Public sector pay freeze for top 40,000 public servants announced

[Sunny]

Its not a fund - its occupational pension scheme. I actually had this with a major multinational in the not to distant past - multinational is still here, still operating these terms and conditions for all employees. This is a major company with 1,000s of employees in Ireland.

As I said earlier, the employers contribution exceeds the employees - in this particular case the employers was approx. twice the employees plus the employer also put a % of profits in the pension fund. This is a publically listed company and the terms and conditions were the industry norm - this company was not regarded as having generous terms and conditions.

Occupational pensions that people automatically get through their employment are NOT the same a pensions you purchase from an investment company off your own bat. Most occupational pension have some guarantees in them. And, as we've seen from time to time, if there is a deficit in the occupational pension scheme, the shareholders pay through reduced dividends when the company has to top up the scheme.

Again just because you have had decent experiences doesn't mean the represents the private sector as a whole. As I pointed out around 50% of the private sector do not have pensions. Also to say that most occupational pensions have guarantees in them is simply untrue. Most private sector pensions are defined contribution schemes so are dependent on investment returns to ensure a decent pension. Most defined benefit schemes out there are closed to new members and are running up huge deficits. There is no legal obligation on a company having having to fund any deficit either so that is another risk that private sector employees have to take on.

 

[csirl]

Again just because you have had decent experiences doesn't mean the represents the private sector as a whole. As I pointed out around 50% of the private sector do not have pensions. Also to say that most occupational pensions have guarantees in them is simply untrue. Most private sector pensions are defined contribution schemes so are dependent on investment returns to ensure a decent pension. Most defined benefit schemes out there are closed to new members and are running up huge deficits. There is no legal obligation on a company having having to fund any deficit either so that is another risk that private sector employees have to take on.

I agree with you on some points. But you cannot use the argument that some employers neglect to put in place proper occupational pension arrangements for their employees as a reason to cut out pensions for other employees. Yes, this is a problem, but is better addressed by encouraging all employers to put provisions in place.

I hate the way people are still focused on how much money will be lopped off all public servants wages - suggesting set % to apply to all. This is shortsighted and doesnt address the problem. People who are doing a good job should be paid what they are worth and surplus employees should be got rid off. The same % should not apply to all.

In my job, everyone was given a c.10% pay cut due to the recession. I think my employer made a big mistake in doing this. The area I work in is due to break all records this year and people have being working very hard over the past couple of years to get to this stage. There are other areas that are generating poor results. So the people who broke all records and put in loads of extra hours have been rewarded with a pay cut - the same pay cut as less productive staff. This has had a big impact on some of my colleagues. I cant see them repeating their 2009 performance next year, whats the point? The mindset of many is "I'll stick it out here until the upswing comes, but I'm out the door as soon as someone else offers me something half decent - I've been treated poorly here".

I would imagine that public sector workers will react in the same way and I've heard some grumbles already from some friends and relatives in the public sector along the lines of ".....I'm taking a pay cut to keep some unproductive waster in X in a job etc.....". I think that an across the board cut will result in productive areas of the public sector becoming unproductive through poor morale among staff and ultimately because the good staff will walk as soon as their is an upswing.

 

[Sunny]

I agree with you on some points. But you cannot use the argument that some employers neglect to put in place proper occupational pension arrangements for their employees as a reason to cut out pensions for other employees. Yes, this is a problem, but is better addressed by encouraging all employers to put provisions in place.

I am not arguing that employees should have their pension entitlements cut. I would love everyone to have the same pension entitlement that exists in the public sector. However the public sector pension scheme is running a €100 billion plus deficit and it operates to some sort of Alice in Wonderland economics.

I have no problem agreeing to a complete overhaul of public and private sector pensions to create a level playing field for everyone. However, I think every sane person in the Country recognises that if there is no way the same terms could be offered to every private sector employee.

 

[orka]

In my experience, typical private sector employee pays 5-10% of salary and receives 50-75% of final salary EXCLUDING SW pension.

Was this in Ireland? I think there are revenue limits on how much pension can be provided - and I think the maximum allowable is two-thirds of final salary. What sort of company was it that provided the 75% pension?

 

[DerKaiser]

Was this in Ireland? I think there are revenue limits on how much pension can be provided - and I think the maximum allowable is two-thirds of final salary. What sort of company was it that provided the 75% pension?

