"cuts to state pensions must be considered"

Sarenco said:
Sorry Sophrosyne, yes I take the point that the further into the future you look the more sensitive projections become to the assumptions used, particularly as regards demographic trends.
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OK, but the amount of the projected contingent liability is embracing a 50-year period.
 
True, but the broad trajectory would be consistent whatever timeframe you chose. The fact that you may become increasingly less confident about your assumptions as you pass through the projected timeframe doesn't necessarily change your confidence level about the broad trend.

To put it another way, it seems reasonable to disagree about, or at least query, the extent or degree to which the demographic profile of the population is likely to change over the projected timeframe but I don't think it would be reasonable for anybody to argue that it is likely that the broad projected trend is wrong.

It's a bit like climate change - to raise doubts about some of the more dramatically projected consequences is entirely reasonable but to deny climate change as a fact entirely would be pretty controversial given the preponderance of evidence available.
 
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Sophrosyne said:
It is nothing of the sort!

???
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Ok, but the point I was trying to make is that you don't have to be a climate change denier to disagree with any particular projections regarding the effects of climate change. Probably a tortured metaphor.

Our demographic profile has been actuarially projected to age in line with a pretty consistent upwards trend-line over the next 5, 10, 15, 20-50 years - that's what I mean by the broad trajectory being consistent whatever time period you chose.

Are you suggesting that that the demographic profile is unlikely to change over the coming decades or are you suggesting that the direction or degree of that change is not capable of being projected or, if it is, that the projections are exaggerated? My perception is that you seem to be saying that we have no idea at all what's going to happen so let's do nothing - but I don't want put words in your mouth.
 
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It's all very well to say that we will solve the problem by retiring later, however those jobs are needed by the people coming after us. If we don't retire as planned and on schedule, the young people behind us in the cycle will have less job prospects leading to higher unemployment and even more problems. Presumably then, future governments will be faced with funding either increased pension liabilities OR increased dole payments
 
Dr.Debt said:
It's all very well to say that we will solve the problem by retiring later, however those jobs are needed by the people coming after us. If we don't retire as planned and on schedule, the young people behind us in the cycle will have less job prospects leading to higher unemployment and even more problems. Presumably then, future governments will be faced with funding either increased pension liabilities OR increased dole payments
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I always find that notion strange, as if there was a fixed number of jobs no matter how many people there were, as if people in and of themselves could not have any economic worth.
 
Well you can of course assume that all new entrants to the job market will create new and "extra" jobs. Personally I don't think that's very realsistic.
 
Sarenco said:
Just to be clear - I am not suggesting that we will ever need to spend a quarter of GDP on State pensions! The issue is certainly serious but there is no need to exaggerate the position.
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My mistake, wasn't trying to exaggerate the position at all, just misunderstood your findings.
 
Dr.Debt said:
Well you can of course assume that all new entrants to the job market will create new and "extra" jobs. Personally I don't think that's very realsistic.
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I'm not suggesting that all of them create extra jobs but more people create more demand as so more jobs follow.
 
Firefly said:
My mistake, wasn't trying to exaggerate the position at all, just misunderstood your findings.
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No problem at all but a quarter of GDP would probably account for the entire tax take (as opposed to my projection of circa 23% of the tax take)!
 
Sarenco said:
In any event, if we can agree that the current position is unsustainable, I think we should move on to discuss possible solutions rather than getting bogged down in defending or attacking existing entitlements.
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Regarding solutions to the problem, I think moving defined benefit pensions to defined contribution pensions is an obvious one. By all means honour time already served. Current costs would increase (as payments would be required) but a line in the sand would be drawn regarding future liabilities. This will be especially important if/when bond rates in the future. Given that the current situation is clearly a house of cards, I am surprised more employees are not looking for this to be honest.

On the OAP side, I suspect that increases will be less than inflation over time, resulting in real reductions.
 
Firefly said:
On the OAP side, I suspect that increases will be less than inflation over time, resulting in real reductions.
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Does anyone have a graph showing OAP rates against inflation over the last 10 or 15 years?
I suspect the increases have been well ahead of cost of living increases.
 
Purple said:
Does anyone have a graph showing OAP rates against inflation over the last 10 or 15 years?
I suspect the increases have been well ahead of cost of living increases.
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http://economic-incentives.blogspot.ie/2010/11/pension-rates.html

Here's a link to an article by Seamus Coffey on point.

As you suspected, increases to the rate of the old-age contributory pension apparently started to outstrip increases in the cost of living (CPI) from 1997.
 
Sarenco said:
http://economic-incentives.blogspot.ie/2010/11/pension-rates.html

Here's a link to an article by Seamus Coffey on point.

As you suspected, increases to the rate of the old-age contributory pension apparently started to outstrip increases in the cost of living (CPI) from 1997.
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Whilst OAP payments have over-shot inflation since then I believe that OAP payments before this were quite meagre. I don't have any proof of this, mind you, but remember hearing my gran giving out about it!!!
 
Firefly said:
Regarding solutions to the problem, I think moving defined benefit pensions to defined contribution pensions is an obvious one. By all means honour time already served. Current costs would increase (as payments would be required) but a line in the sand would be drawn regarding future liabilities. This will be especially important if/when bond rates in the future. Given that the current situation is clearly a house of cards, I am surprised more employees are not looking for this to be honest.
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The DAA are actually moving in this direction

"The parties have accepted that the scheme is unsustainable for active members in its
current form and should be frozen. That is to say, contributions should cease, further
accruals of service should stop and future pension arrangements should be provided
through separate defined contribution pension schemes."

The defined contribution rates are also very attractive. I'd be happy with that rather than the worry over getting nada in years to come!

[broken link removed]

Firefly.
 
Firefly said:
Whilst OAP payments have over-shot inflation since then I believe that OAP payments before this were quite meagre. I don't have any proof of this, mind you, but remember hearing my gran giving out about it!!!
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That's a fair point - just because increases to the contributory OAP have outstripped inflation since 1997 doesn't necessarily mean that it is overly generous today. As you say, the payments may have been too meagre in 1997 to support a reasonable standard of living. Having said that, the Irish contributory OAP is now almost 40% higher than the rate in the UK (I appreciate that the costs to the individual associated with other state services (particularly healthcare) are different in the UK).
 
Firefly said:
The DAA are actually moving in this direction

"The parties have accepted that the scheme is unsustainable for active members in its
current form and should be frozen. That is to say, contributions should cease, further
accruals of service should stop and future pension arrangements should be provided
through separate defined contribution pension schemes."

The defined contribution rates are also very attractive. I'd be happy with that rather than the worry over getting nada in years to come!

[broken link removed]

Firefly.
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Yes, but that particular scheme was actually an under-funded, occupational DB scheme as opposed to the unfunded (ie "pay as you go") DB scheme that applies to the majority of public sector workers.

I do, however, agree with your earlier point that it is not beyond the wit of man to devise an equitable transitional arrangement if it is agreed to move public sector workers to a funded DC scheme if that can be agreed as part of an overall package of measures to address the problem.
 
I have just a few basic comments to make
It is often suggested that they have a better healthcare system in the UK than here when making comparisons about income but we spend a similar amount per head of population in public funding and more in the private system.

Will the vast amount of young people who have been forced to emigrate over the last 5 years and who may not ever return not create a further imbalance in our average population age. Has this been really projected for.

I cannot see any Government dealing with this pension time bomb until it happens. That is not the way we do things in this country. Very rarely do Governments see anything further out than 3 years out.

How would convince an electorate that an extra tax or cut is needed now to prevent this time bomb exploding in 10 years time.

It needs to be dealt wit now but how?.
 
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