Good article on why we should not be borrowing to pay increases to public servants

[Purple]

Therefore, a pension of say, €25,000 would have to drop to €5,000?

If we maintain the same level of expenditure then yes. That means we need a different solution. I would suggest that everyone funds their own private defined benefit pension in order to compensate. If it's done over a long period of time that should minimise the pain.
I'm open to correction on the figures.

 

[Purple]

No system is perfect.

We have the same problem here. Pensioners are effectively untouchable in this country, as can be seen in how little they were impacted by the recession. I don't understand why this is so. There is no justification for helping people who have had their entire lives to make provision for their retirement at the expense of children born into socially deprived areas.

 

[Jon Snow]

If we maintain the same level of expenditure then yes. That means we need a different solution. I would suggest that everyone funds their own private defined benefit pension in order to compensate. If it's done over a long period of time that should minimise the pain.
I'm open to correction on the figures.

That's a great idea, except that we have a Welfare State - Irish people whinge about the dole "only" being nearly €200 a week. How do we get to a stage where the State pension is barely enough to cover a full Sky package and some ciggies...?!

 

[Purple]

That's a great idea, except that we have a Welfare State - Irish people whinge about the dole "only" being nearly €200 a week. How do we get to a stage where the State pension is barely enough to cover a full Sky package and some ciggies...?!

Slowly!
The solution is for everyone to fund their own pension, something like the unfortunately named IRA scheme in the USA.

 

[Deiseblue]

I'm confused by your claim that pay will be reduced in 2017. Clearly your 2017 figure is less than your 2016 figure? Also you'll note your 2018 figure is less than 2016.

Seemingly when you posted the figures above, you did at that point agree that there's a difference between the cost over three years versus cost in year three, since you were trying to get the costs over three years to add up to around 2k.

PER seem to have made an error when describing a 2k over 3 year deal for 300,000 workers as "The agreement has additional costs of €566 million over a 3 year period.."

To explain the PER figure, so far you've claimed it's due to it being net of tax, next because there's some pay cut being implemented in 2017, and now it being because pay rises via reduction in PRD are not pay rises. Isn't the simplest explanation that the description of the cost by PER is incorrect?

Nope , my figures tie in exactly with the link contained in # 87 , the increase in September 2017 totals €1,167 but obviously there is a crossover into 2018 which is why 567 will be paid in 2017 & the balance of 600 in 2018.
I take it that you now agree that someone on €30,000 will not not benefit to the tune of €4,674 as posited by your argument by the end of the mooted agreement?
I remain in the camp of the Government,the Unions , economists & the media in accepting the costs as detailed by Minister , I will eat my hat if someone on 30k per annum has their salary restored to a gross figure of 34,674 by 2018 - a staggering 15.58 %.

 

[Sophrosyne]

We have the same problem here. Pensioners are effectively untouchable in this country, as can be seen in how little they were impacted by the recession. I don't understand why this is so. There is no justification for helping people who have had their entire lives to make provision for their retirement at the expense of children born into socially deprived areas.

The reason for my post about New Zealand was that despite setting up the New Zealand Superannuation Fund in 2001, they have similar problems regarding the funding of future pensions and they did not have to contend with anything like Ireland's fiscal crisis.

I don't think you can judge the past by today's standards.

When we were young, my generation funded pensions through cripplingly high taxes.

Most of the pensioners we were funding lived in poverty or close to it for most of their lives.

Membership of pension schemes really only became widespread from the 1980s.

 

[Duke of Marmalade]

...It has to do with borrowing money to give pay increases when we are just about solvent as a nation...

I went back to the beginning of this thread for this theme which loomed large in the next 8 pages of posts.

I looked up the projections made for Budget 15, and remember the outlook has improved since then. The projection for 2016 was an overall deficit of €1.8bn. But crucially before interest on the Debt the primary surplus was projected to be €1.9bn.

Now, it was perfectly justifiable to ask the PS to endure emergency (unprecedented) cuts to their take home pay when deficits were double digit - the government was simply spending more than it got in revenue.

