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

[Deiseblue]

Yeah, it's quite inaccurate to say that a 2/3rds pension linked to CPI is by far better than a 50% pension linked to salary inflation

It should be pointed out that Public Sector workers do not receive the old age pension in addition to the public services pension unlike those getting Bank pensions.
Bank of Ireland employees prior to 2007 and AIB employees prior to 1996 pay a contribution of 2.5% towards their pension , a public sector worker currently pay 14% ( previously 6.5% ) towards their pensions.
Bank of Ireland pensions are linked to the National Wage Agreements not the CPI , BOI pensioners received the 3.5% increase under the National Wage agreement towards 2016 whereas with the current wage freeze in the Public Sector salary inflation does not currently enter the equation.
Bank pensions are the gold standard !

 

[Sunny]

Why are people comparing bank pensions with public sector. It has already been established that the banks are not representative of the private sector, have closed down the scheme to new members and also have big pension holes (which is beginning to come back into investor minds recently as a big issue in every company that offeres defined benefit pensions). By the way do you have a link showing that the pensions are linked to national wage agreements. First I heard of it. Also banks pensions are based on 45 years service not 40 as in public sector. They also don't get the lump sum.

Didn't the ERSI survey today ignore pensions and still they found a premium in the public sector.

 

[DerKaiser]

Bank pensions are the gold standard !

...And have been closed to new entrants

Are you actually sure that OAP is in addition to the 2/3 salary? Must check that with some of my friends who work there

IN any case we've already accepted that there may be some DB schemes which may be better than the public service ones. I know for a fact the LAPD can retire on 100% salary at the age of 45. BUt what's this got to do with anything?

Public service pensions are a costly benefit
Public sector wages have increased enormously over the decade
Public sector numbers have increased over the decade
Social welfare has increased enormously over the decade
Living costs are down 6.5% since last year
We're running a €20bn per annum deficit (ignoring bank recapitalisations)
Social welfare and public sector pay & benefits make up about 2/3rds of public spending

The entenched attitude towards pay and benefits coming from the public sector and unions is nothing short of depressing.

Taxing the rich alone will not even come close to solving this crisis. Nor will blaming dodgy bankers. The difference between Government spending (2/3rds of which goes on public sector pay and social welfare) and revenues is the equivalent of an annual banking crisis.

 

[Deiseblue]

Why are people comparing bank pensions with public sector. It has already been established that the banks are not representative of the private sector, have closed down the scheme to new members and also have big pension holes (which is beginning to come back into investor minds recently as a big issue in every company that offeres defined benefit pensions). By the way do you have a link showing that the pensions are linked to national wage agreements. First I heard of it. Also banks pensions are based on 45 years service not 40 as in public sector. They also don't get the lump sum.

Didn't the ERSI survey today ignore pensions and still they found a premium in the public sector.

It has also been pointed out that others such as the insurance sector , semi-state bodies and large multi-nationals have similar schemes.
Bank of Ireland employees can retire on full pension after completing 40 years service with the Bank's agreement.
Bank of Ireland pensioners have always received the increases agreed under the National Wage Agreements , no link available but this can easily be verified by contacting the Pensions department in Head Office .
BOI also now operate a hybrid DC/DB scheme the details of which I have outlined in a previous post.
I also note that the unions question the validity of the ERSI report

 

[Sunny]

I also note that the unions question the validity of the ERSI report

I didn't expect that!

Why should I contact a head office to confirm your statements?

 

[Deiseblue]

I didn't expect that!

Why should I contact a head office to confirm your statements?

Because there is no link.
However , I can unequivocally confirm that Bank of Ireland pay the percentage pay increases negotiated under the national wage agreements to pensioners - if you doubt me then the best way of checking matters is the pensions dept. in head office or you could contact the IBOA.

 

[shanegl]

I also note that the unions question the validity of the ERSI report

Really? That's interesting. What does David Begg, a director of the ESRI, have to say on the matter?

 

[csirl]

It has also been pointed out that others such as the insurance sector , semi-state bodies and large multi-nationals have similar schemes.

In summary, you could say that the private sector pensions in large administrative organisations of similar size to public sector organisations have similar or better pension arrangements that most public sector organisations.

Shouldnt the real discussion be about the gap between the employees of large organisations and employees of small/medium sized organisations rather than public v private?

 

[Deiseblue]

In summary, you could say that the private sector pensions in large administrative organisations of similar size to public sector organisations have similar or better pension arrangements that most public sector organisations.

Shouldnt the real discussion be about the gap between the employees of large organisations and employees of small/medium sized organisations rather than public v private?

+ 1
Excellent post.

 

[orka]

In summary, you could say that the private sector pensions in large administrative organisations of similar size to public sector organisations have similar or better pension arrangements that most public sector organisations.

