Cpi - rpi Final Salary Schemes

Sapphire

StevieJ wrote: »

That is one for new legislation or the courts, as far as I am aware my own pension fund describe RPI upratings as a concession not a legal right i.e. they can refuse to uprate if you break the law (I don't know how true that is).

According to the rules of the particular pension I have (with a previous employer), it states that the pension will definitely be increased according to RPI up to 5 per cent p.a.

MikeJones_2

I've been tracking this issue today and there is clearly no consensus on if, whether and how this proposed legislation might be implemented.

Indeed there is no immediate consensus on whether what is being proposed is fair, moral or legal.

Here's an example: a difference of opinion between two Pension Managers (and there is no mincing of the words). See:

- Government clarifies changes to indexation rule (Professional Pensions) (read the Comments after the article)

Personally, I think it is a retrograde step. It may be well-intentioned (as I'm sure it was introduced to give employers who sponsor pension schemes a welcome break) but nevertheless it is ill-conceived and might just backfire.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

cvd

I suggest that the worst thing about this episode is the blatant lying of Osborne and Webb that the CPI is the best measure of pensioner inflation. Their own statisticians say the opposite: see

http://www.statistics.gov.uk/articles/economic_trends/HICP0298.pdf

All you need is the last line of the summary.

PS The "Harmonised index of Consumer Prices" is the original name for the CPI.

PPS If you want an article comparing pensioner inflation with inflation for the general population, then the best known study is by the Institue of Fiscal Studies here:

http://www.ifs.org.uk/comms/comm106.pdf

LindsayO

MikeJones wrote: »

Personally, I think it is a retrograde step. It may be well-intentioned (as I'm sure it was introduced to give employers who sponsor pension schemes a welcome break) but nevertheless it is ill-conceived and might just backfire.

Mike, I'm interested in your opinion on this: in what sense might it backfire?

StevieJ

MikeJones wrote: »

I've been tracking this issue today and there is clearly no consensus on if, whether and how this proposed legislation might be implemented.

Indeed there is no immediate consensus on whether what is being proposed is fair, moral or legal.

Here's an example: a difference of opinion between two Pension Managers (and there is no mincing of the words between their dialogue). See:

- Government clarifies changes to indexation rule (Professional Pensions) (read the Comments after the article)

Personally, I think it is a retrograde step. It may be well-intentioned (as I'm sure it was introduced to give employers who sponsor pension schemes a welcome break) but nevertheless it is ill-conceived and might just backfire.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

Is this true? I thought an increase in VAT was reflected in CPI.

. CPI does NOT include taxation So an increase of VAT from 17.5% to 20% does not affect CPI

MikeJones_2

Hi LindsayO,

Just off out now, but will reply by tomorrow morning in this window!

StevieJ -

StevieJ wrote: »

Is this true? I thought an increase in VAT was reflected in CPI.

Are you referring to VAT mentioned in the Comments of the article I linked to?

Mike

StevieJ

MikeJones wrote: »

Hi LindsayO,

Just off out now, but will reply by tomorrow morning in this window!

StevieJ -


Are you referring to VAT mentioned in the Comments of the article I linked to?

Mike

Yes, that is correct.

Pity the poor pensioner
You can speculate why the government is making this change, but its effect will be to make pensioners poorer so it is completely the opposite to what the Government claim for their policies. CPI does NOT include taxation. So an increase of VAT from 17.5% to 20% does not affect CPI. An increase in the TV license does not affect CPI (TV license has been redefined as taxation). Increases in Vehicle Excise Duty, car tax, petroleum tax, Council Tax all do not affect CPI. Guess what the Government will be increasing next? I know the government say this defines the minimum increase, but it needs to be stopped. The entire pensions industry should be up in arms against this change.

CLAPTON

there seem to me to major unwelcome unintended consequence

- why would any young person start a pension knowing virtually for certain that the T&C of the deal will be changed for the worst by future governments... again and again and again and both in the private and public sector

Sterlingtimes

CLAPTON wrote: »

there seem to me to major unwelcome unintended consequence

- why would any young person start a pension knowing virtually for certain that the T&C of the deal will be changed for the worst by future governments... again and again and again and both in the private and public sector

Than you for the posting. That's the exact question that I want to ask of my MP. Conservatives have always known that Mr Brown was the pensions' bogeyman; now we are led to understand that the Conservatives are also intent upon devaluing pensions by interfering with external factors and potentially with contracts too.

MikeJones_2

Out this morning:

- CPI and RPI - percentage change: lastest figures (year to June 2010) released today by Office for National Statistics

Mike