Pension Tension

Wile E Coyote Bomb

There appears to be a recurring theme in organisations that have contractual defined benefit pension schemes.

Before Christmas, ESB staff went to the brink of strike action over an attempt by the company to redefine their defined benefit pension entitlements as defined contribution. The company argued the change was purely semantic, the workers disagreed. Stalemate ensued.

Now staff at Aer Lingus and the Dublin Airport Authority are threatening to paralyse our national airports during St Patrick’s Weekend over a €780 million deficit in their defined benefit pension scheme. Aer Lingus management claims this is not their responsibility and has offered to contribute €140 million as a gesture of goodwill. Staff aren’t prepared to accept this deal.

Let’s get real here. Defined benefit schemes are anachronistic in the extreme, devised at a time when public sector workers were relatively low paid, when interest rates were higher and life expectancy significantly lower. It was a time before the country became bankrupt, before the markets suffered a cataclysmic collapse and many investment funds were wiped out.

They are utterly untenable in this day and age. But unfortunately there is a complete sense of denial in this respect.

The country just doesn’t have the money to fund these schemes any longer. And putting ourselves deeper into a debt that is already unsustainable is just not an option. Something is going to have to give.

Each principal officer in the public sector retiring on a DB pension of €50,000 will cost taxpayers €1.5 million.

It is going to come to the point that the guaranteed and generous pensions of today’s public sector workers will be funded by a future generation of young Irish workers who may not get a cent on retirement.

The government has already done the unthinkable and raided private pensions with their supposed temporary levy. How this theft has remained unchallenged astounds me. And yet they have no appetite to tackle the ticking time-bomb of public sector pensions. Most likely because they all hope to retire on generous packages (like the majority of the previous Fianna Fail government) before it all blows up in their faces.

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4 Responses to Pension Tension

  1. Absolutely bang on right. Pension fund monies don’t just sit in a bank account. If they did they’d decline in real terms. So they are invested. But a huge amount of that value has just been wiped out, across all pensions, public and private. (Not to mentions stocks, shares, bonds, house prices etc, all forms of equity basically)
    Yet the state and semi-state and former state company workers expect the rest of us, and the next generation, to just passively pick up the tab. It is tough on them, and I do genuinely have sympathy, but they should get real. You mention,and they bang on about, politicians and a handful of overpaid execs and top civil servants. It is sickening this bunch of people. (the private sector are bad enough, the policians and former ministers are utter parasities)

    But it’s less than 5% of the population. It has absolutely no bearing on my situation for example, nor with 75-80 % of other people. The same people who will be picking up the tab if they get their way.
    Striking at St Patrick’s weekend is attempted blackmail and bullying, but it’s also moronic, spiteful and worst of all, pointless. Pointless because neither Aer Lingus nor the DAA actually control the pension funds nor make any of the decisions about them, (that is done by separate trusts)
    The Govt should seriously consider making essential transport service jobs non-striakbale job, like the guards. That includes airlines, in an island nation.

    In a rich irony, the union that has just served strike notice, SIPTU also has its own pension fund, for its own workers. This is also down 30-35% in value (nearly all pensions are). Does this give SIPTU itself, and/or SIPTU workers, any insight or realism about the situation? Any pause for thought and maturity? Of course not! Amazingly, SIPTU workers (i mean workers who actually work directly for SIPTU) may possibly strike, against their own union!
    You couldn’t make it up.

  2. aj vosse says:

    Unions and government together screw the private sector over five times as hard as if they were acting individually! We can only pray that the next government will be anti union and begin redressing the evil of the past… ha ha HA! I’m deranged!! 😉

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