Monday, 25 October 2010

Trick or Threat

Slí Eile: Today, we were served an item on public sector pensions here. The report says that 'the Department of Finance has not ruled out measures aimed specifically at public service pensioners in the budget'. Perhaps there is some connection between the story, the timing and the budget preparation. The item goes on to say: 'It also disclosed the public service pensions bill will increase from 0.5 per cent of GNP to almost 2 per cent of GNP by mid-century, almost €8 billion per annum in current terms. Some commentators have said such a development is unsustainable.' Which commentators? Where? On the basis of what research? Some examples are given including stories of individuals receiving more than €135K per annum. Contrasts are presented with the private sector. We are back to the old divide and rule narrative.
Then the following item here takes the biscuit. 'Gold-plated pension regime may be unsustainable'. Who says it is unsustainable? The cost of a fully provided system of social insurance would be much less than the current cost of tax expenditures on private pensions. See TASC research here.
The entire news story seems like one of many pre-budget softeners.
In truth people are being served by a campaign of psychological terror backed by claims that unless we agree to the most devastating attack on public services, pay, conditions and provision we will be taken over the IMF, EU etc. Prior to invasion the tactic is to terrorise before the ground troups are sent in. Make no mistake the four-year austerity plan is a full scale attack on living standards, jobs and rights of workers.


Whassup said...

What Harry McGee's article fails to point out is that Public Servant Pension deductions in 2010 amount to approximately €1.8 billion, requiring the Government to contribute €400 million (net cost) towards Public Sector pensions this year.

Anonymous said...

The TASC research you've linked to doesn't say anything about the relative costs of a fully provided system of social insurance versus the current cost of tax expenditures on private pensions, as far as I can see Have you posted the wrong link?

Anonymous said...

@Slí Eile

Given your concern about the "current cost of tax expenditures on private pensions", care to hazard a guess on the cost of tax relief on public sector pensions?

Lets see ...

First there's the tax-free lump sum. Tax foregone, hardly any less than 50 million?

All those added years are a worth a fair few bob, a totally untaxed benefit.

Then there's the tax relief on superannuation contributions, several hundred million surely.

Lets not forget the tax relief on the pension levy, must be close to half a billion.

Then the big kahuna, the benefit-in-kind of the state's contribution to the true actuarial cost of these pensions (in excess of superannuation and pension levy contributions).

Methinks the total would be several degrees north of a billion per annum. Strange such a sum doesn't register on your equity-radar.

Slí Eile said...

Thanks for these comments and questions. Progressive Economy manages to attract interesting comments! have a read of this
there you will find a summary of TASC proposals and cost estimates for tax expenditure.
I agree that there is a large and difficult to quantify public subsidy of employees in the public service. It is a pay-as-you-go arrangement and not a real fund into which contributions are made. the pension levy is just a levy and not a payment into a ringfenced fund.
The real issue is how to create a universal system for all categories of employees rather than the present fragmented system where public sectors seem to be favoured compared to some private sector workers because some in the latter have no pension cover or have cover associated with equity which has been wiped out.
Lets stop setting one category against another and recognise that a reasonable standard of living for all groups is what we should be aiming for. it is affordable. now have I convinced you?!