Petition for Pension Reform

[thebloggydew]

I've created a petition for pension reform.

The reasons I believe we need this pension reform are documented in detail here.

Many readers of this site will be aware of the inequality, but for those who are not, private sector workers are getting a very raw deal in pension provision under the current system. They suffer pension inequality in

- value
- risk
- early retirement flexibility
- parity pay
- basis of calculation

This is covered in much greater detail here.

I encourage you to have a read, decide for yourself if the system is fair, and sign the petition.

If anyone has any ideas how to spread the word about this petition, and get as many people as possible to recognise that inequality exists & to sign the petition, id be delighted to hear about them.

[adrem]

Green Paper on Pensions Homepage

The above website was set up to enable anyone and everyone who had a view on how pensions should be structured to put a submission - as you can see from the site, very many people did.

[thebloggydew]

I'm aware of that. The point of the petition is to demand that all political parties should publish their position on pensions in detail. If that position includes a commitment to delivering pension equality, then they should set out a timeline for implementing these changes.

I'm open to correction on this, but I've seen nothing from any political party that gives concrete details of any policy that will end pension inequality in the immediate future (or any other time for that matter).

On the topic of the green paper, (also see here) that was published, it appears to me it raised more questions than solutions. It's time for all parties to nail their colours to the mast, and tell the country whether or not they will end pension inequality, and exactly how they are going to achieve that, because this should be a major factor in deciding who people vote for.

So again, if you are already aware of the inequality in irish pensions, then please sign the petition, and encourage others to do the same. If you are not aware of the inequality, then take even 5 minutes to have a quick read.

[Ronanr]

I am getting it hard to make sense of your website Bloggydew.

You gave the example of the pension situation of a private sector person who had a salary of 32,000 compared to somebody on a public sector who has a salary of 50,000.

This made the comparison of their pensions pretty useless.

Surely it would have been better to compare a private and public sector worker on the same salary?

Could you do the comparison again, but this time comparing the value of pension contributions (INCLUDING the new pension levy, please) of a public and private sector worker who retires after having had the SAME wage?

[Ronanr]

Actually, I will do the sums for you.

You suggest that under current life expectancy, somebody in the private sector who retires on 32,000 (after 40 years of contributions) can expect a pension of 21,143 Euro.

By using your calculations, a public sector worker who retired on 32,000 (after 40 years of contributions) can expect a pension of 16,000 Euro.

Who is disadvantaged now?

[Ronanr]

Any response on the above points, Bloggydew?

[yehbut_nobut]

Actually, I will do the sums for you.

You suggest that under current life expectancy, somebody in the private sector who retires on 32,000 (after 40 years of contributions) can expect a pension of 21,143 Euro.

By using your calculations, a public sector worker who retired on 32,000 (after 40 years of contributions) can expect a pension of 16,000 Euro.

Who is disadvantaged now?

Its even less than that! For 32k salary at retirement after 40 years in the PS, you'll get a pension of about €4,500 per year.

Thats on top of the State (OAP) pension, paid for by full PRSI contributions.

[Ronanr]

In fairness to Bloggydew, the 21,000 Euro pension he cites for the private sector worker also includes the OAP pension.

The main point is that the combined OAP and occupational pension of a private sector worker in the example he cites is 6,000 more than the combined OAP and occupational pension of the public sector worker who retires on a comparable salary.

[bloggydew]

The reason for taking 50,000 is thats the average public sector pay.
The reason for taking 32,000 is thats the average industrial wage.

I take your point that a like for like comparison is also required, which is why I did provide that. In the contents, click on "Summary of the inequality" and under the topic of Value, you'll see the comparison......

- Private, no pension, salary 50k: 37.5% the average industrial wage(12k out of 32k).
- Private, salary 50k, 5% defined contribution for 40 years: 26,286k against 32k is 82% of the average industrial wage.
- Public, pre 1995: The average 50,000 public servant will retire on a whopping 128% of the average industrial wage (40,923k against 32k), further boosted by parity pay increases.
- Public, post 1995: The average 50,000 public servant will retire on 90% of the average industrial wage (28,923k against 32k), further boosted by parity pay increases.

To take your example of 32,000 vs 32,000, yes there can exist instances where the public servant's pension is less, but it is far from that simple.

- For a start, if we're talking about a pre 1995 public servant, the figure is 28,000 (16,000 + 12,000), not 16,000, because that person also gets the state pension.
- 50% of private sector employees have no occupational pension, which requires comparison of the 16,000 (post 95) & 28,000 (pre 95) with the following:

Private, no pension, salary 32k: The old age pension is around 37.5% the average industrial wage(12k out of roughly 32k), so for the majority of private sector pensioners that is the percent of the average industrial wage they will retire on.

In addition, the public servants 16,000/28,000 will never get less valuable regardless of how long the pensioner lives. It can, and in reality would (unless public sector wages never increase) get more valuable thanks to parity pay. The longer the private sector pensioner lives, the less valuable his/her occupational pension fund becomes as its diluted over more years, so would you not agree the inequality is continuously widening?

This also doesnt take into account the early retirement flexibility afforded to the public servant, but not the private sector employee. Nor does it take account of the fact that the private sector workers who do have a defined contribution occupational pension are exposed to the risk of the markets, and their pensions can and have gone down considerably.

It also does not take into account the fact that public sector pensions are calculated based on final salary, and not based on a proportion of current salary like those private sector employees that have a defined contribution pension. Nor does it take into account job security. A private sector employee can only make 40 years contributions if he/she works full time without interruption for 40 years (and only if they are in the <50% who even have an occupational pension), and plenty of people will be losing ground on that right now as they collect the dole.

Comparing the 16,000 pension from the public servant, with the 21,143 from the private sector employee, from your example, does not take into account the public servants lump sum of 1.5 times final salary upon retirement. The private sector employee does not get that.

The fact alone that over 50% of private sector workers, who pay tax all their lives, and whose taxes ironically pay for the pensions of others but not for their own, have nothing to supplement the state pension means the system is unfair, ever mind taking into account everything else. Its a blatant failing of the social partnership system, top heavy with public sector representation, that this is the case.

All Im saying is all workers deserve the same pension provision & protection that public servants get, I dont think thats at all unreasonable. Would you not agree? And if you dont agree, then on what grounds would you defend the inequality?

[johnm]

In fairness to Bloggydew, the 21,000 Euro pension he cites for the private sector worker also includes the OAP pension.

The main point is that the combined OAP and occupational pension of a private sector worker in the example he cites is 6,000 more than the combined OAP and occupational pension of the public sector worker who retires on a comparable salary.

Well Ronanr,

have you any response to bloogy drew?... i've read the blog and i think it demonstrates exactly the inequality in pension provisions between public and private sector workers.