Taxation Rates: Private to Public

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Reviewing

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What are the additional taxes / levies payable if working in Public Service?

I am currently in a Private Company earning €60,000 Gross. I pay 5% pension contribution (which my employer matches).

If I were to take a contract within the Public Service with Gross salary of €60,000 (+ pension etc.), will I have more or less cash each month?

It seems that the levies etc. were intoduced to effectively reduce the pay rates of existing public service employees, but does this mean that public service is now not able to compete with comparacle Gross Salaried Private Sector Jobs?

Also I know that wage cuts in Public Service are very likely. If I sign a Contractt for a specific pay rate, can it just be over-written? Or Public service specific taxes and levies could be applied to give the same effect.
 
You are assuming the same gross pay (after the recent public sector pay cut).


Income tax = same
PRSI = same
Health and income levies = same


It's in the pension contribution area where things are different.


Public servants pay 6.5% pension cont, plus the recent pension levy of approx 7%. It's not quite as simple as that, but that's a start.
 
Reviewing said:
Also I know that wage cuts in Public Service are very likely. If I sign a Contractt for a specific pay rate, can it just be over-written? Or Public service specific taxes and levies could be applied to give the same effect.
Click to expand...

Yes, it can be over-written, by new legislation.
 
Protocol said:
You are assuming the same gross pay (after the recent public sector pay cut).


Income tax = same
PRSI = same
Health and income levies = same


It's in the pension contribution area where things are different.


Public servants pay 6.5% pension cont, plus the recent pension levy of approx 7%. It's not quite as simple as that, but that's a start.
Click to expand...

Thanks for that. The contract looks very interesting but as I contribute 5% to my current pension fund each month, I will need a higher Gross Salary from a Public Sector Contract to have the same net cash each month? (Public Sector Pension may be better but this is a long way off for me at present so anything could have changed by then!)

This seems to put Public Sector at a relative disadvantage when trying to hire people like me who can choose between private or public employment?
 
Yes, public sevice pension conts are now much higher than private sector norms.

So, yes, your take-home wage from the same gross pay would be lower. But the pension benefits are better.

For most public jobs, there is no private sector comparator. In your case, it seems there is.

Bear in mind that in most public service jobs there is a payscale. So you start at the lowest point and usually get an increment , and so move up the payscale.
 
I am a public sector worker at the moment but am moving to the private sector in 12 months..

as a temporary public worker, paying the pension levy, are the monies I am paying into this levy of any benefit to me? i.e is the pension levy just a tax on short term public employees..? (similarly Spouses and children/widows and orphans seems to be a tax on single public sector workers)
 
The Pension levy has no entitlements attached to it, it's essentially taxation under another heading.
 
The original poster might find my spreadsheet [http://taxcalc.eu/monthlyss ] useful for answering this query.

It allows you to enter details for pay/ private pensions/ other income and switch between public and private sector employment categories.
Based on tests I have carried out I believe it gives accurate results.
 
Protocol said:
Yes, public sevice pension conts are now much higher than private sector norms.

So, yes, your take-home wage from the same gross pay would be lower. But the pension benefits are better.
Click to expand...


I dont think the pension benefits are necessarily better. I have seen a public sector contract with a DB pension scheme that accrued at a rate of 1/200th of final salary per year service, meaning your pension could max at 45/200ths. I'm not convinced that's a better deal that a DC scheme
 
millieforbes said:
I dont think the pension benefits are necessarily better. I have seen a public sector contract with a DB pension scheme that accrued at a rate of 1/200th of final salary per year service, meaning your pension could max at 45/200ths. I'm not convinced that's a better deal that a DC scheme
Click to expand...

There are anomolies, such as the one you have pointed out, but for the OP, if your public service job offers a standard public service DB pension which is index linked, then this is a very valuable and costly benefit which you do not currently have in the private sector, and you are expected to pay towards it.
 
huskerdu said:
There are anomolies, such as the one you have pointed out, but for the OP, if your public service job offers a standard public service DB pension which is index linked, then this is a very valuable and costly benefit which you do not currently have in the private sector, and you are expected to pay towards it.
Click to expand...


Agreed, the one I mentioned was the Fin Reg / Central Bank, it was described as "a very attractive DB pension". I'm not sure if this is now a standard offering to new entrants to the public sector? I would suggest anyone moving to the public sector should look carefully at the detail of the pensions scheme
 
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