State will face €324bn shortfall over pensions


#1

There is more…


#2

I expect I won’t have any financial worries in 2066…


#3

it’s scare mongering but it’s the first step towards compulsory pension contributions for all (it won’t be PRSI )
employers, employees and self-employed


#4

people have been operating under the assumption that paying tax was a compulsory pension contribution… it will be hard for some people to adjust for this


#5

Yet another confidential government doc “seen by the Irish Times”.


#6

There won’t be any income tax increases. :open_mouth: All private sector employers and employees will be told that they should be prudent and put money away for a pension (for their employees and for themselves) and will be required by law to do that. At the same time the contributory old age pension will be cut.

This will be after the reduction in pension relieft to 20% so pension industry will be all over the media saying its a good idea.


#7

You forgot to add in that the government will make payment to the recipient when they retire and thus retain control of the pension funds in order that they can pay the public sector pensions from it as well, that way it gets them out of a hole at the same time and takes the strain off day to day spending.


#8

It is not confidential. The actuarial review of the SIF was laid before the Oireachtais about a fortnight ago and is therefore public knowledge


#9

Ah. The report made it sound like they had broken in and stolen state secrets. All the “has yet to be published” stuff.


#10

Is there a link? Both google and welfare.ie are only giving me the one from five years ago: welfare.ie/EN/Policy/CorporatePublications/Finance/Pages/ActRevIndex.aspx


#11

€324 Bn… sit back there for a minute and just let the number sink in, forget everything else for a moment…


#12

I would not forget everything. In fact I would try to recall that:
-it is an implicit liability, not an explicit one like sovereign debt
-it depends quite drastically on the assumptions you make
-Irish welfare payments do not have automatic inflation indexation, unlike many other countries


#13

Try harder! :frowning:


#14

shocker!
at 40bn a year that the cost of funding the irish govt would come to 400bn over a 10 year period.

20 years ago, we were looking for 5bn in grants from the EU. where did the inflation come from?


#15

Fair points, I assume it makes an assumption on benefits that will accrue between now and some time in the future

I’d be willing to wager a substantial amount that the NPV of accrued benefits is a 12 figure sum :sick:


#16

this claptrap is just preparing the ground for phasing out pensions. Work till u drop. The retirement age will be moved to a 100 before the Troika is finished with the irish banana republic


#17

The Social Insurance Fund (SIF) is required by law to be subjected to an actuarial review every 5 years.

The latest 5 year review, for y/e 31/12/10, projects from 2011 to 2066.

Having read the report, I can tell you

  • in 2011 the SIF was underfunded by c. €1.5bn. A subvention from social protection was provided to pay for the shortfall. The fund used to be in surplus every year, but the unemployment numbers used this up in 2010.

  • based on a whole range of assumptions, inc. a far too generous net earnings growth rate (after inflation) of 1.5%, would lead to a deficit of €26bn in 2066.

  • this sensationalist 324bn figure is so ridiculous. To arrive at it I’m guessing they took the 1.5bn figure for 2011, allowed for it increasing year on year and x 55 years = 324bn

Obviously, a 26bn shortfall in 2066 would never be allowed to happen. PRSI would go up, scheme costs cut, unemployment will (hopefully) be nothing like current levels, etc, etc


#18

The 2010 review is now online

welfare.ie/EN/Policy/Corpora … Review.pdf


#19

Being discussed in Committee room 3 now if anyone is interested

oireachtas.ie/ViewDoc.asp?fn … tID=83&m=o


#20

Having just listened to the whole meeting, there were some beauties

  • most of the TDs and Senators there hadn’t really read the report further than the summary

  • there were a lot of questions made up on the spot, with little research into the Social Insurance Fund. At one point Senator Fidelma Healy-Eames, FG Senate spokesperson for Social Welfare, asked what schemes were paid out of the Social Insurance Fund, and even how many social welfare funds are there.

Jesus Christ. She is the spokesperson for social welfare and doesn’t know there are just 2 scheme funds, the Social Protection’s fund and the Social Insurance Fund.

It was very embarrassing for her. She could open any set of accounts and see what schemes are paid out of the SIF.

  • Aengus Ó Snodaigh, SF, asked could more PRSI income be raised by removing the exemption whereby if you make a contribution to a private pension fund, you don’t pay PRSI.

This, despite the fact that from January 1st 2011 pension contributions no longer receive relief from PRSI and the health levy. This is quite well know. Anyone who pays into an AVC, etc would know it (as it costs them more tax.)

The scary thing was, Mary Kennedy, the Principal Officer in Social Protection for PRSI Policy also seemed unware of this change in 2011. For fuck sake.