But to ask these emergency measures to remain in place when we are in primary surplus seems to me outrageous, one thing to tell the PS that we can't afford to pay them, another thing to say we can now afford ito pay you but these emergency measures can now be used to pay down the debt.

I think the interest on the debt and the paying down of the debt should be shouldered fairly by all and the PS should not be specifically targeted in this regard.

 

[ashambles]

I take it that you now agree that someone on €30,000 will not not benefit to the tune of €4,674 as posited by your argument by the end of the mooted agreement?

I never said someone on 30k will have a 34k salary at the end, or benefit by 4k in a single year. This is a 2k pay rise over 3 years using a mixture of rises.

Let's simplify by saying that there's only one rise at the start of the 3 years - a straightforward pay rise of 1000 euro. Would you agree that the cost of that rise per employee is 3000 over 3 years, and that at the end a person who was on 20k is on 21k ?

PER's wording would describe that as costing 1000 euro over three years. But it's 500 euro over 6 months, 1000 over 1 year, 2000 over 2 years etc..

 

[Sarenco]

I went back to the beginning of this thread for this theme which loomed large in the next 8 pages of posts.

I looked up the projections made for Budget 15, and remember the outlook has improved since then. The projection for 2016 was an overall deficit of €1.8bn. But crucially before interest on the Debt the primary surplus was projected to be €1.9bn.

Now, it was perfectly justifiable to ask the PS to endure emergency (unprecedented) cuts to their take home pay when deficits were double digit - the government was simply spending more than it got in revenue.

But to ask these emergency measures to remain in place when we are in primary surplus seems to me outrageous, one thing to tell the PS that we can't afford to pay them, another thing to say we can now afford ito pay you but these emergency measures can now be used to pay down the debt.

I think the interest on the debt and the paying down of the debt should be shouldered fairly by all and the PS should not be specifically targeted in this regard.

Fair enough but does that not rather assume that public sector pay was appropriate prior to the implementation of the emergency measures? While it doesn't tell you the full story, the CSO's latest statistics show that average public sector pay rates are 48% higher than private sector pay rates - there is no observable public sector pay premium in the UK, for example. In a similar vein, the European Commission has found that the ratio of average public pay to per capita GNP in Ireland are among the highest in the OECD.

 

[Duke of Marmalade]

Fair enough but does that not rather assume that public sector pay was appropriate prior to the implementation of the emergency measures? While it doesn't tell you the full story, the CSO's latest statistics show that average public sector pay rates are 48% higher than private sector pay rates - there is no observable public sector pay premium in the UK, for example. In a similar vein, the European Commission has found that the ratio of average public pay to per capita GNP in Ireland are among the highest in the OECD.

Okay, fair point. (Jayz we're getting very civilised round here). I felt the whiskered ones did not play particularly hardball on this round. They must still feel guilty with how they mugged Bertie.

 

[Sarenco]

Okay, fair point. (Jayz we're getting very civilised round here). I felt the whiskered ones did not play particularly hardball on this round. They must still feel guilty with how they mugged Bertie.

Ha! I'd agree with that but I suspect it had more to do with sympathy for a fellow comrade across the negotiating table than guilt over their past results.

 

[Deiseblue]

I never said someone on 30k will have a 34k salary at the end, or benefit by 4k in a single year. This is a 2k pay rise over 3 years using a mixture of rises.

Let's simplify by saying that there's only one rise at the start of the 3 years - a straightforward pay rise of 1000 euro. Would you agree that the cost of that rise per employee is 3000 over 3 years, and that at the end a person who was on 20k is on 21k ?

PER's wording would describe that as costing 1000 euro over three years. But it's 500 euro over 6 months, 1000 over 1 year, 2000 over 2 years etc..

You have stated that the total cost of this three year package will be €1,688,000,000 or an average of €6028 per public sector worker .
As those earning least are to benefit more , am I to presume that those currently earning €30,000 are to see their pay restored by something in the region of €7,000 ?
Just as well I didn't use your original guesstimate of 2 billion euro !

