Public service pension levy announced

[Ringo]

Taoiseach Brian Cowen has announced the imposition of a pension levy on all public servants, as the main plank in the Government's recovery plan for the current year.


A person earning €15,000 gross would pay a pension levy of 3% and the levy rises gradually thereafter.

* 5% on a salary of €25,000
* 6.4% on €35,000
* 7.2% on €45,000
* 7.7% on €55,000
* 8.1% on €65,000
* 8.5% on €85,000
* 8.8% on €100,000
* 9.2% on €150,000
* 9.4% on €200,000
* 9.6% on €300,000.

difficult one here Mrs Ringo is a civil servant, but as some one on the private sector whose taking a pay cut i don't see why civil servants should be exempt. Would like my wife not to take hit:o

[micls]

difficult one here Mrs Ringo is a civil servant, but as some one on the private sector whose taking a pay cut i don't see why civil servants should be exempt. Would like my wife not to take hit:o

I agree in principal but likewise Id rather I wasn't taking the hit :D Its a fair bit of money like.

I dont get the sugarcoating it as a 'pension levy' though. Just call it a pay cut.

[NeilMcD]

Well a pay cut would hit current pensioners and hit your future pension whereas this does not. That is the reason for that.

What is unfair about it is, That current public servants who started after 95 currently pay 6.5 percent on their salary and if they are on roughly 49,000 they will pay 13.7 per cent to their pension. However someboy who joined before 1995 and who is on 80,000 will pay about 8.5 per cent.

[Dodge]

If I was still a civil servant, it would work out thta between myself and the missus we'd be down at about €80 a week.

Which is obviously going to help the economy.

Read today that the Govt was "investing" another €8 billion in the banks (more than 5 times what they think they'll save from the public sector wage bill)

[micls]

Well a pay cut would hit current pensioners and hit your future pension whereas this does not. That is the reason for that.

What is unfair about it is, That current public servants who started after 95 currently pay 6.5 percent on their salary and if they are on roughly 49,000 they will pay 13.7 per cent to their pension. However someboy who joined before 1995 and who is on 80,000 will pay about 9.7 per cent.

Ok. Im just going to nod and smile, because honestly dont understand the whole pension thing very well anyway.

Thanks for trying though :)

[Dodge]

Another reason for having a "pension levy" instead of a pay cut is having a pay cut would cut the amount of tax and prsi paid by public servants

A pension levy doesn't.

[Bald Student]

I dont get the sugarcoating it as a 'pension levy' though. Just call it a pay cut.Would enforcing a pay cut count as a breach of contract? This might be a way of doing it on stronger legal ground.

[NeilMcD]

Ok. Im just going to nod and smile, because honestly dont understand the whole pension thing very well anyway.

Thanks for trying though :)

Basically if you are on 45,000 a year you pay about 6.5 per cent of your gross salary to your pension. However if you joined the civil service before 1995 this would not be the case. You would pay a small amount.

What they are doing now is they are increasing that levy that someone pays based on how much they earn. The table in the first post explains this. So someone who joins after 1995 currently pays 6.5 per cent of their gross to their penstion will now pay 13.2 per cent.

However someone who joined before 1995 and currently pays very little to their pension but earns say 80,000 grand or maybe even 200,000 will pay about 8.5 and 9.6 per cent of their gross towards their pension.

[micls]

No, I understood how much it was going to cost me, it was the 'why it was called that' I didnt understand.

[NeilMcD]

because if they cut your basic wages, they would also be cutting a guy who has retired from the civil services, basic pension because they are both linked. Secondly they would also be cutting your future pension as your basic would be reduced and your pension is half of what you earn over the last 3 years.

Also there may have been a legal issue with it too.

[monutdfc]

She can be hit and miss in her analysis, but there's a good article by Sarah Carey in today's IT on the Public v Private sector debate:
http://www.irishtimes.com/newspaper/opinion/2009/0204/1232923385065.html

[Macy]

It would be easier to swallow if it was more weighted to the higher earners, but sure they wouldn't want to hit themselves and their fellow TD's too hard would they? Also, will Ministers now be paying it for their ministerial pensions? And finally, can we please have our last benchmarking increase paid, as we didn't get that on the basis that the increase was off set by our pensions.

