Donie's Ireland daily BLOG Monday

AIB pension deficit heads for €800m despite €1bn injection

     

ALLIED Irish Banks pension deficit ballooned to nearly €800m last year, despite the bank pumping more than €1bn into the scheme.

According to the lender’s financial statements, the pension deficit jumped to €789m in 2012, up from €763m a year earlier.

The increase came even as the bank controversially transferred assets with a face value of €1.1bn from its own balance sheet to the bank’s pension scheme.

The loans had been listed for being sold off as part of the bank’s deleveraging programme but instead were moved to the pension scheme in an effort to plug the deficit and help fund the bank’s early retirement programme.

AIB is in the process of reducing its staff numbers by about 2,500 as part of a voluntary redundancy scheme and natural wastage.

More than 1,000 staff left the bank last year. Such a move was likely to have renewed pressure on the pension scheme, with many of the retiring staff on costly defined benefit schemes.

The decision to shift the funds to the pension fund was a controversial one when it was revealed last April.

The fund bought the loans at a significant discount to their face value, but it still led to accusations that the bank was using taxpayers’ money to fund excessive pensions for executives that had been built up during the boom.

In November, the bank’s chief executive, David Duffy, confirmed that some of the assets transferred from its balance sheet to its pension fund is helping to pay the “super-pensions” of former senior managers.

These include a €500,000 annual pension reportedly being paid to former chief executive Eugene Sheehy, who was in charge at the time of the infamous bank guarantee in 2008.

His successor, Colm Doherty, who has also left the bank, will get €300,000 a year when he turns 65.

AIB’s pension deficit stood at more than €1.1bn in 2008 but fell back to €400m three years ago. It has almost doubled since then, however.

The widening pension deficit comes as it emerged that the banks are losing millions on repossessions.

AIB lost €14m on houses it took over and sold during 2012 at an average loss of €220,000 per house, with some houses going for less than 40pc of the value of the original mortgage, while PTSB saw €19m disappear on 127 houses it had taken ownership of and then sold.

Bank of Ireland was the most active of the three banks, repossessing 141 houses during 2012.

It did not reveal how much it made or lost on the sale of these houses other than to say the sale proceeds “were adequate to cover the loans after provisions”.

Fianna Fáil’s Michael McGrath calls for insolvency guidelines to be published immediately

  

Michael McGrath said speculation about what was in the guidelines was worrying people

Fianna Fáil’s finance spokesperson Michael McGrath has called for the immediate publication of the new insolvency guidelines.

Mr McGrath said ongoing speculation concerning the rules is creating worry for families.The Department of Justice has said the guidelines will be published later this month.

Deputy McGrath said that while there was a need for guidelines, he believed they should not be over-prescriptive, or that banks should be allowed to micro-manage family budgets.Meanwhile, the Money Advice and Budgetary Service has said debate based on leaks about the guidelines is unhelpful.Speaking on RTÉ’s News At One, head of social policy and communications at MABS Michael Cullotty said many of the leaked figures were based on weekly rates, but insolvency budgets were normally calculated over 12 months.

He said many figures were indicative, and were not always applied across the board.

The €200m black hole as 200,000 Irish people give up their health insurance

    

The number of people with health insurance fell by 64,000 last year and by 198,000, almost 9pc, from its end-2008 peak of 2,297,000 people.

As a result the proportion of the population covered by health insurance fell from 50.9pc at the end of 2008 to just 45.8pc at the end of last year.

With more than 250,000 jobs having been lost over the past five years, 144,000 homeowners in arrears on their mortgage payments and health insurance premiums having doubled since 2009, many people have reluctantly come to the conclusion that health insurance is a luxury that they can no longer afford.

Health insurance has been described as a “voluntary tax”. It is the price which many people are prepared to pay to jump the queues in the public health system.

They are now paying dearly for that privilege. According to the HIA, Irish people paid €2.23bn in health insurance premiums last year. That works out at an average of €1,046 for every person – man, woman or child – covered by health insurance.

And they will soon find themselves paying even more. Health Minister James Reilly is planning to force private patients to pay €1,000 per night for a public bed in a public hospital, a move which the VHI estimates could result in health insurance premiums rising by a further 45pc.

If that happens then what are the chances of the current trickle of people giving up their health insurance becoming a flood?

Will many people who are currently just about managing to hang on to their health insurance decide to take their chances in the public health system for which they are already paying through their taxes?

This could in turn blow a huge hole in the Government’s health budget. This year the Government is planning to spend a total of €14.02bn on health or €3,060 for every one of the country’s 4.58 million inhabitants. And if it weren’t for the huge implicit subsidy from health insurance, the cost to the State of health spending would be even higher.

So what has been the cost to the State of the 198,000 people who have been forced to give up their health insurance over the past four years? While we have no way of knowing for certain without having access to eachperson’s personal health records, we can hazard a fairly accurate guess.

If we take the average annual health insurance premium of €1,046 as our guide for the likely extra cost, then the 198,000 people who have given up their cover are now costing the public health service approximately €207m a year.

Even in an era of telephone number amounts of money, that’s still a pretty serious wedge.

And things could get worse, an awful lot worse. Up to now the vast bulk of those giving up their health insurance have been in the younger age groups. According to the HIA, the number of under-60s giving up their private health insurance between 2009 and 2011 was 127,000 – detailed figures for 2012 are not yet available. However, over the same period the number of people aged 60 or over with health insurance actually increased by 25,000.

With the average health insurance customer in their 70s generating almost 11 times in annual claims costs as someone in their 20s (€2,442 as against €224) that’s clearly not a sustainable situation.

