Perhaps - but only if they are also given full Class A PRSI benefits, which that category of public servants doesn't generally have. There are trade-offs!Although the media are always saying that public sector pensions are very generous, it is rarely suggested that the workers should pay more for them.
People who joined the public sectore pre-1995 pay 6.5% of salary for a generous index-linked DB scheme.
Maybe they should pay more, even maybe 7.5% of salary?
Yeah, 'cause that there BoI is full of public sector unions.It will never happen. The public sector unions who run the country ( for their benefit) would not allow a change in pension terms. Take a look at what happened with BOI when they tried to alter the pension terms for their workers.
Actually, there've already been major [incremental, admittedly, and on "new entrant" basis] changes for civil servants: in 1995, in moving to Class A PRSI and increased pension contributions; in 2004, changes to retirement age. Have you heard huge commotion about them?
Have you heard what the unions secured in return?
Have you heard what the unions secured in return?
Much is vaunted in the press about the value of the public sector pension. However, although it and the job are secure, the max. pension on retirement is 50% of final salary, assuming full service of 40 yrs. A private sector pension pays 66% of final salary, assuming full service. That's quite a difference and goes some way to explain the take up in PRSAs by public servants since 2003.
Slim
Much is vaunted in the press about the value of the public sector pension. However, although it and the job are secure, the max. pension on retirement is 50% of final salary, assuming full service of 40 yrs. A private sector pension pays 66% of final salary, assuming full service. That's quite a difference and goes some way to explain the take up in PRSAs by public servants since 2003.
In addition to the 50% of final salary they also get a tax free lump sum of 1.5 times salary. In total this is approximately equivalent to a pension of 2/3rds of salary for private sector employees.
Second point: public servants get guaranteed increases in their pensions in line with salary increases for the post/grade they were at when they retired. Private sector pensioners may get increases (stress may) but never in line with salary inflation and maybe, if they're lucky, in line with price inflation.
Third point: Slim makes it sound like all private sector workers are in DB schemes where they'll get 66% of their salary when they retire. In fact only something like 12% of the work force are in private sector DB schemes - about 50% have no pension at all!
That’s the thing; (From a pensions point of view) in the private sector you get what you pay for, in the public sector you get what the private sector pay for as wellI was not aware that increases in Final Salary are not passed on to pensioners in private sector. I'm surprised private sector unions have not pursued this vigorously.
That’s a fair point but does anyone seriously think that a 6.5% contribution will fund a 50% pension that is indexed to final salary. If you do then consider that the cost of public sector pensions increased by 81% between 2001 and 2006. See here for details.Public servants are compelled to become members of the Superannuation Scheme. I was, of course, only referring to private sector workers who are members of pension schemes.
Considering the indexation against current salary scale should that not be more like 17.5%?I do think, though, that they should pay a bit more, say 7.5%.
Public sector employees, who joined before Feb 1995, ....
But these pension funds have been almost universally under funded by their members which is why when we sell off our state assets we us the money to plug the huge hole in the pension funds. It also shows that the members do not fund their own pensions.Strictly speaking we are talking about public service employees here as many of the benefits (indexation etc) do not neccessarily extend to the commercial semistate bodies. In addition public service superannuation is unfunded with pension benefits being paid out of governmnent current expenditure while the comercial semistate bodies have an approved pension fund which backs the DB scheme. This is an important detail as the employees of NET and Irish Shipping discovered.
That’s a fair point but does anyone seriously think that a 6.5% contribution will fund a 50% pension that is indexed to final salary. If you do then consider that the cost of public sector pensions increased by 81% between 2001 and 2006. See here for details.
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