The truly shocking cost of State pensions

[Sarenco]

What about all the females?

The cost of their pensions are even higher! You know, because they live longer.

What about those that contribute for more than 40 years?

That has zero impact on their pensions - the maximum pension accrues on 40 years service.

... without taking into account pre & post 95 pensions, the embargo, etc.

All of which are completely and utterly irrelevant to calculating the actuarial value of a pension payable today.

the calculator on the website of the Pensions Authority...data has not been made public and therefore cannot be scrutinised.

I still don't know what data you are talking about. I assume you are not suggesting that the Pensions Authority (a statutory authority) would install a corrupted calculator on its website.

* - Assumption - may or may not be true.

Regardless, it's irrelevant.

I'm regularly surprised at the degree to which public servants underestimate the true value of their pension entitlements.

To paraphrase Upton Sinclair:

"It is difficult to get a man to understand something, when his pension depends upon his not understanding it!"

 

[noproblem]

"I'm regularly surprised at the degree to which public servants underestimate the true value of their pension entitlements."

Any chance you could give us a link or two to the above statement?

 

[Sarenco]

"I'm regularly surprised at the degree to which public servants underestimate the true value of their pension entitlements."

Any chance you could give us a link or two to the above statement?

I don't understand - I can hardly provide a link to my own comment!

 

[ppmeath]

ppmeath

Civil service is 10% of PS, so most PS always made 6.55 pension conts.

I did point out that some PS, e.g. the civil service, did not pay the 6.5%.


30,000 approx civil service

300,000 approx wider PS.

The Public Sector incorporates the Civil Service, that pension scheme is more or less the same pension scheme that a Garda, Nurse etc has.

Pre 1995 didn't make a personal pension contribution, they contributed towards the spouses and dependent's pension only, that is not a criticism, it is the way the system was.

 

[ppmeath]

The "contributions" are entirely notional - they don't get paid into a fund. In any event, the "contribution" level is immaterial in the context of the benefits accrued.

No, they're not "notional", from an employee point of view, they are very real, they pay real money.

 

[ppmeath]

Why? The article is talking about the value of pensions payable today - and will remain payable for a very long time to come.

It is certainly not pointless to highlight the huge cost of these pensions in the context of budgetary projections, on-going negotiations with public sector unions, etc.

Payable to those who are retiring on very good terms, terms that have been altered considerably and there is no mention of it.

 

[ppmeath]

Carry on ignoring this part Sarenco:

"Start providing
A person who aspired towards an annual pension of €100,000 when they reached 65, and started providing for it at 25, would have to put €65,400 into their pension fund every year, with the contribution assumed to increase by 2.5 per cent per year. If they wanted to retire at 60 and started making contributions aged 20, the equivalent figure would be €74,250.
If a young person aspired towards a pension of €24,000 per year, which is just below the average for retired civil servants last year, and wanted to retire aged 65, they would have to start investing €15,750 annually from age 25. That is the equivalent of one third of gross income. If they wanted to retire at 60 and started investing at age 20, the starting contribution would be €17,850."

That's fine.

 

[Sarenco]

The Public Sector incorporates the Civil Service, that pension scheme is more or less the same pension scheme that a Garda, Nurse etc .

Well, the average Garda retires on a pension with a value of ~€1.2m, plus a generous lump sum, after only 30 years' service.

I'm amazed the civil servants aren't up in arms!

 

[KOW]

So again the biggest grade in the Public service by far are Clerical Officers. After 40yrs service 350 euro pension per week. Dont get the old age pension. So someone can sit on their backside for 40yrs and receive a pension of approx 220 per week. A difference of 130 per week before tax after 40 yrs work.

 

[Sarenco]

Carry on ignoring this part Sarenco:.

I'm not ignoring anything!

The quoted section looks perfectly accurate to me. Are you suggesting it isn't?

There is no comparison drawn with the pension that a civil servant (that isn't retired) might enjoy in the future but that isn't the point of the article. You keep reading that into the article - but it isn't there.

 

[noproblem]

I don't understand - I can hardly provide a link to my own comment!

You've made a sweeping statement with no back up. Similar to ould chat in a pub, but hurtful and spoken like a know-all, yet no known substance to it. Oh, apart from your own opinion.

 

[Sarenco]

You've made a sweeping statement with no back up. Similar to ould chat in a pub, but hurtful and spoken like a know-all, yet no known substance to it. Oh, apart from your own opinion.

Huh?

It's simply been my experience that public servants regularly underestimate the true value of their pension entitlements. That's not an opinion - that has genuinely been my experience.

Why would you find that hurtful?

 

[Sarenco]

A difference of 130 per week before tax after 40 yrs work.

Genuine question - could you estimate how much it would cost a 60-year old man to buy an annuity that pays €130 per week?

Assume for this purpose that a surviving spouse will receive half that amount and that the €130 figure will escalate over time in line with inflation.

[incidentally, the non-contributory pension is means tested and is currently only payable at 66 but ignore that detail for the time being.]

 

[Sarenco]

No, they're not "notional", from an employee point of view, they are very real, they pay real money.

Ok so, tell us where that real money goes?

The truth is that all State pensions are funded on a "pay as you go" basis - there is no separate fund into which contributions are deposited. It's purely notional - an accounting exercise if you prefer.

 

[Sarenco]

Payable to those who are retiring on very good terms, terms that have been altered considerably and there is no mention of it.

Why would there be? The article isn't about the terms upon which civil servants may retire in the future.

 

[KOW]

Genuine question - could you estimate how much it would cost a 60-year old man to buy an annuity that pays €130 per week?

Assume for this purpose that a surviving spouse will receive half that amount and that the €130 figure will escalate over time in line with inflation.

[incidentally, the non-contributory pension is means tested and is currently only payable at 66 but ignore that detail for the time being.]

Do you suggest that after 40yrs of work my wife does not deserve a pension pre tax of 130 euro extra compared to somebody who may have never worked? I dont think so

 

[Sarenco]

Do you suggest that after 40yrs of work my wife does not deserve a pension pre tax of 130 euro extra compared to somebody who may have never worked? I dont think so

It's really not about what anybody deserves - I'm simply asking if you could estimate what that extra €130 per week would cost if bought in the open market?

 

[Gordon Gekko]

Doesn't a pension of €30,000 cost around €1,000,000 in the open market?

That's the pension for a public servant on €60,000.

No way €60,000 is the average salary in the public sector.

 

[Protocol]

The Public Sector incorporates the Civil Service, that pension scheme is more or less the same pension scheme that a Garda, Nurse etc has.

Pre 1995 didn't make a personal pension contribution, they contributed towards the spouses and dependent's pension only, that is not a criticism, it is the way the system was.

Again, let me be clear.

Many, but not all, PS have always made 6.5% pension conts, back before 1995.

Teachers, etc. have always, always, let me repeat, always paid 6.5%.

Yes, a minority of PS, e.g. civil service and uni lecturers, did not make the 6.5% pension cont.

 

[Sarenco]

Doesn't a pension of €30,000 cost around €1,000,000 in the open market?

An annuity that pays a 60 old man €30k pa, indexed for life with a surviving spouse benefit of 50%, would cost a heck of a lot more than €1m, at current annuity rates.

Also, the article only refers to civil servants - not public servants more generally.