One doesn’t need to be an actuarial genius to figure out what’s happening.

Younger, healthier customers are leaving the VHI and its competitors in their droves and taking their chances in the public health system, while older, sicker customers are clinging on for dear life.

Were this to continue for any length of time then only the older customers would be left. At which point the whole edifice collapses. The Irish health insurance market is based on the principle of community rating, where everyone, regardless of age or medical history, pays the same price for the same cover. That only works if younger customers are prepared to subsidise their elders.

If, or more likely when, the vast bulk of younger customers bolt, the cost of health insurance will quickly soar to prohibitive levels.

A health insurance market consisting entirely of over-60s would have to charge average annual premiums of more than €1,820 a year just to cover its claims costs, and that’s before any charges for public beds in public hospitals.

Fifty-six years after the VHI was first founded, the Irish health insurance market is on the brink of collapse.

In the event of such a collapse the public health service would be the big loser as it would be faced with an influx of older patients and would quickly have to find most of the €2.23bn which the Irish people currently voluntarily spend on health insurance.

Aspirin just once a month cuts cancer risk by 22 %

 

New research shows that taking an aspirin just once a month could cut the risk of developing cancer by almost a fourth

Researchers at Queen’s University in Ireland studied data from the National Cancer Institute, Prostate, Lung, Colorectal and Ovarian Cancer trial of aspirin and ibuprofen on cancer risk and found that the “wonder drug” painkiller already taken by millions to prevent heart disease and stroke also significantly reduces the risk of developing head and neck tumors.

Researchers found that taking aspirin on a weekly and monthly basis reduced the risk of developing head and neck cancers by 22 percent in people aged 55 to 74, according tothe study published Feb 28 in the British Journal of Cancer.

Researchers have found that aspirin was most effective in preventing throat cancer.

However, researchers found that taking aspirin and ibuprofen daily as not significantly associated with reduced cancer risk.

“Regular aspirin use was associated with a significant 22 per cent reduction in head and neck cancer risk,” researchers concluded in the study.

“No association was observed with regular ibuprofen use,” they wrote. “Aspirin may have potential as a chemopreventive agent but further investigation is warranted.”

UK experts say that the latest research is encouraging in the battle against rising mouth cancer rates.

“Mouth cancer cases are increasing, so this piece of research is encouraging,” said Dr. Nigel Carter, chief executive of the British Dental Health Foundation,

“Regular aspirin use has been linked to preventing a number of cancers, and if it is a particularly successful practice for warding off mouth cancer, it should act as a springboard for more research.”

However, he warned that people shouldn’t be fooled into thinking that aspirin use counteracts the danger of mouth cancer.

“If you smoke, drink alcohol to excess, have a poor diet and are at risk from picking up the human papilloma­virus (HPV), aspirin use will be irrelevant,” he said.

The latest research is not the first to link aspirin to cancer prevention.  Past studies found that people who take the painkiller are less likely to develop bowel, beast, liver and other types of cancer.

The green, green grass of the Arctic:

 

Researchers predict dramatic boost in trees and shrubs due to global warming

• Wooded areas in the region could increase by 50%
• Changes also set to effect animal migrations

The Arctic is set to become a lush and green landscape due to global warming, researchers have predicted.

Experts say the wooded areas in the region could increase by 50% over the coming decades – and accelerate global warming in the process.

Researchers have unveiled the most accurate map ever of how vegetation could change in the region.

‘Such widespread redistribution of Arctic vegetation would have impacts that reverberate through the global ecosystem,’ said Richard Pearson, lead author on the paper and a research scientist at the American Museum of Natural History’s Center for Biodiversity and Conservation.

In a paper published on March 31 in Nature Climate Change, scientists reveal new models projecting that wooded areas in the Arctic could increase by as much as 50 percent over the next few decades.

The research team—which includes scientists from the Museum, AT&T Labs-Research, Woods Hole Research Center, Colgate University, Cornell University, and the University of York—used climate scenarios for the 2050s to predict how this trend is likely to continue in the future.

The scientists developed models that statistically predict the types of plants that could grow under certain temperatures and precipitation.

It shows the potential for massive redistribution of vegetation across the Arctic, with about half of all vegetation switching to a different class and a massive increase in tree cover.

Experts say in Siberia, for instance, trees could grow hundreds of miles north of the present tree line.

‘These impacts would extend far beyond the Arctic region,’ Pearson said.

‘For example, some species of birds seasonally migrate from lower latitudes and rely on finding particular polar habitats, such as open space for ground-nesting.’

In addition, the researchers investigated the multiple climate change feedbacks that greening would produce.

They found that a phenomenon called the albedo effect, based on the reflectivity of the Earth’s surface, would have the greatest impact on the Arctic’s climate.

When the sun hits snow, most of the radiation is reflected back to space.

But when it hits an area that’s ‘dark,’ or covered in trees or shrubs, more sunlight is absorbed in the area and temperature increases.

This adds to the global warming problem.

‘By incorporating observed relationships between plants and albedo, we show that vegetation distribution shifts will result in an overall positive feedback to climate that is likely to cause greater warming than has previously been predicted,’ said co-author Scott Goetz, of the Woods Hole Research Center.

Earlier this month shocking new images revealed by Nasa show the Arctic is becoming lusher and greener as temperatures rise.

‘Vegetation growth at Earth’s northern latitudes increasingly resembles lusher latitudes to the south’ the agency said after releasing a new study based on a 30-year record of land surface and newly improved satellite data sets.

The images show how the extreme of the Northern Hemisphere is changing, with previously frozen areas now showing lush green grass and trees growing