YOU could say that. You could say anything you want but it wouldn’t make it correct. I don’t accept that benefits offered to employees of large administrative organizations were ever better than the public sector pension but you’ll find that the better large company schemes have closed to new entrants and there’s a very good chance that future accrual for existing employees will switch to defined contribution also. How difficult is it to understand the concept – “the schemes used to be provided – they became too expensive to provide so they are no longer provided”.
Discussion of the cost of contributions is meaningless without knowing full details of relative packages. I would prefer to earn 50K and make a 10% contribution to my pension scheme than 40K and a 5% contribution. Would you consider the person with a 5% contribution to be better off if they both provided the same benefits?
I would also agree with DerKaiser – I would be dubious about the bank schemes providing two-thirds PLUS OAP – can anyone confirm this definitively?

Shouldnt the real discussion be about the gap between the employees of large organisations and employees of small/medium sized organisations rather than public v private?

The poor provision for the majority of the private sector is certainly a discussion worth having. But the gap is already being closed – private sector DB schemes are being closed and benefits are becoming less attractive. However, in the context of that minor irritation of our state hemorrhaging €20B per annum, the far more important discussion is how to save money. The pension offered to public sector with benefits far in excess of the average private sector worker is a target for a cost saving. It is a benefit that I believe a majority of taxpayers are coming to resent paying taxes for.

 

[Purple]

Shouldnt the real discussion be about the gap between the employees of large organisations and employees of small/medium sized organisations rather than public v private?

Why? We're talking about the state spending money it doesn't have.
What large organisations spend on remuneration is nothing to do with that.

 

[Deiseblue]

I would also agree with DerKaiser – I would be dubious about the bank schemes providing two-thirds PLUS OAP – can anyone confirm this definitively?
I can confirm without a shadow of a doubt that as well as the 2/3rd of final salary pension Bank pensioners will also receive the Old Age Pension on attaining 66 as long as they keep their credits up to date at the local social welfare office.
I also note what you say about closing off the DB schemes to new entrants , the Bank of Ireland have introduced a hybrid DB/DC scheme which actuarially calculates a pension of 2/3rds of final salary based on employee contributions of 5.5% of salary , I posted all the details in a previous post.

 

[csirl]

Why? We're talking about the state spending money it doesn't have.
What large organisations spend on remuneration is nothing to do with that.

Yes we are. But the solution is not to impose a blanket cut on all public sector workers. The reality is that programmes in the public service will be shut down. If a programme is shut down, the people working in it should be made redundant. You dont want a situation where you have people in productive funded programmes taking a pay or pensions cut to keep surplus staff in non-funded programmes twiddling their thumbs. This would never happen in the private sector.

There is also the overall argument about employees renumeration and benefits. In any job, whether in recession or not, if you pay people below the odds, then the best people will drift away to other organisations. Yes, there is a delicate balance here between affordability and pay rates, but you cannot totally disregard the market rate for a job (which is lower in a recession).


Finally, the main argument put forward on this thread for cutting public service pensions is that we cannot afford it. By implication, does this mean that in good times when their is an exchequer surplus, the government should make public service pensions more generous? Do people want public service pay to be linked to exchequer performance? How best could this be introduced? Should there be a profit sharing scheme for public servants (bearing in mind that most of the staff of the Dept of Finance would probably be millionaires now if their was a profit sharing scheme in operation for the past decade). Would this be acceptable?

 

[Purple]

Yes we are. But the solution is not to impose a blanket cut on all public sector workers. The reality is that programmes in the public service will be shut down. If a programme is shut down, the people working in it should be made redundant. You don’t want a situation where you have people in productive funded programmes taking a pay or pensions cut to keep surplus staff in non-funded programmes twiddling their thumbs. This would never happen in the private sector.

I agree but the public sector unions have stopped reasonable reform for years so now we have no choice.

There is also the overall argument about employees renumeration and benefits. In any job, whether in recession or not, if you pay people below the odds, then the best people will drift away to other organisations. Yes, there is a delicate balance here between affordability and pay rates, but you cannot totally disregard the market rate for a job (which is lower in a recession).

There is not, and for decades there has not been, a case to be made for pay increases in the broader public sector due to market conditions. The public sector were better paid than their private sector counterparts 15 years ago and the gap has widened massively over those years.

Finally, the main argument put forward on this thread for cutting public service pensions is that we cannot afford it. By implication, does this mean that in good times when their is an exchequer surplus, the government should make public service pensions more generous? Do people want public service pay to be linked to exchequer performance? How best could this be introduced? Should there be a profit sharing scheme for public servants (bearing in mind that most of the staff of the Dept of Finance would probably be millionaires now if their was a profit sharing scheme in operation for the past decade). Would this be acceptable?

No, pensions should be seen as part of an overall remuneration package that is just attractive enough to get and keep the right people for the job. What has happened is the government gave pay and pension awards during a short-term capital tax income boom that have to be funded out of current tax income for the next 40 years. It was never sustainable. It was based on political horse-trading, not any economic or social need.

