State Pension costs unsustainable?


#1

So the single biggest scheme cost for Social Protection is the State Pension Contributory with a 2012 Estimate (pg184 on) of 3.75bn and growing (up 130m from 2011 alone)

In comparison, the combined cost of Jobseeker’s Allowance and Benefit is 3.5bn.

With pension costs going up each year this huge cost must be tackled. And soon.

We also fund the
State Pension Non Contributory (967m), and
State Pension Transition (154m).

Then there is
Widow’s Pension Contributory (1.34bn), and
Widow’s Pension Non Contributory (18m)

Any ideas on tackling the cost?

One of my friends actually believes many Pensioners may be better off since 2007, or atleast not too worse off, as they did not have any cuts that employed persons and Jobseeker’s had, and we have had inflation of just 5.5% between February 2007 and July 2012.


#2

Can the Widow’s contributory pension really cost 1.34 billion? If so why isn’t it means tested?

don;t agree with means testing the state old age contributory pension or lowering it to match the non contributory rate. I reckon that people who have worked all their lives deserve at least this from the state and most workers will contribute more than they ever draw out.

But if my beloved spouse God forbid got hit by a bus in the morning I would qualify for a widows pension for the next 30 years until I get the OAP one - despite having a job which would enable me to support myself and the kids on my own. This is simply crazy.


#3

I’d be interested in seeing the actuarial numbers for work time contributions versus likely payout for Ireland. I’d be surprised if the around 40 years of social insurance contributions was not used up in less than 10 years of the likely 20 years post retirement period.

Pay as you go social security is basically a ponzi scheme. You are paying your parents / grand parents generation current retirement benefits. You are not contributing to any kind of investment fund that invests for future payout. Pay as you go state pensions only works when the dependency ratio is low. Which it no longer is.

I have no expectation that the current scheme will survive till the time I reach retirement age. One way or another it will return to what it was originally envisaged as, a last safety net to stop old people starving and falling into utter destitution. Little more. All the profligacy of the last 40 years will go away sooner or later. In the meantime the battle over pensions will be the defining political battle over the next few decades.

The choice is either serious reform and cutbacks, or else a much lower standard of living for everyone else. An economy dominated by pensioners is a dying economy. I expect a number of current 1’st world countries to return to 2’nd world standards of living for the very reason.


#4

It’s possible, but there could be other outcomes - poorer standard of elder care = earlier death. Demographic bulges work their way through (over the next 20 years) = persistent deflationary pressures (old people buy less stuff) = availability of property ongoing = lower cost of larger housing = a gradual move to larger families again…


#5

Old people vote (and by old people I mean 60 plus even though thats not old by modern standards), and are very well represented in the media, likewise (and I’m taking this from McWilliams) they have come out of the implosion quite well and appear to have retained a huge amount of wealth. In that regard, none of the established parties will target them or their entitlements unless as a very last resort. Hosing your young workforce to pay legacy debts and sustain entitlements for, in my opinion, the generation that is largely responsible for this mess, is quintescentially Irish. Economic suicide may have worked in the 50’s when we were essentially a bunch of illiterate fcukwits who believed everything priest and politician told them, its different now and when the young middleclassers realise that they have fallen out of this social bracket - for good, the scam will dawn. We may finally get the revolution!!!


#6

A ponzi scheme indeed, except at least with a private sector ponzi scheme you get the choice of putting your money in, in this case the state will likely force everyone & businesses, maybe even the Germans to keep pumping.


#7

Although I think they did very well out of the boom, I’m not sure it’s the over 60s who are largely to blame for the mess. I’d put that on the shoulders of the subsequent generation (in their 40s and 50s now).


#8

I dont think the younger generation did well from the boom, I admit I havent studied any statistics but more so from commentary i’ve read, the largest grouping who appear to be in negative equity are those now in their 30’s-40’s who were forced to buy overpriced shite to get on the ladder, the vast majority of new build estates and complexes is made up of this grouping. Those who bought their houses in the 60’s/70’s/80’s are still sitting pretty assuming they didnt go nuts on top ups. Furthermore on the jobs front my anecdotal experience is that when the boom hit those incumbents who were already in advanced positions appeared to get the biggest pay increases. The crud who came in at the bottom still got paid shite in relative terms, admittedly those in their 40-50’s now would have been well placed when the boom hit to demand pay increases as there was a shortage of skills in all areas and anyone who was “qualified” with experience when it hit could demand decent remuneration. Likewise the current 60 plus cohort would appear to be the last to benefit from defined benefits pensions schemes both public and private that are now being removed for younger generations.

