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Burton says pension changes will give "certainty"

Joan Burton says that the Government hopes that uses of the new law will be a “rare event”.

THE MINISTER FOR Social Protection says that she believes that new legislation changes to defined benefit pensions will create a more certain landscape for customers.

Joan Burton told RTÉ’s Morning Ireland that she hoped that the mechanism, which will see the Government bridging the gap in insolvent funds, would be used only in rare cases.

“Those with pensions up to €12,000 will be protected and there will be a sliding scale for those with pensions over €12,000.

“My aim is to create the maximum level of protection for all parties.

“In the case of a double insolvency(where both the fund and company are insolvent) , there is a European directive that says the State has to pay 50 per cent of the fund.

We’re hoping that this is such a rare event that this is an eventuality that will not occur.

“In the Budget, I secured the agreement that the Pension Levy could be used to provide this backstop.”

Burton said that efforts have been made to normalise the funding of the schemes.

Read: New legislation to protect pensioners with defined benefit schemes

Read: Union boss warns that ESB industrial action could hit power supplies

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42 Comments
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    Mute Bramley Hawthorne
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    Nov 20th 2013, 10:21 AM

    No change for the insiders on double pensions, such as Government Ministers.

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    Mute Enola Straight
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    Nov 20th 2013, 11:46 AM

    Can someone PLEASE explain this? I’m baffled to be honest.

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    Mute Right Wing Steve ©
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    Nov 20th 2013, 10:32 AM

    But it’s still ok to steal money from private pensions to prop up public sector ones, it’s a bandit country.

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    Mute damien chaney
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    Nov 20th 2013, 11:00 AM

    There is no public service pension fund all pension contributions collected by the government from public servants go straight to the exchequer, all public servants have to pay pension contributions you cannot opt out of the pension scheme In fact, the ‘what if’ argument proffered by IBEC, and subjected to mass saturation by RTE, is simply not valid. It ignores the fact that public service pensions are paid from current revenues and not from a fund from which pension companies draw massive profits for their rather hollow assurance that they are protecting contributions made to pension schemes.

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    Mute Right Wing Steve ©
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    Nov 20th 2013, 11:09 AM

    I think we had a public sector pay fund, but I think somebody used it to pay the wages of public sector workers so they could pay taxes to pay the pensions of retired public sector workers, they in turn get rehired to correct exams etc. Meanwhile Mr Noonan stole my money to make up the shortfall.

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    Mute Brendan Greene
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    Nov 20th 2013, 11:15 AM

    That fund was only iniated by C.McCreevy in receny years and no pension was ever paid from it.

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    Mute Right Wing Steve ©
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    Nov 20th 2013, 11:21 AM

    It went back into the general fund to help pay for public pensions

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    Mute Brendan Greene
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    Nov 20th 2013, 11:31 AM

    No Steve, it didn,t. It was specifically used to re-finance the banks.

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    Mute Right Wing Steve ©
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    Nov 20th 2013, 11:42 AM

    Brendan the banks were refinanced by the exchequer with funding from the likes of the pension reserve fund

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    Mute Scrap Croke Park1
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    Nov 20th 2013, 10:32 AM

    Good idea Joan. Seeing as how the State is doubly insolvent will you apply the same principal to all PS pensions?

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    Mute Brendan Greene
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    Nov 20th 2013, 10:58 AM

    joan, the same principle cannot apply t public pensions other than Semi-States as those pensions are pay as you go rather than funded. In any case public servants are already paying a public service pension levy on top of their standard contribution of 6.5% of gross. Most therefore are paying about 15% of gross for their pensions. In addition P.S pensioners have already been cut on a sliding scale running up to 12%.
    You also should remember than the contributory and non-contributory OAP is also a public pension.

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    Mute Right Wing Steve ©
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    Nov 20th 2013, 11:05 AM

    A good private pension is roughly 1 to 3 employee to employer, so if you were to get 66% of your final salary as a pension including the state OAP pension 15 % is still pretty low, but how much of a financial contribution will the people retiring next year have made over their career.

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    Mute Brendan Greene
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    Nov 20th 2013, 11:13 AM

    only P.S. pensioners who started after 1995 are entitled to the OAP but then have their occupational pension cut by the same amount as they are coordinated. The max P.S. pension is 50/80ths

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    Mute Right Wing Steve ©
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    Nov 20th 2013, 11:20 AM

    Average Public sector wage is €928.76 times 52 is €48,295 so 5/8 of that is €30,000, which is a pension fund of about €750,000

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    Mute Desmond O'Toole
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    Nov 20th 2013, 11:50 AM

    There is no pension fund involved in PS pensions, RWSteve. PS pensions are pay as you go. Time you did some basic research.