 

[DerKaiser]

There is also the overall argument about employees renumeration and benefits. In any job, whether in recession or not, if you pay people below the odds, then the best people will drift away to other organisations. Yes, there is a delicate balance here between affordability and pay rates, but you cannot totally disregard the market rate for a job (which is lower in a recession).

First theory: You could probably cut public service pay by 10% with negligible impact on the quality of applicants

Finally, the main argument put forward on this thread for cutting public service pensions is that we cannot afford it. By implication, does this mean that in good times when their is an exchequer surplus, the government should make public service pensions more generous? Do people want public service pay to be linked to exchequer performance? How best could this be introduced? Should there be a profit sharing scheme for public servants (bearing in mind that most of the staff of the Dept of Finance would probably be millionaires now if their was a profit sharing scheme in operation for the past decade). Would this be acceptable?

Second Theory: Benchmarking has achieved what you've described above

 

[csirl]

Probably the big issue here is that public sector managers are not allowed to negotiate terms and conditions with the staff they hire at the time of hire and have no say in the numbers of staff hired/fired. There is too much of a one shoe fits all approach. Public sector managers should be given targets and budgets and be allowed to work within these parameters.

 

[BeanPole]

Beanpole

You keep banging on about a 20% pay cut across the board but, when asked, refuse to explain how you came up with this figure. For instance why the same percentage across the board? Why 20%? Is this in addition to the cuts we have already taken? (and yes, the pension levy is a 'cut'!).

Its just really hard to take your posts seriously when you just bang out statements with no analysis or explanation.

Sorry liaconn

It's been really hectic at work, so I haven't had the time or interest to get back to you to try to justify my entirely sensible starting point of a 20% pay cut.

If you really are struggling to find evidence that the public sector are massively overpaid compared to the private sector, have a look at the latest ESRI report:
http://www.rte.ie/news/2009/1009/economy.html

Fintan O'Toole also had a good analysis in the Irish Times during the week.

I don't think its necessarily accurate to benchmark against current wages in the private sector, as many private sector workers (including everyone at the manufacturing site where I work) are under pressure to take pay cuts for ever increasing hours. We are fighting for the survival of our jobs and homes.

I think a more accurate benchmark would be to compare public sector pay and conditions with those of our European neighbours. As one German diplomat pointed out recently, there is no reason why a civil servant in Ireland should be paid three times the level of his German counterpart. I also have a number of friends, who were hospital consultants in the UK, who came back to a more than doubling of their pay in Irish hospitals.

Nope - the truth is that 20% is probably a fair starting point in public sector wages, social welfare, and the minimum wage in order to take a dramatic step change in the cost base of our economy

 

[S.L.F]

If you really are struggling to find evidence that the public sector are massively overpaid compared to the private sector, have a look at the latest ESRI report:
http://www.rte.ie/news/2009/1009/economy.html

Is this the same report that got it's comparisons of what the Gardai are worth by comparing them to security guards.

The same report that compares DIT lecturers to teachers.

Maybe then librarians should be compared to video shop assistants.

Maybe trained chefs in canteens should be compared to what a cook in McDonalds would make.

I think a more accurate benchmark would be to compare public sector pay and conditions with those of our European neighbours. As one German diplomat pointed out recently, there is no reason why a civil servant in Ireland should be paid three times the level of his German counterpart. I also have a number of friends, who were hospital consultants in the UK, who came back to a more than doubling of their pay in Irish hospitals.

Did this same diplomat say anything about the cost of houses, fuel, cars, insurance, food or clothes in Ireland as compared to Germany.

Does this diplomat believe that public servants should live on grass and water?

I would think this diplomat is not being very diplomatic and would need a pay decrease since they are not very good at their job.

I have no qualms about attacking the pay of consultants I think they are paid far too much.

95% of public servants are just doing their job and mostly scrape by (these days) I don't doubt that there are Public servants who make a serious killing financially but they are few and far between and I believe it is very unfair to paint all 350,00 people in the PS with the same biased brush

 

[BeanPole]

To say that teachers in their early 30s on €40k per year (plus the hols, the pension,etc etc) are "scraping by" is an insult. As for €60k at the top of the scale - sheesh !!

The cost of living in Ireland is caused, in no small way, by our inflated salaries.

In the exposed private sector, we are making painful adjustments very quickly indeed. In my own company, we have had across the board pay cuts already this year, and more likely before Christmas. It's that or the jobs to Eastern Europe, where a highly skilled, low cost workforce can do our jobs just as well, while local tax rates are far lower.

To see SIPTU and IMPACT on the news screaming for more pay rises for a cossetted public sector is a slap in the face to those of us scraping by, and praying that our jobs will be here tomorrow.

It is patently unfair to suggest that the entire pain for the readjustment / depression that Ireland is going through should be borne by private sector workers

 

[Firefly]

Did this same diplomat say anything about the cost of houses, fuel, cars, insurance, food or clothes in Ireland as compared to Germany.

With the exception of fuel, all others will come down if wages fall.