As for the 40-50’s now being responsible for the mess I dont buy that, all the leading political/banking/regulatory figures who played a key part in priming the bubble are nearly all to a man in their 60’s or older. A few of the developers may be a bit younger but their involvement was more symptomatic than causative.

Again I admit I’ve not researched this but have read David McWilliams commentaries on the above issue he dubs the “generation game”. I’m open to correction on the above.


#9

The bubble was sown ten years ago… take all ages and subtract ten from them for culpability…


#10

Fair enough I take your point on the leading characters in the Celtic Debacle being in their 60s. I don’t have systematic evidence either, just a general impression that the individuals who took on the most personal debt (multiple BTLs, mad cars, massive PPR mortgages) are now in their 40s and 50s. This is mostly from personal or anecdotal knowledge - I know people in their 30s who are in difficult circumstances with negative equity, but the likely future bankrupts are my age (40s) or older.

Edit: too many adjectives…


#11

I would narrow it down a bit further, subtract ten years and let me have the table plan for the FF tent at the Galway races.


#12

You’re probably right on that front, but I dont think they can be blamed for the collapse, the real issue is the banks lent on this basis to boost short term profitibility and ergo the commission/salaries of those pushing the loans right up to senior management. When it all went arseways the top brass kept their gains handed the bill to the state and fcuked off into the sunset with rolls royce pensions - job done - aided and abetted by the political and regulatory machinery. The people in their forties who went crazy will ultimately have lost out in the boom, big debts vastly decreased asset values.


#13

I think we’re blaming different parties to the same nefarious transactions - I blame the johns but you blame the whores and panderers :smiley:


#14

To update this for 2013 Estimates
per.gov.ie/wp-content/uploads/Ex … at-Pro.pdf

The single biggest scheme cost for Social Protection is:
State Pension Contributory with a 2013 Estimate (pg181 on) of 3.985bn and growing (up 185m from 2012 alone)

In comparison, the combined cost of Jobseeker’s Allowance and Jobseeker’s Benefit is 3.6bn.

With pension costs going up each year this huge cost must be tackled. And soon.

We also fund the
State Pension Non Contributory (957m), and
State Pension Transition (166m).

Then there is
Widows’, Widowers’ / Surviving Civil Partners’ Pension (Contributory) (1.34bn), and
Widows’, Widowers’ / Surviving Civil Partners’ Pension (Non-Contributory) (16m)

Any ideas on tackling the cost?

Many Pensioners may be better off since 2007, or at least not too worse off, as they did not have any cuts that employed persons and Jobseeker’s had, and we have had inflation of just 5.5% between February 2007 and July 2012.


#15

Coveney - No substance to pension cut reports

rte.ie/news/2013/0811/467600 … -pensions/

Pension cut anger sparks FG fury at Burton

independent.ie/irish-news/po … 91160.html

Is a €10 cut so much? Dole reduced to €188 from a peak of €206. Many Pensioners have stayed on €230 through the economic collapse


#16

From my limited knowledge and experience of people on pensions, the cuts to the allowances have hit some people hard and a cut in the pension will hit them again. However there are pensioners who have expereinced no changes to their income and it would probably have been fairer to cut the pension but leave the allowances and supports in place or even increase them for those in need.


#17

All this talk of blaming arbitrary demographic groups is sad and ridiculous.

The problem is that we have 400k or whatever working age people not working.

Rather than contributing 10k in payroll taxes they are claiming 10k in benefits.

20k x 400k = 8bn, which is more than half the deficit. Feel free do your own maths.

It’s easier to blame pensioners than solve the unemployment problem,

In the meantime it makes sense to trim spending in all areas (unless we plan to default) but on the basis of fiscal pragmatism not rage against aul wans.


#18

+1 Government want to be able to say they didn’t cut the state pension. At the same shyte with Income Tax i.e. we won’t increase income tax (but will will increase every other tax and stealth charge VAT. Motor Tax, DIRT to name a few).


#19

Lets solve unemployment, wow, why didn’t someone think of that already.

I’m getting tired of seemingly reasonable people who don’t think and just want to Say happy things, especially about the ‘vulnerable’ who ever the fuck they are. Why shouldn’t pensioners show solidarity and take a 4.3% cut? It s called a recession/depression it’s not optional


#20

Why can’t we all job share (I know lots of people who would love to but the employers don’t want it), could we have the option to retire early on the social welfare rate to reduce youth unemployment levels? Why can’t the government introduce training schemes similar to those in Germany that give people relevant qualifications and training instead of the jobsbridge scheme.

The government needs to come up with alternative ideas and not just encourage companies to relocate to Ireland with low corporation tax and IDA grants.

I’m not against a cut in pensions if they reinstate the suports for the vulnerable pensioners.