Pensions and pensioners

 

  A chara, – Brendan Ryan (October 17th) correctly states that public servants have to pay towards their pension for at least 40 years but I fear that the figure he quotes for pension deductions of “6.5 per cent of salary” greatly undervalues their contribution.

Like all public service workers I pay pension contributions in a range of separate tranches. When I added together all my pension contributions and levies I obtained a sum equal to 15.5 per cent of my gross earnings. Some 2.2 per cent of this is to cover years that I was in part-time employment and unable to contribute towards a pension, a situation that occurs for many teachers as few gain permanent work early in their career. It is also worth noting that because, like the majority of public servants, I am forced to pay PRSI at the slightly lower D rate, I will not qualify for the Contributory State Pension. – Is mise,

KEVIN P McCARTHY,

Killarney,

Co Kerry.

Sir, – Brendan Ryan (October 17th) makes some interesting observations regarding public service pensions.

First he points out that a 6.5 per cent contribution is now payable for each year of service in most cases!

The quoted example is someone retiring on €50,000 per year after 40 years of service (presumably aged about 58).

Their pension contribution in their final year is €3,250. For simplicity I will assume (however unlikely) that this amount was contributed for each of the 40 years and that the pension is fixed without indexation.

The retiree will have accumulated a pot of €130,000 at age of say 58. The tax-free “gratuity” at 1.5 times salary will consume €75,000 of this, leaving some €55,000 to purchase a pension.

This amount is unlikely to purchase an annuity of even €1,000 a year, a far cry from the indexed €25,000.

The State pension to which Mr Ryan refers is payable, not after 40 years, but rather on reaching the age of 66 and from 2021, age 67.

Perhaps as he suggests an “intelligent debate” on the subject would be worthwhile. – Yours, etc,

PHILIP JORDAN,

Dublin 6W.