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Friday, January 31, 2014

Irish academics, pension top-ups and poor private pensions coverage

This is a response to  a post by Hugh Sheehy on an Irish Economy thread. The system appears to have some gremlins at work.

This is the issue that has been raised: Irish academics get lavish pension top-ups as private pensions struggle

@ Hugh Sheehy

Hugh,

Thanks for the link.

I had written about this issue of top-ups in 2010 when the National Pensions Reserve Fund had taken responsibility for the 'old' university pensions that had a deficit of more than €600m, and it's not surprising that some of the supporting cast on the insider stage would try and drown out dissent.

This is a graphic illustration of the Irish caste system.

While profitable overseas companies and the small number of indigenous ones were shutting down defined benefit (guaranteed payout) systems; the finance minister was levying private pension funds; the social protection minister did not know what to do with  a report from PwC, the Big 4 accounting firm, that showed fees ate up an average of 17% of a fund over a typical fund's time horizon (Enda Kenny had promised Shane Ross that he would have the issue investigated when the levy was introduced in 2011 -- Kenny is not Bill Clinton and with 3 public pensions, even it had later crossed his mind, it would have been hard to convince the typical SME worker that he feel's their pain) -- over 500 academics in the bankrupt country were getting pension top-ups.

The basis for these top-ups is dodgy and the Comptroller & Auditor General said in 2011 that the issue required investigation.

The property clause in the Constitution is usually worth a try.

However, the right of 'legitimate de facto expectation' as outlined by a university official to the C&AG a years ago is similar to the 'droit du seigneur' in that only people within an elite could claim it.

Why worry about inequality when it's found mostly in places with funny names?

It's official state policy to keep employer social security low and thus the low level of employee pensions in the private sector.

Note the contrast with the racket organised by the insiders and when Brian Cowen at the outset of the Croke Park process proposed that the link with a current incumbent's  earnings be replaced by consumer prices, the unions said it would be a dealbreaker.

Why are bankers so selfish?

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