J
Jon Stark
Guest
Not sure why you're quoting me and disagreeing with me, as we seem to be in agreement!
No you don't!
A quote from an insurance company includes their profit margin.
The State is a "not for profit" entity, so the real cost of providing a public sector pension is the annuity quote less the insurance company's profit margin.
So quoting the annuity quote is utterly misleading.
It might be your turn of phrase but it's not utterly misleading - it gives a fairly good indication of the cost but does needs to be adjusted for the profit as we all agree.
That is still an actuarial calculation though
Any idea what kind of margin they operate at?? I'd be very surprised if they don't err very much on the side of caution (i.e. Profit)...
If the fund requirement per the IT article is 1.5m and the annuity provider have as little as a 30% margin, then the actual cost is 1.15m...
You are not expressing concern in your OP (and again see my earlier comments re standards, discussion etc) or anywhere that I've noticed since, about the cost of annuities.
For the avoidance of any doubt, I am very concerned about current annuity rates. I'm sure that anybody that is currently saving to provide for their retirement is (or at least should be) similarly concerned
The margin is circa 20%.
Ok, so you're talking about targeted underwriting margin in the UK annuity market from a time when purchasing an annuity was compulsory in that market. It hardly follows that that is reflective of the Irish annuity market.
In any event, even a 20% underwriting margin wouldn't bridge the gap between the escalation rate of PS pensions and cost of living increases of an annuity.
Are you ever wrong, Sarenco?
In any event, even a 20% underwriting margin wouldn't bridge the gap between the escalation rate of PS pensions and cost of living increases of an annuity.
In any event, even a 20% underwriting margin wouldn't bridge the gap between the escalation rate of PS pensions and cost of living increases of an annuity.
Any profit margin within the annuity is simple part of the cost to the individual.
Of course that's quite true. I suppose you could get really silly and start factoring in the cost of framing, administering and enforcing our tax code into the cost of providing State pensions. But that would clearly be ridiculous - wouldn't it?
Sorry if this is a stupid question but could you explain the above in plain English for me? What is the escalation rate of PS pensions mean?
Not ridiculous at all, IF you can establish that there is a marginal cost in that area due to State pensions, and IF you can reliably quantify that additional cost... does your gut suggest it exists and/or it's material...?
Well the costs clearly exist. The good folk in the Oireachtas, Department of Finance, Revenue Commissioners and Courts all draw salaries (and pensions!), occupy office space, etc..
Apologies for the jargon. It simply means that PS pensions rise in line with the salaries of serving PS staff members as opposed to increases in the cost of living.
The Department of Public Expenditure estimated a couple of years ago that it would shave €16 billion off the PS pension bill by limiting future increases to increases in the cost of living.