again, I'm well aware the last benchmark found the civil service was comparatively well enough paid and didn't increase. The previous one was a very different story.
No, the last benchmarking said that the difference in pay was circa 15% in favour of the private sector, but took account of the pension to award 0%. So add the that to the levy and you get 22.5% contribution to the pension, above the 6.5% that has always been paid. This is for the additional amount above the standard contributory pension that anyone paying stamps (including Pete) are paying.
Defined benefit pensions were the standard, workers were conned into believing they were, and are, too expensive - aided and abetted by Government who failed to regulate the scheme's and have allowed the deficits to be run up. It was all about profit maximisation and companies not wanting to look after their employee's. Now they're really getting their value from it, by using it as another angle in their worker v worker campaign.
As passinginterest said, pensions and job security were reasons some of us stuck it out in the Public Sector instead of cutting and running like some did to better paid jobs in the Private Sector. I don't, and didn't need, benchmarking to tell me I was earning less than the people I graduated with - I only had to ask them.
OneRedArmy
13/03/2009, 8:56 AM
Unless you are close to retirement, defined benefits schemes are dead. As a result of underfunding and the demographic timebomb of an ageing population they are simply a big pyramid scheme.
My defined benefit scheme is probably underfunded by about €2bn euro.
It's been known for a decade that pensions are unsustainable, but given key decision makers are usually towards the higher age group, they have a disincentive to make any changes.
On comparisons versus public and private sector, we all have reference points. What I will say is that is very hard to put a value job security as it's an individual thing.
Maybe this deserves its own thread...
Irish Pension Fund Performance over last 10 years (http://www.finfacts.ie/fincentre/irishpenfunds.htm)
Fund Managers doing a great job! :rolleyes:
Fiona Daly, Managing Director of Rubicon Investment Consulting, commented:"Irish group pension managed fund returns over the past ten years have been a very disappointing -1.0% per annum on average, well below the Irish inflation rate of 3.5% per annum over the same time horizon. Indeed, none of the managers surveyed outperformed inflation over this period, with only Merrion Investment Managers delivering positive returns."
We got the usually guff yesterday that it all wotrks itself out over the long term. Obvious 10 years is not long years enough.
Didn't practically all the banks/assurance firms advertise their products as earning "significantly" above inflation?
For the record I'm no longer a public servant and have a minimal pension
Didn't practically all the banks/assurance firms advertise their products as earning "significantly" above inflation?
Not sure about that. I didn't get to it yesterday but we had the annual presentation. They of course said recent dip doesn't matter i the long term which I would think fine for few years but 10 years seems fairly long term to me - could be 1/3 or 1/4 of pension life.
Unless you are close to retirement, defined benefits schemes are dead. As a result of underfunding and the demographic timebomb of an ageing population they are simply a big pyramid scheme.
My defined benefit scheme is probably underfunded by about €2bn euro.
Ireland hasn't the demographic problems of other countries, such as the UK.
Underfunding of pension schemes goes back to the lack of regulation that has allowed that situation to develop. They're underfunded because companies haven't contributed enough, and some of the dodgy practices around control and investment of the monies in them.
Much as I am disillusioned with my defined contribution scheme at least I knwo what it is worth (or is not). Definied benefit schemes will always be under funded in a recession as company does not have the money (e.g. Banks) so will always be an issue if those companies collapse at that time. You also have the problem with retirees living longer & company might be much smaller now than was 20 years ago.
I read a suggestion recently that should be a proper state pension where everyone pays in from their wages so the more you pay the more you receive later. Apparently the Natonal Pension fund returns have been fair good. It would be cheaper to administer due to the economies of scale.
Apparently the Natonal Pension fund returns have been fair good. It would be cheaper to administer due to the economies of scale.
It wasn't doing too bad in the scheme of things, until the Government ploughed it into the Banks...
There should be a mandatory pension scheme for all workers, administered by the state.
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