No levy on the bankers that they keep on bailing out. How much would a similar levy on bank workers raise, with the monies the top brass are on?

Hard to know how it will effect us directly until we get confirmation whether it is a before tax pension increase, or a post tax levy. If it's before tax the net effect is roughly halved as we pay at the top rate of tax. It will reduce our spending and also factor in to our childcare arrangements, so it'll hit the state's take in on another side.

btw Pre-95 Civil Servants are paid at a lower rate, and pay a lower rate of PRSI. So while they don't have a pension charge it is implied in their salary scale, and they can't claim the same social welfare benefits as on an A stamp. It's one of the great muddying of the waters tatics by the right claiming that somehow civil and public servants don't pay for their pensions.

[pete]

I was expecting other schemes alongside the public pay/pensions & was amazed this is all them came up with in a few months. Really have to wonder what the government do every day.

I know its not their job to run the country but if the unions object they really should look at providing an alternatives.

No mention of any cuts in Minister pay, Junior Ministers etc... Surprised little mention of that.


She can be hit and miss in her analysis, but there's a good article by Sarah Carey in today's IT on the Public v Private sector debate:
http://www.irishtimes.com/newspaper/opinion/2009/0204/1232923385065.html

I think she is usually worth a read. She is correct on that.

[micls]

I was expecting other schemes alongside the public pay/pensions & was amazed this is all them came up with in a few months. Really have to wonder what the government do every day.
Agreed. I dont mind doing my bit if I thought there was a proper plan but a couple of billion isnt going to solve anything.


I know its not their job to run the country but if the unions object they really should look at providing an alternatives.

Agreed also.

I have a major problem with my friends, who are temporary teacher) being hit with this the same way I am(permanent). At least I have my job security-which is what I presume were paying for. They dont, most of them will lose their jobs this june.


No mention of any cuts in Minister pay, Junior Ministers etc... Surprised little mention of that.

I presumed they counted as public servants?

[Macy]

I know its not their job to run the country but if the unions object they really should look at providing an alternatives.
They'd said all along that they'd take pain in the scheme of an overall package. All we've got is public servants taking the hit on the same day BoI and AIB are playing hard ball with Lenihan over yet another bail out whilst they all keep their jobs, pensions and perks. Levy the bankers too, cap their wages with Civil Servants (which at the top are still very high), cap their pensions in line with it too.

[pete]

I presumed they counted as public servants?

I expect they will take the hits on pension levy too but this a drop in the ocean. In the grand scheme of things pay cuts by the government would not bring in much cash but the symbolism would be important.

I saw Martin Manseragh on Vincent Brown last night on TV3 & when asked if there are any government cuts he made a vague reference to travel expenses. To his credit he has previously said he will offer to step down from Junior Minister position if asked but its was embarrassing watching him to know he is a Junior Minister when all he could do was literally shout & rant at Vincent Browne. :rolleyes:

[micls]

I expect they will take the hits on pension levy too but this a drop in the ocean. In the grand scheme of things pay cuts by the government would not bring in much cash but the symbolism would be important.


Ok. Thanks

[dahamsta]

No mention of any cuts in Minister pay, Junior Ministers etc... Surprised little mention of that.The councillors in Dublin proposed a 10% pay cut. Here's what Labour councillor Aodhán O'Ríordáin had to say about that:


Fianna Fáil Motion to Cut Councillor Salary by 10% Hypocritical (http://aodhanoriordain.blogspot.com/2009/02/fianna-fail-motion-to-cut-councillor.html)

The motion proposed tonight by members of the Fianna Fáil group on Dublin City Council is hypocritical in the extreme and classic cheap electoral politics.

The proposal that each member of Dublin City Council should take a 10% pay cut has been referred to the Protocol and Selection Committee however it goes nowhere to uncovering the real scandal of payments to Councillors at the taxpayers expense?

Will the Fianna Fáil members agree to a root and branch review of Councillor Expenses?
Why are councillor mobile bills paid to the tune of €30,000 per year?
Why are lavish expenses paid to councillors who attend meaningless conferences around the country?
How many councillors in the Fianna Fáil group have taken lifts in colleagues cars to meetings in other counties and then claimed travel expenses?
Why is there no attempt to take 10% or more from the tax-free expenses afforded to councillors which would amass a greater saving for the council.
Fianna Fáil representatives attempts to distance themselves from the mess that their government colleagues have made and to present themselves as guardians of the solution is pathetic and unworthy of council support.

