The electorate was Sticking It To The Man. By deciding to keep paying for the Senate. Way to go, voters!
It’s sickening but, there is a whole layer of state/semi-state/politico Dublin that lives like this. And they cannot understand why their 40-60k pensions & top-ups are not “fully deserved after working all my life.”*
*Note: “all my life” often means a gentle state job, a plum semi-state board placement, a pension entitlement that kicks in very early, some sort of vaguely political or charity role… then a stream of multi-pension cash that starts at 60 and continues until they die. Unabated. Unrestricted.
If it sounds like I resent them - it’s because I do!!
They are also bleeding the State dry through multiple cuts all providing an income stream.
It’s the multiple income streams that makes it so hard to highlight.
My work colleague’s neighbour (a lady in her 80s) is in receipt of 3 state pensions & half-pensions totalling 70k a year.
70k a year!!
Maybe we could hear a bit more about this case but in general the public service pension system aims to provide half salary at retirement if you serve 40 years (this has changed to a career average salary recently). So if this lady would have to have served 40 years and have been on 140K plus 20 years ago to justify this level of pension. Right now 140K is roughly where the top of the public service salaries lie. They were probably a bit higher 10 years ago but 20 years ago I don’t think so.
I am not saying that there isn’t some anomaly here (which should be or has been closed) but using it to judge the general public service pension situation is probably unfair.
Yes! But she can’t take it with her! Let’s force the auld bint to spend, spend, spend!
Firstly, it’s not a generalisation on the State public service pension. I agree with you there. It is a generalisation on the multi-pension brigade in Dublin - of which there appears to be a few.
Secondly, more info - no problem.
Remember - I said 3 pensions or half-pensions.
She draws down her own public service pension which has (apparently) increased by 40% since she started drawing it 20 years ago. Try getting that in a private pension that was barely contributed to. Approx 35k.
She gets a half-pension from her time on a State board - supposedly some time in the late 1990s. 10k for jam.
And she draws down half her sadly deceased partners state pension (education sector). 25k+.
That’s a lot of State cash.
She’ll tell anyone who’ll listen that she “doesn’t know what to do with the money.”
And the State keeps hosing it at her. That’s almost 6k a month gross. Every month until she dies.
Note: this isn’t a comment on this lady herself but on the crazy system that facilitates and normalises this.
If there were simply 200 people like her in Dublin (and it’s hard to believe that there is not), then the liability to the State over 20 years for those 200 people is over 250million. Quarter of a BILLION.
Norris is I suspect carrying a lot of legacy debt from his ill-fated 2011 presidential run.
He managed to raise €18k but spent a staggering €332k on the campaign and got no reimbursement.
Thanks for the background. Yes that is a ridiculous level of income. Significantly higher than my household. My view for a very long time is that the Public Service schemes shouldn’t be defined benefit over a certain salary level as providing gauranteed pension over a certain income level is completely pointless as this example shows. Most state board positions are now unpaid. I never heard of one being pensionable before. The concept of a “half-pension” doesn’t arise generally as pensions accrue per day although I am sure there were anomalies in the past.
Sure my Father took early retirement from the CS in 1990 and gets paid more than me as a pension. This must be a huge drain on public resources as I’m sure there isn’t a big pension pot to cover this.
Nah, but there’s a very stable, broad based triangle-style, don’t-call-it-a-pyramid-scheme system in place, which is looking after those in the right places very nicely indeed.
Is Norris drunk in that video?
I got some clarification from work colleague today who lives nearby: the ‘half-pension’ as she calls it, was from a (cosy) placement on a semi-state board apparently - from which the lady derived an income, and thus a partial pension based on years there, and a generous top-up. It was up to late 1990s.
Would love to have more info, but that’s it.
I agree - it’s the fact that, cumulatively, the 3 income streams generate a massive income from the State.
How large a private pension pot needed to generate a 70k a year income? 2.75million?
The ‘Survivor’s Pension’ as it is called is one half of the deceased spouse’s pension, or one quarter of his final salary. It dates from the time when public servants were all men and their wives had no labour market income and no entitlement to a state pension. It was an anti-poverty device.
It should be done away with now as the example of this apocryphal neighbour shows. Over half of public servants are now women, and spouses of civil servants are entitled to a state pension too.