Yeah, the revenue limits would be 2/3 less SW. 75% with no SW deduction would seem strange.

Also, a 'typical private sector employee' does not have a pension, let alone a DB pension.

According to the pensions green paper at 31/12/2006 less than 800,000 of the 2,100,000 workers in this country had any form of pension.

It's very hard to have a reasoned debate on appropriate levels of pay and benefits when you spend most of the time trying to simply convey the correct facts

 

[DerKaiser]

Most occupational pension have some guarantees in them. And, as we've seen from time to time, if there is a deficit in the occupational pension scheme, the shareholders pay through reduced dividends when the company has to top up the scheme.

I think the more common scenario these days (in companies that actually offer DB pensions to their employees) is for the pension scheme to be wound down by first closing off to new entrants and then reducing or ceasing accruals to existing employees.

 

[Deiseblue]

Can we have the name of the guy who manages that pension fund... pretty please?

Glad to help , in the case of AIB it's AIB investment Managers and in the case of Bank of Ireland it's BIAM.
3/4 of final salary on retirement plus OAP at age 65 .

 

[DerKaiser]

Glad to help , in the case of AIB it's AIB investment Managers and in the case of Bank of Ireland it's BIAM.
3/4 of final salary on retirement plus OAP at age 65 .

AIB DB scheme has been closed to new entrants since 1996?

Based on revenue pension limits, I'm still very sceptical of 3/4 of final salary plus OAP but I guess we'll have to take your word for it if nobody else has the facts

 

[Sunny]

Neither AIB or BOI offer defined benefit schemes anymore. Both are hybrid schemes and yes both are still very generous to employees. Its not 3/4 of final salary. It's 2/3's (max as set down by revenue I think) and this is based on retiring on 65 after 45 years service (in the case of BOI anyway). Also these pension payouts have to be linked to inflation unlike public sector ones. BOI's scheme is running a deficit of over €1 billion and both banks reserve the right to change the terms of the pension if they want. As I say they are bloody good schemes but they do not represent whats available in the private sector as a whole and there are still major risks for employees. Look at how many people wanted the banks to be allowed fail during the current crisis. It would have been Waterford Crystal on a much larger scale.

 

[Deiseblue]

AIB DB scheme has been closed to new entrants since 1996?

Based on revenue pension limits, I'm still very sceptical of 3/4 of final salary plus OAP but I guess we'll have to take your word for it if nobody else has the facts

You are right , got a bit carried away - it's two thirds of final salary.
AIB and Bank of Ireland now operate hybrid schemes , in Bank of Ireland new entrants since 2008 are in the hybrid scheme - anyone employed prior to that will get the full pension on retirement plus the OAP.
In AIB anyone employed prior to 1996 will get the full pension plus the OAP.
Entry level people in BOI will make a 2.5% mandatory contribution to a DB scheme which aims to deliver a pension of between 45% and 50 % of their final salary and can make a voluntary contribution of 3% of their salary to DC fund which should ultimately provide a 66% pension , I would presume that the AIB scheme works on the similar basis !
Those in BOI that signed up for voluntary DC contributions received a 3% salary hike plus DC top ups from the Bank of 2% for first 2 years and 1% for the third.
Everyone is entitled to OAP no matter what scheme they are in

 

[Firefly]

I would imagine that public sector workers will react in the same way and I've heard some grumbles already from some friends and relatives in the public sector along the lines of ".....I'm taking a pay cut to keep some unproductive waster in X in a job etc.....".

Maybe those "performing" workers should have opposed across-the-board increases under benchmarking?

 

[Deiseblue]

Neither AIB or BOI offer defined benefit schemes anymore. Both are hybrid schemes and yes both are still very generous to employees. Its not 3/4 of final salary. It's 2/3's (max as set down by revenue I think) and this is based on retiring on 65 after 45 years service (in the case of BOI anyway). Also these pension payouts have to be linked to inflation unlike public sector ones. BOI's scheme is running a deficit of over €1 billion and both banks reserve the right to change the terms of the pension if they want. As I say they are bloody good schemes but they do not represent whats available in the private sector as a whole and there are still major risks for employees. Look at how many people wanted the banks to be allowed fail during the current crisis. It would have been Waterford Crystal on a much larger scale.