[Dodge]

In the grand scheme of things pay cuts by the government would not bring in much cash but the symbolism would be important.


Its only symbolism? Does anyone truly expect the Govt to use tht €1.4 billion to better the lives of anyone?

It has, however, taken €1.4billion worth of spending power out of the economy. Which will absolutely impact people. A colleague of my wife is now considering leaving the public service as when her revised salary has travel and child minding removed leaves her with the grand total of €60 per week (She'll be down about €40 per week). She was struggling as it was. I hate people who use extreme examples to back up their point but the realilty is that for a huge amount of young families with the parents working in the civil service, cutting €30-100 per week from their budget is going to hurt them.

Which will cause them to spend less, which will lead to further trouble in the private sector which will lead to another cycle of this rubbish.

Does it affect someone on €300k? Does it ****

[Den Perry]

I am becomming very disillusioned with this place now. Am really considering emigration, but going on 36 now am I too old? Anybody here ever made such a change at that age?
Btw I'm still working but not enjoying it.!!!!!

[NeilMcD]

Its only symbolism? Does anyone truly expect the Govt to use tht €1.4 billion to better the lives of anyone?

It has, however, taken €1.4billion worth of spending power out of the economy. Which will absolutely impact people. A colleague of my wife is now considering leaving the public service as when her revised salary has travel and child minding removed leaves her with the grand total of €60 per week (She'll be down about €40 per week). She was struggling as it was. I hate people who use extreme examples to back up their point but the realilty is that for a huge amount of young families with the parents working in the civil service, cutting €30-100 per week from their budget is going to hurt them.

Which will cause them to spend less, which will lead to further trouble in the private sector which will lead to another cycle of this rubbish.

Does it affect someone on €300k? Does it ****

Career break would be a better option I reckon for her if she can manage it.

[Fr Damo]

I hate people who use extreme examples to back up their point but the realilty is that for a huge amount of young families with the parents working in the civil service, cutting €30-100 per week from their budget is going to hurt them.

If somebody is paying 100 per week in a levy it must mean the income is around 100k before tax. The levy is tax dectuable (41%) and therefore altough not palitable better than a p45 or a paycut of 20%. I know lots of people like you describe in the private sector who earn 35- 40 k in industry who have taken pay cuts equal to this amount in cash but after the pill was swollwed they got on with it.



Which will cause them to spend less, which will lead to further trouble in the private sector which will lead to another cycle of this rubbish


which will reduce prices and bring us where we need to get. If the child care you refered to was 50 less a week (which will happen as they fight for business) you friends wife will have 70 quid in her pocket after the levy rather than the 60 she currenlty netts off. This is the model we have to approach in my view, to get competitive again and start exporting.

[NeilMcD]

I was expecting other schemes alongside the public pay/pensions & was amazed this is all them came up with in a few months. Really have to wonder what the government do every day.

I know its not their job to run the country but if the unions object they really should look at providing an alternatives.

No mention of any cuts in Minister pay, Junior Ministers etc... Surprised little mention of that.



I think she is usually worth a read. She is correct on that.

By the way I think Sarah Carey is one of the most hateful figtures in Irish media. A littled privelaged girl with right wing views. I have seen her at many debates and she represents everything that is wrong with this country in my view.

She is attacking the wrong person in Begg also. He is a very impressive performer who does represent the workers. I she has no dig at IBEC. She has fallen for the narrative of the debate despite having a go at it.

[Lionel Ritchie]

By the way I think Sarah Carey is one of the most hateful figtures in Irish media. I'd still be about her like a rat in a dustbin. :cool:

Incidently, I'm grateful I'm less likely to lose my job than many. But unless I can't count -I've just lost about 25% of my disposable income.

[NeilMcD]

I'd still be about her like a rat in a dustbin. :cool:

Incidently, I'm grateful I'm less likely to lose my job than many. But unless I can't count -I've just lost about 25% of my disposable income.

Depends on what you call disposable income too. Is this after rent or mortgage and esb and gas etc. Disposable income is a subjective term and a moveable feast.