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    Mute Scrap Croke Park1
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    Nov 20th 2013, 12:12 PM

    I think there being no fund is the point. It’s way “underfunded” as it doesn’t exist. The employer (the state) is practically insolvent.

    As this government effectively capped private sector pensions at 60k they could start by doing the same in the PS. I know not many in the PS have these very large pensions – all the more reason to do it

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    Mute Right Wing Steve ©
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    Nov 20th 2013, 12:58 PM

    Desmond I think you can extrapolate from that how much a public service pension is worth, or do you have to be spoon fed.

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    Mute Keith Holland
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    Nov 20th 2013, 2:28 PM

    The max PS pension is 40/80 and those who started after April ’95 will have the state oap (€12,017) counted as part of that benefit. Not arguing for or against just pointing out.

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    Mute Desmond O'Toole
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    Nov 20th 2013, 3:19 PM

    @RWSteve .. your so-called extrapolation is a debating trick designed to deliver a dog-whsitle number of €750k that the usual anti-PS suspects can start barking about. Here are the facts: (a) PS pensions are pay-as-you-go, i.e. they are funded from the superannuation contributions of serving public servants plus a top-up from the State (as with any occupational scheme), and there is NO pension fund nor pension pot associated with them, (b) public servants who commenced prior to 2004 are not entitled to receive the state contributory pension and your made-up figures take no account of this, and (c) public servants who commenced from 2004 are entitled to the state cont pension but have the value of it netted off from their occupational pension … again you take no account of this. You may be entitled to your own opinions, however fancifully based they are, but you are not entitled to your own facts.

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    Mute Right Wing Steve ©
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    Nov 20th 2013, 3:30 PM

    @ Desmond

    (a) It’s not a pay as you go system, because you don’t pay for it, somebody else does, lets call him Johnny Taxpayer. Superannuation payments are collected at source and go into the big pot called The Exchequer. If there is not enough cash collected good old Johnny Taxpayer is there
    (b) They receive the equivalent in old fashioned pension payments
    (c) See point (b)

    Why don’t you go and price an equivalent pension yourself, you would only need to save about 6,000 per year for 50 years at a compounded interest rate of 3%.

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    Mute Desmond O'Toole
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    Nov 20th 2013, 3:53 PM

    You would know that PS pensions are routinely referred to as “pay-as-you-go” if you had bothered to do any research into this matter. Current PS pension payments are funded by the superannuation contributions and PRD payments of serving PS workers and a top-up by their employer, the State (or state-funded bodies) out of current expenditure. This element IS taxpayer-funded, but PS workers are taxpayers also, a fact that you conveniently gloss over. Once again … there is NO pension pot nor pension fund involved. Your further failure to account for the net effect that entitlement or otherwise to the state contributory pension plays in the composition of PS pensions just reinforces my point that your “extrapolation” is weak, polemical and completely at variance with the facts.

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    Mute Keith Holland
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    Nov 20th 2013, 4:06 PM

    PS workers who started pre 95 won’t get state cont pension (exception of non officer grades). Pre ’04 is incorrect. But this is factored into their benefits and not additional to what pre ’95 would get

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    Mute Desmond O'Toole
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    Nov 20th 2013, 5:37 PM

    Sorry Keith, you’re right. It was 1995. I was working on something else at the time I was commenting. Damn multitasking!

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    Reg
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    Mute Reg
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    Nov 20th 2013, 12:40 PM

    My own idea is that everyone who makes the minimum number of PRSI payments should be entitled to the state pension including public sector workers. If you want more than that then open a PRSA or something similar and save for it like most ordinary workers have to. If you can persuade your employer to add something then great. These defined benefit pensions are no more than pyramid schemes. The linking of salary to pension also has to stop. Some retired civil servants saw huge increases in their pension payments because the salary of the job they once held increased substantially. A small county like ours cannot afford this largesse.