 

[Firefly]

I looked up the projections made for Budget 15, and remember the outlook has improved since then. The projection for 2016 was an overall deficit of €1.8bn. But crucially before interest on the Debt the primary surplus was projected to be €1.9bn.

Now, it was perfectly justifiable to ask the PS to endure emergency (unprecedented) cuts to their take home pay when deficits were double digit - the government was simply spending more than it got in revenue.

Hi Duke, I can see where you are coming from, but the interest has to be paid and is just as relevant (perhaps even more so than other expenses). There are no doubt countless families out there who would be flying if they didn't have to pay the interest on their mortgages , but that doesn't mean that their funding requirements change.

 

[Purple]

You have stated that the total cost of this three year package will be €1,688,000,000 or an average of €6028 per public sector worker .
As those earning least are to benefit more , am I to presume that those currently earning €30,000 are to see their pay restored by something in the region of €7,000 ?
Just as well I didn't use your original guesstimate of 2 billion euro !

Ashambles is counting up the combined cost. You are looking at the extra cost per year and not the extra cost taking this years cost as the starting figure.

 

[michaelm]

The Lansdowne Road deal is a poor one for the PS, not least given that it's part of a strategy to buy the election. The unions should reject it and demand an end to FEMPI and in particular to the pension levy. This is unlikely to happen because the unions are spineless and untouched by the draconian cuts FEMPI inflicted.

My net pay, for example, is down more than €600/month since the end of 2008 (more than €40k net in total over the period to date) . . yet the government want to buy my vote with a tweak to the pension levy (special PS tax unrelated to pensions) thresholds next year worth maybe €7/week net to me (perhaps I can afford Netflix after all) and the promise of a a €1000 gross increase (another €7/week net) in September 2017 . . and (inexplicably) lobbed into the agreement is recognition of various initiatives specifically including Irish Water.

 

[Firefly]

I'm hearing now that the USC is going to be cut....We're not even out of the woods and we can't help but go deeper into debt with these

 

[Sunny]

My net pay, for example, is down more than €600/month since the end of 2008 (more than €40k net in total over the period to date) . . yet the government want to buy my vote with a tweak to the pension levy (special PS tax unrelated to pensions) thresholds next year worth maybe €7/week net to me (perhaps I can afford Netflix after all) and the promise of a a €1000 gross increase (another €7/week net) in September 2017 . . and (inexplicably) lobbed into the agreement is recognition of various initiatives specifically including Irish Water.

Do you want to explain how your net pay is down more than €600 a month since 2008 from pay cuts?

 

[Jon Snow]

Do you want to explain how your net pay is down more than €600 a month since 2008 from pay cuts?

He didnt say it's all due to pay cuts..?

 

[Sunny]

He didnt say it's all due to pay cuts..?

Well considering that this discussion is to do with restoring public sector pay cuts, I don't see why anything else matters and he was using it as an example why the deal was bad.

 

[michaelm]

Yes, for clarity, not all due to PS pay cuts . . 4k straight forward pay cut, 4k additional pay cut in the guise of a pension levy, extra hours are effectively a pay cut but I didn't account for that or other tinkering with T&Cs . . the rest is USC, which of course is paid by all so not related to the Lansdowne Road deal.

So to simplify, I've had an 8k cut in gross wages since end 2008 thanks to the Financial Emergency Measures in the Public Interest legislation; the new 'deal' proposes to give me back 1k in Jan 2016 and another 1k in Sep 2017. I think that this is paltry and should be rejected by the unions. If the Government want to talk up everything they can't concurrently stand over financial emergency legislation.

The pension Levy has a sting in its tail as it is not deductible from gross income for assessment purposes in relation to applications for Medical/GP Visit Cards. This stipulation was added to the HSE assessment guidelines in 2009. It therefore excludes a tranche of modestly paid public servants who would otherwise qualify.