[Dodge]

If somebody is paying 100 per week in a levy it must mean the income is around 100k before tax. The levy is tax dectuable (41%) and therefore altough not palitable better than a p45 or a paycut of 20%. I know lots of people like you describe in the private sector who earn 35- 40 k in industry who have taken pay cuts equal to this amount in cash but after the pill was swollwed they got on with it.



I used the 30-100 as if both parents are public servants (as is the case in numerous of my friends) then both parents are down 30-50 euro each

And there are plenty of people in the private sector who haven't received pay cuts (or any other term)

[NeilMcD]

[QUOTE=Fr Damo;109854



which will reduce prices and bring us where we need to get. If the child care you refered to was 50 less a week (which will happen as they fight for business) you friends wife will have 70 quid in her pocket after the levy rather than the 60 she currenlty netts off. This is the model we have to approach in my view, to get competitive again and start exporting.[/QUOTE]

I think most of us can agree though that the biggest driver in prices increases was the rise in house prices. People needed bigger and demanded bigger wages at social partnership meeting in order buy houses etc. Wages had to increase in order for people to feel they could buy houses. This in turn drove up house prices further as the rules for mortgages became less stringent. Cheap credit and profiteering to a huge level by developers in my drove up our cost base right across the country. I know this is back of an envelope economics but it is pretty close to the truth in my view.

[Wolfie]

I think most of us can agree though that the biggest driver in prices increases was the rise in house prices. People needed bigger and demanded bigger wages at social partnership meeting in order buy houses etc. Wages had to increase in order for people to feel they could buy houses. This in turn drove up house prices further as the rules for mortgages became less stringent. Cheap credit and profiteering to a huge level by developers in my drove up our cost base right across the country. I know this is back of an envelope economics but it is pretty close to the truth in my view.

Indeed. The implication of the pension levy for myself and the missus (both of us public sector workers) is that well over half of my reduced monthly wage will now go on mortgage repayment.

We moved house partly based on the knowledge that our earnings would at least stay the same and increase by virtue of increments, towards 2016 increases and possible promotion in the future.

I understand that this was undertook of our own volition but its a dramatically changed economic landscape to September 2006.

All of this will have the effect of us tightening our belt further, thus not releasing very much of our remaining disposable incoming into the economy.

[Macy]

Depending on how it's treated, it will leave me and the missus with bugger all after bills (what I'd consider disposable income, as everything else is accounted for).

We could probably save money moving the children from a proper regulated creche to an unregulated, most likely cash in hand childminder. That'd probably cost a couple of the workers in the creche their job, and increase social welfare payments. We're lucky that this would be a choice rather than a necessity, and we can still afford to base the decision of quality of care rather than cost. Others won't be so lucky.

We could probably save money by stopping our health insurance for the family too. I'm sure an extra burden on the public system is just what it needs at the moment also.

[Fr Damo]

I used the 30-100 as if both parents are public servants (as is the case in numerous of my friends) then both parents are down 30-50 euro each Fair enough but it's still a house hold with 70 - 100k coming in


And there are plenty of people in the private sector who haven't received pay cuts (or any other term)

Wouldn't agree... Cant quantify the numbers but it's wides spread. EG A Car salesman for example might depend on commision for half their income, they are selling zero at present and are therefore on a 50% pay cut! Our company, directors 25% cut, managers 10% cut factory floor 5% cut. I could go on about three day weeks and short time also (this is not in the figures).

This is bench marking.
There are obviously a couple of public service workers on here and I have no axe with any of you, I feel the last couple of days will probably galvanise the population to get through this becasue we are all in it. (except the ESB!! but that's another day)

[Dodge]

A couple earning 70k between them have practically nothing at the moment Damo. Don't forget that both already pay 6.5% of that into their pension, both pay PRSI at rulle rate and tex just like everyone else. Mortgage of roughly €1k per month, rising bills, childminders of roughly €1,200 a month, transport costs etc etc etc

70k for a family of four is nothing.

[Lionel Ritchie]

Depends on what you call disposable income too. Is this after rent or mortgage and esb and gas etc. Disposable income is a subjective term and a moveable feast.

Mortgage paid and largest utility (health insurance -which lets face it -is for having not using and is nothing short of legislated theft) paid and I feel lucky that they are.

Christmas club is gone and summer holiday savings gone so how this affects the people in Smyths toys on the ennis road and in Kilkee I'm not sure -but adversely is my guess.

