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Public Sector pensions: Some things you won’t hear every day… June 5, 2013

Posted by WorldbyStorm in Economy, Irish Politics.
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The SBP notes that:

A quarter of public service pensioners receive a pension of only €5,000 annually, according to government documents.

And that:

Documents obtained by The Sunday Business Post under Freedom of Information legislation revealed that almost half of all public service pensioners get a pension of about €10,000 or €11,000 annually.

Though it immediately contradicts the spirit of itself by going on to note that:

However, despite large numbers of public service pensioners getting relatively modest pensions, the documents indicated that the average public service pension is about €30,000, which indicates that a percentage of public service pensioners are drawing considerably larger annual pensions.

Yes it does. But look again at the figures, about 50 per cent of PS pensioners get €10-11k per annum. 25 per cent get €5k per annum. That’s 75 per cent.

Wouldn’t it make for a much less provocative line in relation to ‘average public service pensions’ being €30k when contextualised with the other two points. Or let’s put it a different, more illuminating, way. 25 per cent of PS pensioners are on €12k and upwards. That’s a pretty broad range in and of itself and while I’d be very very interested to see how it breaks down it suggests that media nostrums on the matter are way off.

And ironically the SBP article actually quotes the following:

“On the perceived inequality between public and private sector, there is a media obsession with people retiring on high pensions,” the minutes of the meetings reported.
The documents indicated that in some “individual cases” people in the public service get “very large pensions”, but also stressed the number of public service pensioners receiving very modest pensions.

Well, yeah.

Comments»

1. hjfoley - June 5, 2013

Reblogged this on misebogland.

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2. crocodile - June 5, 2013

What percentage of secondary teachers would you say retire after forty years on a full pension? 70? 60?
According to a guy I know in the pensions industry, it’s…1%.
I found that hard to believe at first, but he explained that large numbers leave early and even larger don’t get a full time job before they’re 25, meaning the equation is impossible. Hardly anyone who got a job in the eighties or in the last few years got it before their late twenties.
Does this matter? Well, commentators who want to exaggerate public service pensions take the top figure theoretically possible, of someone who got an incremental job before twenty five and worked a full forty years, retiring on a senior post – someone who scarcely exists.

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Daniel Sullivan - June 5, 2013

crocodile, while the point you make is quite reasonable, that far fewer people end up gettng the full teachings pension I find it hard to credit that it’s just 1% of the main body of teachers or that someone in the generic private pensions industry could come to that exact figure unless they’re counting anyone who has ever sent a day in front of a class as part of the 99%. And let’s keep in mind that a teacher could “retire” after 35 years of service and get close to 90% 35/40 of their pension from that point onwards and then go off and do other work. If we were to eliminate the perhaps large number of very occasional teachers (those who don’t do more than 2 years in the job) what would the % be who get to 55 years old and 35 years of service and who can then retire?

http://www.asti.ie/?id=146

As for the more general point of the post, it should be noted that those figures relate to just the additional public service element of their pension and evidently doesn’t include the standard state pension which for the rest of the working population was in theory at least funded via PRSI payments and the contributions paid were considerably less than for those in non-public sector employment. So that state pension provision is effectively unfunded.

And as noted by others if the average pernsion payment is 30K and 75% of people are on 11K or lower then 25% of people must be on an average of close to 90K in order to drag that overall average figure upwards (that’s a very rough calculation on my part).

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crocodileshoes - June 5, 2013

Show me a secondary teacher that got an incremental job at twenty. Since the early seventies, few have managed it before 25. A typical career trajectory for a secondary teacher retiring these days is: part time/ temporary work for several years, about 25 years full time incremental, with frantic ‘buying back’ of notional service, retirement in late fifties on about 30/80.
I know many retired secondary teachers and not one of them has ‘retired’; they’ve all retired.

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Daniel Sullivan - June 5, 2013

Retirement in late fifties is well in excess of what most of the working public would be getting. Most end up working to 65 and beyond these days.

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WorldbyStorm - June 5, 2013

That is true, well, the 65 bit. All that said retiring early does incur a cost, and as I understand it in teaching it is now a case of retiring at 65 or 40 years, which ever comes first.

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3. RosencrantzisDead - June 5, 2013

The problem with averages is that they can be skewed by outliers. In this case, we could have a small percentage on very, very high pensions (Does public sector includes semi-states and possibly some of the now state-owned banks/NAMA?) and that would be sufficient to shove the average up a notch or two.

Did they happen to mention what the median pension was?

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4. 6to5against - June 5, 2013

if 75% are on less than 11k, and the mean is still 30k, there must be some extraordinary outliers.

Something else odd here is the effect of the OAP.

Clearly, for those, on 11k or under the OAP cannot be included. That clashes with my understanding of how pensions were calculated prior to 95, but hopefully the full income of those people invoved is significantly higher than listed here, maybe in the range 17k – 23k?

But for anybody on 30k, if we add in the OAP, it closer to 42k.

To qualify for that sort of pension in the PS you would need to end your employment on 84K, That happens, alright, but to a very, very small minority. There is no way that that could from a mean salary. Indeed, even to go with the 30k, would require a mean final salary of 60K.

Something here doesn’t quite add up. Maybe somebody better informed can explain?

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5. Jim Monaghan - June 5, 2013

The recent victory in the Courts by the VEC head types for an allowance for whatever will alienate support. Sinn Fein has the right idea of a maximum salary of 100k.

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6. Ninth Level Ireland » Blog Archive » Public Sector pensions: Some things you won’t hear every day … - June 5, 2013

[…] “The SBP notes that: ‘A quarter of public service pensioners receive a pension of only €5,000 annually, according to government documents’ …” (more) […]

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7. Irish Left Review | Those Darned Public Sector Pensions - June 10, 2013

[…] suggest otherwise (a few facts are always a healthy tonic to unsubstantiated assertions).  WorldByStorm over at Cedar Lounge Revolution pointed to the Sunday Business Post article based on documents obtained under the Freedom of […]

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8. The problem with averages… | The Cedar Lounge Revolution - November 22, 2013

[…] In 2009 (in response to a question from Mary Lou McDonald) that out of 428,845 PS workers 311,000 made €50k or less, and 248,000 made €40k or less and 178,000 made €30k or less – and all this before the wages cuts etc of the last five years. Granted this may not adequately reflect finishing salaries either then or subsequently, but here’s the problem, the only other data on this is from the SBP itself which in an article in June referenced the figure of €30,000 when it noted that: […]

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9. ‘Reforming’ pensions? | The Cedar Lounge Revolution - December 18, 2013

[…] SBP has tended to exaggerate the size of pension payouts in the PS, and has itself noted that the majority of PS pensions (and lump sums) are relatively small, even the example of the PO is – obviously – far from the generality. Anyway, inevitably, […]

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