Pensions levy and comercial semi-states companies

Joe Hill

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Does any body know if it is intended that the pensions levy will apply to public servants in the commercial semi state sector. As far as I know they are not employees of the Government, and are not part of the public sector pay bill.
 
As far as I know the pension levy applies only to the Public Service and not to the part of the Public Sector that is commercial semistate companies like ESB, CIE, etc.

These companies have their own funded (not paid for out of government expenditure) db schemes. Some of these schemes are well funded while others are in defecit.

What happens when one of these companies goes bust? In Irish Shipping and more recently with Irish Fertilisers the pensions got consideradibly less than they were expecting.

I suggested here that the levy should apply to the semi state db's and that in the event of one scheme being overfunded the excess could help another under funded one.

Many media outlets, economic commentators and politicians use the terms Public Service and Public Sector as if they are interchangeable. - they are not. The ESB for instance is part of the public sector but is not part of the public service.

The Civil Service is a sub set of the Public Service and the Public Service is a sub set of the Public Sector.

My question is: what is proposed for the commercial semi state sector? I suggest a compulsory pension contribution to top up their DB funds and if they are projected to be adequately funded the excess could go to other distressed DB schemes in the Public and Private Sectors. (Such as Waterford Glass etc)
 
As far as I know the pension levy applies only to the Public Service and not to the part of the Public Sector that is commercial semistate companies like ESB, CIE, etc.

These companies have their own funded (not paid for out of government expenditure) db schemes. Some of these schemes are well funded while others are in defecit.

What happens when one of these companies goes bust? In Irish Shipping and more recently with Irish Fertilisers the pensions got consideradibly less than they were expecting.

I suggested here that the levy should apply to the semi state db's and that in the event of one scheme being overfunded the excess could help another under funded one.

But the commercial semi-state pensions don't work in the same way as the PS ones, for example some at least are based on final salary and aren't linked to the position and any future salary increases. Put that levy on them and they'll expect the same benefits as the PS.

If commercial semi-state pension funds are in deficit, then they need to be reformed. The airlines pension fund didn't give the indexation last year. ESB are talking of getting rid of the DB pension for new employees. If they are subject to the levy there is no incentive to reform as they may as well go bust and let the gov take over. Any increase in pension contribution rates should go to the funds & not the gov.
 
I wasnt suggesting the public service pension levy for the commercial semistates but rather a compulsory db pension levy on all funded db schemes and any surplus would go to distressed db schemes in the public and private sectors.

I see your point that t&c's vary in these db schemes. I know a few are wage linked, some are inflation linked, some are linked at the discretion of the trustees and some are fixed (ie not linked at all).
 
Actually, as the prospect of the pensions levy being applied to the semi-states could be yet another landmine waiting to go off in the government's face.

I'm in the semi-state sector and have been repeatedly told by my union that the levy does NOT apply as we fund our own pensions and only come out on 20% of final salary (in the civil service it's 50%, I think) just like the private sector. However, we haven't been told this by the revenue commissioners, who are the people who count.

As far as I'm aware (and I'm open to correction) the levy isn't to fund civil service pensions, it's being presented as a kind of insurance fee, a charge for the government guarantee of the civil service pension.

Since our pensions are also guaranteed by the government (notwithstanding that they have never actually put any money in, except as the employer contribution) it could be argued that we also are subject to the levy.
 
Actually, as the prospect of the pensions levy being applied to the semi-states could be yet another landmine waiting to go off in the government's face.

I'm in the semi-state sector and have been repeatedly told by my union that the levy does NOT apply as we fund our own pensions and only come out on 20% of final salary (in the civil service it's 50%, I think) just like the private sector. However, we haven't been told this by the revenue commissioners, who are the people who count.

As far as I'm aware (and I'm open to correction) the levy isn't to fund civil service pensions, it's being presented as a kind of insurance fee, a charge for the government guarantee of the civil service pension.

Since our pensions are also guaranteed by the government (notwithstanding that they have never actually put any money in, except as the employer contribution) it could be argued that we also are subject to the levy.

Yes, the question about the commercial semi state organisations (especially the ESB) is a ticking time bomb.

No, the so called "Public Service Pension Levy" does not apply to a wide range of public sector organisations who have their own pension arrangements.

Im sorry to tell you this but funded DB schemes in the commercial semi states are not guaranteed by the government! The former employees of Irish Shipping and more recently Irish Fertilisers learnt this lesson when they retired on a fraction of their DB pension promise.

I think that there is scope for a compulsory levy on all DB schemes (public and private). The extra funds generated could shore up those schemes in distress.

Lastly I don't know where you get the 20% from I've never heard of it.
 
The 20% comes from a calculation of one fortieth of 20% for every year worked, meaning you get 20% if you put in the full forty years. At least that's what our pensioners have always gone out on. And according to my union, yes, our fund, (CIE) is guaranteed by the government, though as I say, we fund it ourselves. Of course, I'm also paying 180 euro a week (about 105 with tax relief) into an AVC. Let's hope that's enough to keep me in the style I would like in retirement.
 
Hi Eggball,

What you describe is a very poor scheme. But it does not surprise me as there are some poor commercial semi state schemes out there.

Have a look at the CIE pension scheme booklet.

In the case of CIE the unions may well have negotiated some kind of pension guarantee when CIE was established as a plc.

Workers in Irish Shipping and Irish Fertilisers also thought they had a pension guarantee from the government.

aj
 
Anyone know if UCD is considered semi-state or is it public service and subject to the levy?
 
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