Clarity on pension funds
Madam, – For the information of Messrs Flanagan, Bell and Moloney (May 13th), and John Power (May 20th): 1. Ordinary public service pensions are not funded from general taxation. In 2009 they cost €2.6 billion but contributions were €3.1 billion, so the State made a €0.5 billion profit even before (a) the imposition of the “pension levy,” (b) the additional income-stream of the “adopted” NUI staff pension scheme and (c) the recent 4 per cent cut in public service pensions.
2. Public service workers receive only the pensions they pay for. They do not get the additional “State old-age pension” of more than €10,000 per year that other workers get.
3. Some private companies pay an “employer contribution” to employees’ pensions (averaging 5.8 per cent of salary in 2008). The State makes no “employer contribution” to public service pensions.
4. The Government has the use of public service pension contributions for up to 40 years before payout of pension. If this money were invested in “An Post Savings Certificates” (currently yielding 3.53 per cent per annum) it would quadruple in value in real terms within the 40 years. – Yours, etc,