State will face €324bn shortfall over pensions


#21

I listened to a bit, and they did sound like people tentatively asking questions they hoped didn’t make them sound stupid.

It’s not clear how the move of public sector workers to partially PRSI based pensions is contributing to expected deficits. When McCreevy introduced the NPRF it was timed to start kicking in when you’d have expected public sector pensions to start drawing on the PRSI fund.

Clearly when the public sector started paying PRSI that would have increased the funding so that’s helped up to now. However there are a couple problems – one is that it appears that the government doesn’t make a transfer to correspond with employer’s contributions. Maybe no government does but that’s around a 1.5B funding shortfall in this somewhat notional fund. (A second problem is these PRSI pensions will be paid out earlier than normal PRSI pensions at 67.)

I wonder if other countries handle their government pensions the same way, drawing from the social security funds for their own pensions while not making a corresponding employer contribution. Clearly it doesn’t save any money whichever way they do it however knowing how they do it might help identify why a deficit might exist.


#22

Per IT today, Gov considering reducing Jobseeker’s Benefit entitlement from 12 months to 9 months.

This is to help plug the projected €1.8bn gap in the Social Insurance Fund for 2012

irishtimes.com/newspaper/fro … 44614.html

Interesting idea. JB is not means tested. Idea here is that
a) you’d cut the 773m 2012 estimated cost for JB by 25%, to c. 580m, and
b) you’d go no to JA faster, which is means tested.

That would still leave a gap of 1.6bn in the fund. Plus you’re just going to increase the cost of JA’s budget.


#23

The main issue is that the fund isn’t really funded and the pensions are lumped with all other benefits and financed from current income. This isn’t the way to do it as pensions require different long term planning than other social benefits. If you look at Page 60 of KPMG report you will find that the pension liabilities rise by 80% per decade while other benefits are stable in comparison and projected to rise 80% in the next 40 years.

There is a clear conclusion that the current model is not sustainable and that the government should move towards defined contribution scheme in which case there will be no future liabilities. Either that, or we all have to come to terms with the fact that there will be a growing PRSI / Tax whatever (where this ‘Fund’ has a shortfall it is subsidised from tax receipts) to cover all government pension promises to the point that the future shortfalls are covered. This implies doubling of PRSI/tax portion required to fund the pensions each decade and on page 61 the discounted values of shortfalls are neatly put in a table to give you an idea of what happens in each decade. Going by the figures, 20 years from now almost entire tax take (from good days 2007) will go towards pension payments.


#24

2013 Social Protection accounts are out

audgen.gov.ie/documents/annu … Vote37.pdf

Social Insurance Fund still in annual deficit to tune of 1.314bn (see pg 7, subvention to SIF)

The SIF accounts are published separately, on welfare.ie. Not up yet but will appear here
welfare.ie/en/Pages/Social-I … -Fund.aspx


#25

Social Insurance Fund accounts 2013 went up yesterday

welfare.ie/en/downloads/sif2013.pdf

Deficit down from 2.084bn 2012 to 1.314bn 2013

460m owed by employers to DSP from the Redunancy and Insolvency Fund (pg8). Most of this will never be recouped


#26

the Irish self employed don’t know how lucky they are. in most EU. countries you have to cough up a week’s worth of minimum wage pay, even if your income is zero that month.

in Ireland, a self employed person can take a chance for a year and if the business fails he can just walk away. But his counterparts in Europe have to pay the equivalent of 12 weeks full time pay at minimum wage. This explains why nixers are so common in some countries.

In theory, of course, they’ll get it back when they retire.


#27

Burton plays down paternity leave

irishexaminer.com/ireland/bu … 10806.html

The Social Insurance Fund is already spending 1.3bn more per annum than it takes in


#28

Probably eventually be forced by Europe to implement it though.


#29

Sep 2015 C&AG report on Funding of the Social Insurance Fund

audgen.gov.ie/documents/annu … 20fund.pdf

The SIF deficit was 541.7m in 2014, down from 1,314.1m in 2013
(pg 7 audgen.gov.ie/documents/annu … ection.pdf)


#30

State’s pension system considered unsustainable

irishtimes.com/business/pers … -1.2373517


#31

We are doomed.


#32

I think the answer will be to continuously move the retirement age upwards over the next 30 years. Children born in 2015 shouldn’t expect to retire before 2085 at the earliest. With life expectancy advancing so much over the past few decades, I don’t see any alternative.


#33

It’s politically easier than cutting the benefits existing pensioners receive. Could also see ‘new’ pensioners getting lower benefits for the same reason.

The ‘shortfall’ predictions are a bit silly really. There won’t be a shortfall, because entitlements will be adjusted.


#34

Well I just got a letter yesterday from the German pension office confirming that I’ve contributed to my state pension in Ireland from the start of my working life to the time I moved to Germany and it will be counted toward my German state pension.
I know that Germany has huge demographic problems but I have more confidence in receiving a German state pension than an Irish one especially as the pension payable matches your earning/contribution over the years rather than the same flat pension for everyone irrespective of whether you worked yourself to the bone or lived an idle life in Ireland.

I don’t see how Irish politicians will knuckle down to tackle the pension crisis(already a crisis) until it is too late. It is just too complicated a topic and nobody wants to be seen to be taking money from Pensioners.


#35

…and whatever happened to the “National Pension Reserve Fund” …???


#36

It’s just another of our banana republic’s ponzi schemes. No politician here will ever tackle it seeing as they are all invertebrates.


#37

I was at a conference recently where a non-German regulatory refered to the unmanageable (from a sovernign perspective) guarantees that had built up in the German pension system.

Maybe you are right and the Germans will push through the the current low interest rate crisis. However at some stage they need to stop offering the guarantees. Ideally before they run out of money :slight_smile:


#38

Social Insurance Fund 2018 accounts are up
http://www.welfare.ie/en/Pages/Social-Insurance-Fund.aspx

The fund is back in surplus since 2016, with 1.1bn now in reserves end of 2018

Pensions cost 6.7bn in 2018.

Another 1.02bn was spend on the non contributory pension (pg 20 below)

So we are now at 7.7bn total pension costs in 2018 and rising…


#39

It is only 10% of government spending. I don’t see the problem really unless it hits 20% and with the changes to the pension age and the flattening in life expectancy I think the matter is in hand to be honest.