Irish Public Sector Pensions' bill is a travesty that needs attention

[eyeSpy]

From the Finfacts.ie team:

Irish Public Sector Pensions' bill jumped ?743m to ?1.8bn in 5 years to 2008 - up 66.5% compared with pay rise of 45.4%

"The core finding was that on average, public servants earned 13% cent more than their private sector counterparts on a like-for-like basis in 2001"

"Another discovery was that the margin by which public service workers outearned their private sector counterparts tended to be significantly larger at the bottom of the income distribution than at the top."
Putting paid to the spin often used by unions that many of the civil servants on the lower end of the scale need to be protected.

"For a private sector worker to have the equivalent benefit of a public sector pension, it would require funding of an estimated 25 to 28% of annual salary every year for 40 years."

"The gilt-edged public sector pension is indexed for life to the earnings of current incumbents of the last job held. So when the Dublin City Manager got a 36% pay hike last October, his predecessor's pension also jumped 36%!!

Current Minister for Health Mary Harney will get an annual pension of about €130,000 plus a severance payment of €70,000, if she retires in 2012 at the age of 59. Her pension will then rise in line with ministerial pay rises for the rest of her life."

Are those years of industrial peace and wage inflation which Bertie negotiated as Minister for Labour finally being exposed as the gestation period of a monster? Did he buy industrial rest with private sector P.A.Y.E?

[Conor]

"For a private sector worker to have the equivalent benefit of a public sector pension, it would require funding of an estimated 25 to 28% of annual salary every year for 40 years."

I think I've read that on Finfacts before. It seems to be based on nothing.

[smitchy2]

I think I've read that on Finfacts before. It seems to be based on nothing.

Can you provide the correct figures then?

[Conor]

Can you provide the correct figures then?

No. In any event, it would vary significantly from grade to grade, with lower grades benefitting least.
From a quick calculation, taking someone earning 30k pa and assuming 4% salary / OAP growth and 5% investment return pa, a 25% contribution would fund their pension for around 90 years post retirement.

[adamirer]

if its that great join the public service... seriously.
everyone on this site has had the opportunity.. if thats THAT well paid and THAT good a pension and THAT undemanding...

There are open competitions at CO, EO, HEO, AP and PO... if you're good enough, go for it.

[Gimpanzee]

if its that great join the public service... seriously.
everyone on this site has had the opportunity.. if thats THAT well paid and THAT good a pension and THAT undemanding...

There are open competitions at CO, EO, HEO, AP and PO... if you're good enough, go for it.

Don't be daft - a post came up that was paying roughly the same amount in basic pay as private equivalent almost 2 years ago. I was job hunting the time. You're average other position had a handful of candidates, for this local authority position there was over 40 people interviewed (this was the short-list) for this one job. At a time when there was plenty of jobs available in IT. Why? because it was a one way ticket to easy street. 40% extra holidays per year. Work half hour less per day. No overtime, no weekend work. Defined benefit pension. Needless to say I didn't get it, otherwise I'd be trying to justify my existence too.

[Schuhart]

In fairness, finfacts offer a rationale here.

The first benchmarking body viewed pensions as being irrelevant in comparing public and private pay as the then Taoiseach Bertie Ahern and Finance Minister Charlie McCreevy wanted to produce a favourable end result for the public sector unions.

As for the second benchmarking report, the "more valuable pension arrangements in the public service relative to private sector arrangements," was assessed as 12% of salary, as if all private sector workers are covered.

Convenient indeed, but the majority of Irish private sector workers have no occupational pension. Besides, many of those who do, are exposed to the vagaries of the market.

Irish pension funds were down 33.4% in the year to October and the average annual return over the past 10 years was 1.9% -- less than inflation.

With a severe recession expected in 2009 and a slow recovery thereafter, returns will be poor for the foreseeable future. This will hit workers who will retire in that time frame. As for the rest of private sector workers, it's unlucky to be among the outsiders in Ireland.

For a private sector worker to have the equivalent benefit of a public sector pension, it would require funding of an estimated 25 to 28% of annual salary every year for 40 years.

Addtionally, the Report of the Benchmarking Body shows, on page 71, that estimated costs of public sector pensions range from 20% to 30% of salary, depending on what precise job you do. On page 67 they note how private sector schemes are moving away from defined benefit to defined contribution. The full report on costs is on page 194 onwards. The bottom line is that the finfacts information is substantially true.

I’m afraid the plain fact is that public sector pension arrangements are just completely lala.

[eyeSpy]

if its that great join the public service... seriously.
everyone on this site has had the opportunity.. if thats THAT well paid and THAT good a pension and THAT undemanding...

There are open competitions at CO, EO, HEO, AP and PO... if you're good enough, go for it.

I did work in the public sector for 2 years but in a highly specialised modern dynamic organisation. I left due to geography and family circumstances. There was no way of staying in a similar role unless the organisation moved with me. I do not begrudge my ex-colleagues their job security as no-one in there was coasting. If anything most people were over worked and under resourced. I went in with the view that many have of the public sector.

While i was working there I was oblivious to what kind of pension I was contributing to.
I didn't realise the benefits of a DB pension until I went to sort out my own one on leaving (I hadn't one before joining the public sector organisation so was clueless).

My anger is based on the nature of public sector pensions not with the workers or their security. The pensions deal should be reviewed.