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    Mute Keith Holland
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    Nov 20th 2013, 2:31 PM

    You’re right with pyramid scheme analogy. The real problem occurs (in the private sector) when companies close off entrance into these schemes. As more and more people retire with less people paying into it, it remains a pyramid scheme but the pyramid is now upside down which is a massive problem that a lot are facing or will face

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    Mute Aus Tereo
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    Nov 20th 2013, 11:17 AM

    This translates to me as: it probably won’t have to be used that often but if it is, don’t worry we’ll just increase the private sector pension levy that was supposed to be removed this year to our hearts content.

    This government has a chance to start putting things in place to improve our horribly broken pension system but instead it just focuses on short term hair brained plans like this. It really bothers me to see how far we are behind other countries like UK and Australia in dealing with this issue.

    As usual with irish politics it’ll take a catastrophic event for them to sit up and take notice.

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    Mute John Morgan
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    Nov 20th 2013, 1:48 PM

    It was mentioned on the radio this morning that the pension levy will be used to fund any payouts (newstalk business breakfast). This means that people in DC schemes will be paying to cover people in DB schemes and receive no benefit themselves.

    This is very unfair (and when this was put to the lady – Head of the pensions board – all she could say was yes).

    I’m in a DC scheme and so part of my fund is being taken to pay someone elses pension (the whole levy sticks in my craw as I see it as theft basically)

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    Mute Kenneth
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    Nov 20th 2013, 11:49 AM

    Pensions should be a completely personal item, why on earth should employers or the government pay anything toward an individuals retirement. If an individual is too stupid to plan well then tough luck

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    Mute shay o'reilly
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    Nov 20th 2013, 2:32 PM

    Kenneth, I’m paying into it for 30years, and you want to change it now,
    During the 90,s, many public servants tried to leave the pension system , they were not allowed do so, and were told that they could not set up a private pension, receiving the private sector tax breaks , iv had enough of the rubbish talk about PSP on this and other sites

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    Mute Keith Holland
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    Nov 20th 2013, 2:37 PM

    Tax relief on pensions is not limited to private sector workers. Any money paid into any pension scheme qualifies for tax relief at your marginal rate

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    Mute shay o'reilly
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    Nov 20th 2013, 2:42 PM

    Keith public servants aren’t allowed a private pension

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    Reg
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    Mute Reg
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    Nov 20th 2013, 3:09 PM

    Public sector pensions should be stopped for all new entrants. Let them be entitled to the state pension if the minimum PRSI requirements are met and open a PRSA to save for anything additional. Perhaps the state could agree to add a contribution, a percentage of what the employee contributes for example with strict limits. As for those in the system well they have to be allowed to continue I suppose at this stage. This would allow far more flexibility and allow those that would like to leave the PS more flexibility in the future. Some are just hanging in there for the pension.

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    Mute Alan McCartney
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    Nov 20th 2013, 5:56 PM

    If you don’t have the required PRSI contributions and never planned ahead do you receive the state pension? And if so would a % of the state pension be funded by public sector employee taxes? Just checking……

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    Mute shay o'reilly
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    Nov 20th 2013, 6:38 PM

    Alan , I think you get the non-contributory old age pension

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    Mute Alan McCartney
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    Nov 20th 2013, 8:16 PM

    Thanks Shay

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    Mute Keith Holland
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    Nov 20th 2013, 11:25 PM

    But they can increase their pension benefits through a PRSA/AVC and get tax relief that way. There are also employer led schemes where they can buy extra years service, thus increasing pension benefits and also getting tax relief. Under revenue rules, everybody is entitled to find for a pension of 2/3 their final salary. There is no reason for PS workers to take out a private pension instead of the one they have as it would not be as good as public sector, especially those who entered the sector pre ’95

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    Mute Keith Holland
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    Nov 20th 2013, 11:26 PM

    @Reg public sector pensions have changed dramatically for new entrants starting this year going forward. It is no longer based on final salary and years of service. They will accrue a benefit each year

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    Mute Sean Collins
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    Nov 20th 2013, 4:32 PM

    What about your own pension burton

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    Mute Catherine Hayward
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    Nov 20th 2013, 12:38 PM

    The only certainty these days is one way or another we will end up broke..

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    Mute Josh Barton
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    Nov 20th 2013, 12:52 PM

    No Catherine,

    Death and Taxes are also a certainty

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    Mute Marie McCormack
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    Nov 20th 2013, 3:25 PM

    And dead. That’s also pretty certain, and the rest is just miserable circumstances

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    Mute Patrick
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    Nov 20th 2013, 8:02 PM

    if Burton only had a brain.

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