[NeilMcD]

Another aspect of the PRSI that the unions do not get across is that anyone who has joined after 1995 pays A1 PRSI. PRSI is meant to be used for when you are leg go and need to seek job seekers allowance as they are calling it. However a civil servant is unlikely or never to be seeking job seekers allowance so to pay at the A1 rate is another form of additional taxation. It is like me insuring myself against the possibility of an accident giving birth to a child. (now creating one may be a different thing).


Wouldn't agree... Cant quantify the numbers but it's wides spread. EG A Car salesman for example might depend on commision for half their income, they are selling zero at present and are therefore on a 50% pay cut! Our company, directors 25% cut, managers 10% cut factory floor 5% cut. I could go on about three day weeks and short time also (this is not in the figures).

This is bench marking.
There are obviously a couple of public service workers on here and I have no axe with any of you, I feel the last couple of days will probably galvanise the population to get through this becasue we are all in it. (except the ESB!! but that's another day)



The ESB are a private company. We have had an agenda of privatisation both in the EU and by this government. As a result a company that makes a profit is entitled to give its workers what was agreed as part of the pay deal. However if ESB was still owend by the state they would not be able to pay these increases as the government would tell them not to. Secondly the ESB provides a dividend to the state each year so it is a net contributor to the state. IBEC were caught out on this as they have called for privitastion for years in the energy sector and other sectors. They forgot than ESB is now a member of IBEC and they should have been representing them, when they were reminded of this, they backed off and started to back the ESB. It was laughable.

[Fr Damo]

Sorry to be strying off topic but my point ref the ESB was in relation pricing and thus wage agreements, I am aware bthey are private.... You would think they are living in a differnt country though. John Gormless was on at one with RTE saying he believes Eammon Ryan will be asking them to revisit their prices. Ahem...

Interesting tale about IBEC and ESB though.

[NeilMcD]

But the reason that prices are so high is due to the regulator not letting them drop them when oil prices were low. What is the reason for this, well private companies would not enter the market because they figured they could not make a profit out of the sector. As a result the ESB have been told to keep their prices high in order to attract the likes of Denis O Brien to the market. However our right wing media esp the Sunday Indo do not do their home work on this, why because they are owned by both O Reilly and by O Brien. We have the strange situation that breaking up a monopoly is actually increasing the price of electricity and causing us to be uncompeititive. It goes back to a point I have said before, that ideology should never be the way to approach problems, its what I admire about Obama in that he seems to be solution based rather than ideology based.

[Fr Damo]

So they put the prices up to attract "competition"?? Great.:confused:

[hula4]

as a public sector employee i genuinely feel it could have been worse, i havent done the exact maths but i can take the hit, it just means i have to be a bit more careful but i suppose thats not a bad thing! but i reckon im the exception as i have no wife, kids etc, i can pay my mortgage comfortably but thats cos i have been very lucky.

there are people in the same circumstances as me that are seriously worried today despite our job security etc.

also was told last night that our taoiseach is paid more annually than the american president, surely this cannot be true?

[passinginterest]

As a lower paid civil servant I can't say I'm happy but I'm willing to take the hit in the hope it'll benefit the country. It's manageable with falling interest rates and general deflation in the price of commodities but it'll certainly make things tighter. I suppose I'm lucky in that neither of us drink or smoke and we have no kids so the mortgage is the primary concern.

[NeilMcD]

So they put the prices up to attract "competition"?? Great.:confused:

Yeah the regulator was told to put them. ESB have asked to have them reduced but was refused. ESB makes up 40 per cent of the market now. So to blame high prices on them is simply wrong and to blame it on the company paying their workers what the agreed last year is even worse.

As a 31 year old I am glad I did not buy a house in the last few years. I am glad I spent my money on drink and trips to Ireland matches. I have got more of a return on that then I would have on my over priced house.

[pete]

Just to be clear when I said pay cuts by the government I meant the Ministers & TDs. I wasn't referring to the 1.4 billion from the public sector yesterday. For example cutting 10% of politician salaries is small chance but sends you a good message to everyone...

