Richard Curran: Pensions crisis shows real value of a public sector job
Insurance and pensions giant Aviva put the frighteners on us all this week by spelling out the size of the pensions gap - namely, the amount of money those retiring between 2017 and 2057 need to save each year to achieve an adequate standard of living in retirement.
Aviva estimates that the gap has increased in the last six years from €20bn to €27.8bn. The message seemed pretty clear. If you are going to retire in the coming 40 years you need to save an additional €1,000 per month.
Who has that kind of money?
There are those under 35, most of whom don't have a pension plan. Many of them definitely don't have that kind of savings capability and little inclination to think beyond the next Electric Picnic, never mind retirement.
There are those close to retirement who may well have seen their pension pots diminish, depending on the nature of their employer pension scheme. If they are in a defined scheme and nearly over the line, they should still do pretty well, unless it has gone completely wallop.
Then there are those in the middle. Some of them are still in negative equity on boom-era houses. They are up to their necks in child care bills, the USC, higher motor insurance premiums and rip-off bin charges.
They have seen defined benefit pension schemes enjoyed by predecessors in companies they work for shut down before they had a chance to benefit from them. So many of these schemes have now closed, they should be renamed "defined (for the time being) benefit" pension schemes.
But where is this money going to come from? Well, the report has its own definition of an adequate standard of living. It may actually be too aspirational and based on the expectations of a generation who did get to benefit from decent pension provision from employers.
In fact, the report barely mentions the role of employers. It even has examples of case studies with people who firmly believe we should pay for our own pension.
Not surprisingly, it doesn't mention the part pension providers play and how a government commissioned study in 2012 found that pension charges can take 17.4pc of retirement savings.
There is also the contradiction of how since the crash consumer's net savings have increased as debt is being repaid, but pension participation rates have declined. It is as if people are busy saving money but just not putting it into pensions.
Overall, there is a big day of reckoning coming and Aviva is right about that. Pensions are in deep crisis and it is being compounded by the fact that interest rates are so low at the moment.
Any pension fund buying up a slice of the 10-year bond issued by the NTMA this week is looking at a guaranteed yield of 0.33pc per year. You won't build much of a pension on that.
Defined benefit schemes are either effectively gone or running up massive deficits. A study of 26 of the largest companies in Ireland, conducted last year by LCP Ireland, showed a combined deficit of €5.4bn in 2014. AIB's was at €1bn and Bank of Ireland's stood at €986m.
The grim reading of the Aviva report contrasts sharply with the extraordinarily privileged position that many in the public sector have in relation to pensions. The state should be the best employer, but should its pension provision come in so far above the private sector?
Politicians earn pensions that would cost millions to buy. A minister who serves for just one full Dail term can qualify for a pension that would cost several million euro for someone to buy as an annuity.
The state guarantee behind a defined benefit pension scheme is cast-iron, but it appears transient when given by a company. If a company goes bust, its pension commitments can be shattered.
None of these risks apply in the public sector. Public servants had to stomach a pension levy in the crash but the guarantee that underpins the ultimate value of defined benefit pension schemes is always there.
Take universities for example, which have suffered from underfunding in recent years in particular.
They may be victims of underfunding from the state but they have "over-pensioned" in the past too.
UCD's pension liabilities amount to €1.8bn. Trinity College's are around €1.4bn.
We may have some blue chip companies in Ireland but when it comes to pensions, the real blue chips are held by the public sector.
Movidius sale means Irish unicorn hunt continues
Great news for the founders of Irish chip maker Movidius. It has been a long hard road for them over the last ten years, culminating in a €300m to €350m sale of the company to Intel.
They get a just reward, a great shareholder and they don't have to suffer the distraction of endless funding rounds.
But it is a little bit of a pity that they had to sell. Movidius was tipped to become the next unicorn or billion dollar valued tech company. The sale takes them out of that particular hunt.
The share register shows a raft of equity funds and tech entrepreneur investors from Ireland and Belgium to California and the British Virgin Islands.
The state ended up with around 12pc of the company through investments made by Enterprise Ireland and partners of the Irish Strategic Investment Fund, who only arrived to the party in 2015.
Some of that equity came quite late in the day and represents a pretty good financial turnaround for its investors.
The only state investor who appears to have taken a real risk and suffered along the hard road with the Movidius founders was Enterprise Ireland. The state agency has been chipping in money to back the company since 2007.
Perhaps Movidius will have a much longer and brighter future under the wing of Intel, especially given the fate of all our previous unicorns in the tech sector - from Baltimore to Trintech.
Movidius management were paying staff wages from their own personal funds just a few years ago as things got very tough. Now they have secured the future of the company and its Irish jobs.
We will just have to wait a bit longer for that endangered species - the Irish unicorn.
AIB and Ardagh: it's a tale of two IPOs
Two companies still trying to get a long awaited IPO away are AIB and packaging group Ardagh. Paul Coulson's Ardagh has had to change IPO plans several times in recent years. He is now talking about getting the IPO away in the first half of next year. But he only plans to offload 5pc of the group. What is the point?
Is it about ticking the IPO box, finishing something that he said he would do, or boosting the balance sheet while broadening the shareholder base - just a little?
At AIB, chief executive Bernard Byrne said during the week that the bank has been fixed and is ready to IPO once the government pushes the button.
AIB might be ready for the markets, but the markets may not be ready for AIB. Well at least not at a good price.
With Michael Noonan battling the European Commission on the Apple tax ruling; fending off moves for greater tax harmonisation in Europe; Brexit; putting together a budget which will be scrutinised by the Independent Alliance and Fianna Fail and even watching the cost of cardiac services in Waterford for John Halligan, an AIB flotation might be slipping down the priority list.
Sunday Indo Business