Minister Varadkar says current State pension is unsustainable...

That's terrible. Expecting the Minister for Social Protection to do something about a looming Social Protection issue. You're as bad as the people who expected the Minister for Health to do something about hospitals.
 
I wish a Minister would come out and say something along the lines of: 'if you weren't born by 1960, you won't get a State pension as you understand it today'. There'll be a lot of wringing of hands and upset in the decades to come because no one saw it coming, even though there is absolutely no shortage of reporting on the matter.
 
Consultation doc and submission pack are located [broken link removed]

Right-hand-side of the page, well mid right, (laughable webpage design)
 
"I know there's a problem but can't solve it immediately, so I'll make it worse instead".
 
What sort of fund would one require to deliver a pension of €12,000 per annum...probably €400,000 give or take?

What's the average salary...€40,000 maybe?

PRSI is levied at a total rate of 14.75% per annum. That's €6,000 per annum over (say) a 40 year career.

Surely the State Pension is deliverable with some simple long-term planning (e.g. creating a fund with the proceeds of the bank share sales and investing it)?
 
The current government (a shambles) doesn't lend itself to making tough decisions. Instead of introducing gombeen tax cuts, we'd be far better served by reconstituting the National Pension Reserve Fund with the proceeds from the sale of AIB etc, undertaking to contribute a fixed sum to the fund per annum, and investing the total proceeds in the same manner as the Norwegians and others do.
 
RTE Radio 1 decided to have Willie O'Dea and a guy from SIPTU on to talk about the issue - Willie O'Dea's position (and I presume that of FF) is that 'something' needed to be done about the issue. With that kind of clarity I know we're not going to twiddle our fingers until the storm hits. He also said that the retirement age of 68 was too high - I'm guessing it won't be in any future FF manifesto to bring the retirement age down but we will see.
 
Sarenco said:
And the next time there's a crisis?

We tried that approach - the truth is it didn't work.:(
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To be fair, my understanding is that if you take what's still in the Pension Reserve Fund, the ISIF, and the market value of the State's holding in the banks, the total is greater than what was originally in the Pension Reserve Fund.

One could argue that the Pension Reserve Fund should be ring-fenced, but the fact is that we needed it in those dark times.
 
Gordon Gekko said:
To be fair, my understanding is that if you take what's still in the Pension Reserve Fund, the ISIF, and the market value of the State's holding in the banks, the total is greater than what was originally in the Pension Reserve Fund.
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Really? That surprises me - I'd love to see some figures.

There is a pretty compelling argument against investing in risk assets while carrying significant amounts of debt. That's really what we would be doing by reconstituting the NPRF.
 
Sarenco said:
Really? That surprises me - I'd love to see some figures.

There is a pretty compelling argument against investing in risk assets while carrying significant amounts of debt. That's really what we would be doing by reconstituting the NPRF.
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It was stated by a senior NTMA person at something I attended recently.

Re borrowing to invest, I agree in general, but not when you can raise debt at close to zero percent.
 
Sarenco said:
The problem is you don't know what price you will be paying to roll over the debt during your investment horizon.
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But we can raise money at close to zero, and over the relevant timelines, diversified investors have never lost money...ever. What's the time period for an investor in the MSCI World Index not to have lost money...17 years?

Surely we as a nation can be a little bit more creative. We're proposing a gombeen giveaway of €2b per annum or thereabouts. We have ISIF. We have debt. We can raise money at close to zero over meaningful time horizons, over which globally diversified investors have never lost money.

Am I being naive?
 
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Gordon Gekko said:
To be fair, my understanding is that if you take what's still in the Pension Reserve Fund, the ISIF, and the market value of the State's holding in the banks, the total is greater than what was originally in the Pension Reserve Fund.
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Hi Gordan

I had a bit of a dig to see if I could put some rough figures around this as a matter of curiosity.

Rounding to the nearest billion, ISIF has a current value of €8bn and the State's shareholdings in BOI and PTSB have a combined value of €2bn. Valuing the State's shareholding in AIB is a bit more subjective but the most recent estimates seem to be around €9bn. So that's €19bn in total.

At the end of 2008, the NPRF had a total value of just over €16bn so it does indeed seem likely that the combined value today of ISIF and the State's shareholdings in the banks exceeds the value of the NPRF at the time of the bailouts.

However, if the bailout hadn't happened and the NPRF remained invested as per its asset allocation at the end of 2008, without any further contributions from the State, then by my calculations the NPRF would have total value today of around €22bn.

Depends how you measure things I suppose!

Reconstituting the NPRF in some form may well be part of the answer to our looming problem. However, I still think we will have to increase contributions and/or lower benefits to make the current system sustainable.
 
Sarenco said:
Hi Gordan

I had a bit of a dig to see if I could put some rough figures around this as a matter of curiosity.

Rounding to the nearest billion, ISIF has a current value of €8bn and the State's shareholdings in BOI and PTSB have a combined value of €2bn. Valuing the State's shareholding in AIB is a bit more subjective but the most recent estimates seem to be around €9bn. So that's €19bn in total.

At the end of 2008, the NPRF had a total value of just over €16bn so it does indeed seem likely that the combined value today of ISIF and the State's shareholdings in the banks exceeds the value of the NPRF at the time of the bailouts.

However, if the bailout hadn't happened and the NPRF remained invested as per its asset allocation at the end of 2008, without any further contributions from the State, then by my calculations the NPRF would have total value today of around €22bn.

Depends how you measure things I suppose!
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Plus the small matter of €30bn additional national debt for Anglo/INBS...
 
Unless I missed it, I don't believe any of that sum came from the NPRF.

Massive amount of money, for sure, but I don't think it really has anything to do with the topic under discussion.

What do you think is the best way to address the looming pension crisis?
 
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