[Macy]

Yeah the regulator was told to put them. ESB have asked to have them reduced but was refused. ESB makes up 40 per cent of the market now. So to blame high prices on them is simply wrong and to blame it on the company paying their workers what the agreed last year is even worse.
Especially when the Government is one of the bloody social partners that agreed the national agreement in the first place! I think approx 40 companies paid at the same time as the ESB, i.e. on time in line with the national agreement.

It has happened in every market that the Government has interferred with to try and bring in competition. Competition is supposed to lead to lower costs and a better service. Our telecoms infrastructure is an embarrassment, prices for all utilities have gone up to encourage people to enter the market, health insurance has gone up as the Government keep on moving the goal posts on the VHI. We're too small a market for competition and ultimately it's the Government backers who end up making the money and taking the benefit.

[pete]

Public sector unions might be protesting against the government cuts but I can't see them getting much support from unemployed people if they picket the Social Welfare offices. That would be a serious own goal.

Simple Maths seems to be missing from the skills of the Unions leaders. While some public services are paid by users most revenue for the state comes from taxes. Less private sector jobs means less revenue for the state. To close the gap need to either reduce costs or increase taxes.

Now that the issue has died down not sure what the unions solution to pension levy is. Seems they have agreed 2 billion of cuts required but are not suggesting an alternative. If pension levy on low paid is cut that will mean bigger levy for those at the higher scales - would the unions favour that?

It seems public sector workers pay 6.5 of their gross wages to pension + another 4.5% for average earner does not seem unfair. I pay similar amount to my company pension & no chance will ever get close to public sector guaranteed pension. I would guess my employers pension better than most.

[Dodge]

The unions did provide an alternative to the government. One which saved €1.4 billion from public pay roll and raised taxes for higher earners in public and private sector as part of social partnership

IBEC bolted and the government changed he goalposts

Average worker now pays 13% into pension now Pete

Oh and if we're talking about lack of maths skills, how about this levy resulting in people on 30k a year losing more than those on 42k. Sound fair to anyone?

[Bald Student]

The unions did provide an alternative to the government. One which saved €1.4 billion from public pay roll and raised taxes for higher earners in public and private sector as part of social partnership
How much was cutbacks and how much was higher taxes? The tax increases are likely to come on top of the cuts, not instead of them.

[Dodge]

The €1.4 billion was all cutbacks, but focussed on higher earners. The increased taxes would've doubley (should be a word) effected highly paid public servants and apparently all public service unions had agreed to it

[Bald Student]

Leaving aside the issue of taxes then, what you're saying is that the Unions offered cutbacks equal in size to the current ones but with a different distribution?

[Dodge]

Leaving aside the issue of taxes then, what you're saying is that the Unions offered cutbacks equal in size to the current ones but with a different distribution?

exactly

[Macy]

Without wanting to steal Dodge's thunder, I believe that is the case, yes. There probably wouldn't be cuffufal over the levy if it was more reasonably distributed - an average of 7.5% with the very top only paying 9.2%, and the net effect as outlined by Dodge above.

Still good to know the levy is going for the greater good - disadvantaged children with learning disabilities have their teachers cut, banks get €7bn to bail them out.

[OneRedArmy]

Without wanting to steal Dodge's thunder, I believe that is the case, yes. There probably wouldn't be cuffufal over the levy if it was more reasonably distributed - an average of 7.5% with the very top only paying 9.2%, and the net effect as outlined by Dodge above.

Still good to know the levy is going for the greater good - disadvantaged children with learning disabilities have their teachers cut, banks get €7bn to bail them out.Public sector workers exist to implement the policies of Government.

Government screwed up (and are ultimately responsible for this mess), ergo your pay suffers.

Similarly, bank senior executives screwed up, so my pay has suffered regardless of my own performance.

It's no more complicated than that.

[Macy]

Public sector workers exist to implement the policies of Government.

Government screwed up (and are ultimately responsible for this mess), ergo your pay suffers.

Similarly, bank senior executives screwed up, so my pay has suffered regardless of my own performance.

It's no more complicated than that.
Your pay has suffered, but what of the execs. I wouldn't necessarily argue against a hit, but it's how it's done and who pays most is the issue. That should be a concern for all workers in any sector

It's laughable for the senior execs of IL&P expecting some kind of pat on the back for a 10% cut in pay, for example. Ditto the Government ministers, with two pensions who expect ordinary civil servants to take the bulk of the pain whilst they take a meesly hit.