PS: I am quite suspicious of a €10k pension for a few years’ service on a state board. Doesn’t ring true.
Yes, but look at the reality of it. What Irish politician or party is going to propose a cut to a widows pension?
Sure even all the talk about the state pension not being worth much in years to come and yet in the last budget they increased it.
Ever hear the story of the guy who put his secretary on a semi-state board as a perk? It’s not this lady, but this stuff did happen in Ireland - I hope it still doesn’t. But sadly I’d say it still does.
You only have to look at the Charities receiving state funding who were doing hugely questionable things with that funding to see that it’s been fast ‘n’ loose with state money for a long long time in this country.
Sure when Bertie and Celia split she ended up on the board of the National Consumer Agency
Much handier than paying alimony!
Apologies but I’m only dipping into this thread.
I’m a higher paid public servant. I know the pensions are amazing I’m not here to argue that they are not.
At the moment I have a mandatory deduction of 16% of my salary towards the pension.
After 40years service you can retire and receive 50% of your salary as retirement income (now lifetime average)
How much should be deducted monthly to make it fair?
Separately I don’t see why the pensions are linked to pay increases in the existing grade. This makes no sense and it has ended up in some PS receiving almost as much or more in their pensions than they every did in the post.
The Gov could instantly and permanently save a lot of money by linking rises to the CPI or the official inflation rate and it would be very hard to argue why the PS deserve more than this. The current situation of how the pension rises with pay rises in the job that they retired from in some cases 20 years ago is bizarre.
Don’t get me wrong I’m happy to eat the pork, I just don’t think this aspect of the pension is fair or justifiable.
Terra, the answer to your question “How much should be deducted monthly to make [a 50% final salary pension] fair?” is impossible to answer definitively without defining what “fair” means.
The simplest definition is “on a par with people in defined contribution schemes”.
I can’t find info on historical Irish pension fund returns, but here are some stats from the UK:
(source isn’t objective but it’ll do)
“The average pension fund return over the 53-year period was 10.1% p.a. which is 4.4% p.a. ahead of retail price inflation and 2.9% p.a. above wage inflation.”
Returns vary over time, but as a first approximation, what contribution would be required over 40 years to generate 50% of final salary? Well, it depends also on the profile of salary increases.
Lets say a person ends up on double the salary of a new entrant joining as they leave, and that increments are evenly spaced.
Real inflation in contributions = 2^(1/40)= 1.75%
Real investment returns = 2.9%
If you feed these into a spreadsheet for a 40 year period, you find that a 20% contribution rate gives a total fund of 10x final salary.
In the past, this would have been enough to buy an annuity of half final salary (5% annuity rate). It isn’t now, because bond returns are in the toilet, and that’s what used to back annuities.
A little over 3% is more realistic right now, which would require a fund of about 15x final salary and 30% annual contribution.
The other factor is whether the pension includes state contributory of about 12k.
If it does, and you are a low earner, then it would be fairer to require a reduced contribution since you might theoretically receive zero benefit from those extra contributions.
Anyway, I reckon the answer is “up to 30% gross deduction, depending on salary level”.
Oh, and this bit (bolded) seems idiotic/random, assuming those lifetime averages are not index-linked. With zero inflation you’ll get half final salary, with infinite inflation you’d get almost nothing.
It would be much more sensible to index defined benefit pensions against some fraction of the average industrial wage, adjusted for final salary.
Defined benefit pensions are a good idea, done right.
The lifetime average only applies to new entrants from 2013 I think. This will take an age to wash through the system though when it does the savings will be big.
The linkage of the pension to salary of the incumbent is not actually a guaranteed legal thing, it has just been something that the Minister of the day has continued to grant. People who retired 20 years ago did very well out of this given the very big increases in real wages of public servants. But I don’t see this being repeated, ever. The state pension is also substantially higher than what it was in real terms than it was in the 90s too.
TI will probably pay more in PRSI (including employer) contributions than he will ever take out as the contributory pension part of his pension. This is because PRSI payments are not capped anymore but the state pension (€235 a week) is.While that is indeed true for a high-income private sector earner, it complicates the calculations for high-income public service workers.