Irish Times:"Exposing a two-tier and unequal pension system" public vs. private


I have always believed that the generous PS pension arrangements arose because Trade Union negotiators were able get them past politicians who knew that the costs would not materialise until long after they themselves had left the scene.

There is no cost to any current administration in agreeing a pension benefit which will not become due for many years. An easy sop to the unions.
 
The difficulty is lack of flexibility in the Public Sector and "linkages" negotiated by the unions. Rates of reward cannot be increased in any one area (where there is a shortage) without knock on effects right across the board.

+1. Look at all the hassle trying to hire nurses. If the demand is there the wages offered should be increased, but doing so would result in an orderly queue forming at government gates.
 

Yip. Plus the fact that politician's pensions are also DB.
 


The "super tax" is an anomaly which no one is meant to incur.

It's an anomaly for sure but not evidence of a wicked conspiracy against the private sector.

Can someone explain, is the cut in point for the super tax different between public and private sectors or not. Thanks
 

Absolutely disagree.

A defined benefit pension is a lie.

The employer offering it has no idea if they will be able to honour the terms of the scheme 50 years into the future.

It is no good to the employee because they must always doubt that the promise will be defaulted on.

A society where middle income retirees are required to manage multi million euro pots is so terribly inefficient.

As for efficiency they could outsource the management to professional investment managers.

As to bearing investment risk in their pensions, well that risk exists anyway, but with a defined pension scheme the employers has promised to bear the risk. A promise they do not know that they can keep.
 
cremeegg
There are more people in unions in the private sector than in the public service actually 5 or 6 100% more in fact
, Think about the shelving of the car park tax it was not the unions who got it shelved it was pressure from head of departments who got it suspended quitely/not intelimented
,These pensions originally designed for themselves ,If the were funded the same as the private sector DB and capped there would be on problem,
Lots of good well ran DB pensions schemes Buy an annuity for each person who retires so it is very easy to control and see cost,
State Sponsored Bodies DB schemes already show the way,
 
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creemegg the rules for the 'super tax' are the same it's just that no one in Public S gets high enough a pension to incur it. No one in the Private S should put so much into their supplementary pension fund that it incurs the super tax.
 
cremeegg
There are more people in unions in the private sector than in the public service actually 5 or 6 100% more in fact

True, however private sector employers are not so quick to make promises about future costs.


Lots of good well ran DB pensions schemes Buy an annuity for each person who retires so it is very easy to control and see cost,

The problem arises long before any annuity needs to be bought.

An new employee in their 20s is promised a pension 40 plus years in the future, to run for who knows how long.

The investment environment in those 40 years is completely uncertain.

DB pensions are simply a lie. The extraordinarily strong investment climate in the 80s means that those retiring until recently were not caught out.
 
Would I be correct in saying you did an example of the cost some time in the past year I remember seeing it .I did notice a few bad mistakes that is why i remember seeing it,
 
cremeegg you think the State can guarantee to pay pensions 50 years into future?

No I don't think that the state can deliver any such guarantee. That is why I agree with Brendan that all PS pensions should be DC.


I agree with your concerns here, however I don't see DB pensions as a solution. I see them as a cover-up to hide the problem. We are saying to PS workers that they will receive 40/80s when they retire, linked to ongoing salaries. everyone knows that this is unlikely.

I accept that pooling of longevity and investment risk may be desirable, though surely a DB scheme may, depending on its members age profile, do the opposite. e.g. if lots of people retire now that focusses investment risk on future retirees.

Not in the public sector case of course because there is no investment risk, there is nothing invested to be at risk.
 
I am intrigued Duke, I would also welcome the input from those of a left-leaning disposition who often claim that private enterprise are just chasing profits. Would they prefer that all workers have a defined benefit pension from the state coffers, to, you know, make it fairer?

Btw, how's that pinkometer going?
 
Now leave TheBigShort out of it at least he knows when he is walking on egg shells,
 
Oh you mean like the contributory & non contributory State pensions payable to all citizens on attaining the appropriate age ?

Of course in the case of public sector workers such state pension is integrated whereas a large number of private sector workers will receive the state pension in addition to their occupational pension.
 
 
creemegg the rules for the 'super tax' are the same it's just that no one in Public S gets high enough a pension to incur it.

Well according to BB above, a TDs pension is high enough to incur the supertax but because of the way it is valued by Revenue it does not

I actually think I know the answer to this one, bit I don't work in pensions so of course I m not an expert, and I am going to put you to the trouble of explaining it.
 
Hopefully FG won't spend the proposed " Rainy Day Fund "

How on earth then are we going to recapitalise our errant Banks when they inevitably screw up again , after all the National Pension Reserve fund cannot come to the rescue again after it was cannibalised to bail them out previously.