My last post crossed with yours.
The Banks can only change terms and condtions with the agreement of the IBOA , obviously that would include changes to the pension schemes.
I appreciate that such pensions do not represent whats generally available in the Private Sector however there are a large number of firms with comparable schemes.
The maximum employee contribution to the BOI hybrid scheme is 5.5% with the mandatory contribution being a mere 2.5% - what are public sector workers currently contributing , am I right in thinking it's approx 14% ?

 

[Purple]

My last post crossed with yours.
The Banks can only change terms and condtions with the agreement of the IBOA , obviously that would include changes to the pension schemes.
I appreciate that such pensions do not represent whats available in the Private Sector however there are a large number of firms with comparable schemes.
The maximum employee contribution to the BOI hybrid scheme is 5.5% with the mandatory contribution being a mere 2.5% - what are public sector workers currently contributing , am I right in thinking it's approx 14% ?

Banks are protected sector companies (regulated with huge barriers to entry). They do not operate in a proper open market and cannot be compared to most of the private sector. Even with their special status they cannot afford to pay DB pensions.

 

[Purple]

Glad to help , in the case of AIB it's AIB investment Managers and in the case of Bank of Ireland it's BIAM.
3/4 of final salary on retirement plus OAP at age 65 .

Do you now accept that this is not the case?

 

[Shawady]

Isn't this part of the problem with comparing the Public and Private sector - That within the private sector itself there are (1) companies such as banks/large multi-nationals/ semi-state companie that enjoy similar benefits to the public sector and (2) a large number of smaller companies that do not provide benefits such as pension schemes, most probably because they could never afford it.
People working for companies that have been represented at the social partnership talks have got the pay increases but those employed in the SME sector have not got these increases as this sector has not been represented. Am I right in saying SMEs were not represented at the partnership talks?

 

[Purple]

Isn't this part of the problem with comparing the Public and Private sector - That within the private sector itself there are (1) companies such as banks/large multi-nationals/ semi-state companie that enjoy similar benefits to the public sector and (2) a large number of smaller companies that do not provide benefits such as pension schemes, most probably because they could never afford it.
People working for companies that have been represented at the social partnership talks have got the pay increases but those employed in the SME sector have not got these increases as this sector has not been represented. Am I right in saying SMEs were not represented at the partnership talks?

Yes on all counts (it should be noted that the semi-states are not private sector but with the banks make up the bulk of the active IBEC members. IBEC is affiliated to the ICTU)

 

[Latrade]

Isn't this part of the problem with comparing the Public and Private sector - That within the private sector itself there are (1) companies such as banks/large multi-nationals/ semi-state companie that enjoy similar benefits to the public sector and (2) a large number of smaller companies that do not provide benefits such as pension schemes, most probably because they could never afford it.
People working for companies that have been represented at the social partnership talks have got the pay increases but those employed in the SME sector have not got these increases as this sector has not been represented. Am I right in saying SMEs were not represented at the partnership talks?

Yes on all counts (it should be noted that the semi-states are not private sector but with the banks make up the bulk of the active IBEC members. IBEC is affiliated to the ICTU)

It may be the case in Shane Ross' head, but not actually the case. It's not just SMEs who couldn't afford the last wage deal, retail, hotels, etc, manufacturing. All represented and all unable to provide the benefits outlined.

I'd be interested to know the reason why IBEC is affiliated to ICTU.

 

[Shawady]

Yes on all counts (it should be noted that the semi-states are not private sector but with the banks make up the bulk of the active IBEC members. IBEC is affiliated to the ICTU)

Getting off topic but were the american multi-nationals such as Intel or Wyeth part of the partnership arrangement, does anyone know?

 

[Purple]

I'd be interested to know the reason why IBEC is affiliated to ICTU.

They are a union, that's why.

Getting off topic but were the american multi-nationals such as Intel or Wyeth part of the partnership arrangement, does anyone know?

They join as a PR exercise when they get their grants but really have bugger all input after that.

 

[Latrade]

Getting off topic but were the american multi-nationals such as Intel or Wyeth part of the partnership arrangement, does anyone know?

Not individually. Social partnership is through various representative bodies such as ICTU and IBEC.