RPI to CPI Early Day Motion 1032

Old_Slaphead

Ripoff wrote: »

I am sorry but I can not let you get away with you saying that this effect is negligible (around 0.5%pa compound) on 'small, paid for occupational pensions'. The ONS's own figures quote that it is expected to be 1.18% for the next five years and that is compounded.

Over last 20 years the difference between RPI & CPI averages 0.7%. Assuming that's taxable at 20% the net effect is 0.56%.

Unfortunately everyone has to pay for the last government's general spending largess and lack of effective financial regulation.

Many workers have had zero pay rises for years, students have to pay more, pension age is being put back, benefits recipients will suffer, private pensioners have been blitzed. The nation has been living beyond it's means for years. Why should the babyboomer generation with absurdly generous FS pensions (mainly public "servants") who will still get a significant degree of inflation-proofing, be exempt from contributing just a little bit ?
The vast majority of the population can only dream about getting similar benefits in their old age.

Ripoff_2

Old_Slaphead wrote: »

Over last 20 years the difference between RPI & CPI averages 0.7%. Assuming that's taxable at 20% the net effect is 0.56%.

Unfortunately everyone has to pay for the last government's general spending largess and lack of effective financial regulation.

Many workers have had zero pay rises for years, students have to pay more, pension age is being put back, benefits recipients will suffer, private pensioners have been blitzed. The nation has been living beyond it's means for years. Why should the babyboomer generation with absurdly generous FS pensions (mainly public "servants") who will still get a significant degree of inflation-proofing, be exempt from contributing just a little bit ?
The vast majority of the population can only dream about getting similar benefits in their old age.

Again you are missing the point. This change for private pensioners does NOT benefit the public purse, it is for life, not just till the deficit is paid off. Plus we are already contributing by the pension age change and the VAT increase and any other measures this Government can dream up. Private pensions had NO increase last year, so they also had a zero pay rise. Pensioner inflation is actually higher than even RPI confirmed by Age UK.

You seem to believe that ALL private and public pensioners are on fantastic pensions, they are NOT and again you miss the point in that people paid for these pensions, they are NOT given them free with the job.

It's like putting money into a building society and being guaranteed 4.6% increases and then at the end of the term the building society saying ignore that guarantee we are only giving you 3.1%. No one would think that was acceptable would they? The building society would be up before the OFT and quite rightly so, this change is on a similar level. People paid for RPI indexing and expect to get RPI indexing, otherwise it's deception and theft.

It is pretty obvious that we will have to agree to differ on this issue. I simply do not agree with your comments.

Ripoff_2

Goldwing1 wrote: »

Update.
I asked for written evidence. The reply I received was;

"Mr Green has asked the House of Commons library to provide him with a briefing on this issue. He will be back in touch in due course."

Looks like the question is a little more difficult to answer. Keep badgering those MP's.

There are two documents I know of in commons library on this issue and when you read them it clearly says that changes need to be made to CPI before it is used for indexing.

Taken from the Documents: The UK Statistics Authority responded on the 6th October (to the RSS letter)

I quote: "we believe the CPI should become the primary measure of consumer price inflation but only when the inclusion in the index of owner-occupiers’ housing costs has been achieved". Note that they say "BUT ONLY WHEN" not beforehand like the Government has proposed.

Futher more in the documents it says:

In the June 2010 budget the Chancellor George Osborne announced that CPI would be used for indexation stating that CPI provided a more appropriate measure of benefit and pension recipients inflation experiences than RPI, because it excludes the majority of housing costs faced by homeowners.

However on 19th August 2008 the then Shadow Chancellor George Osborne said "pensioner inflation is now considerably higher than CPI inflation because pensioners spend a much higher percentage of their income on high-inflation goods, like heating, light and food." (from Conservative Party, ‘An Unfair Britain: Why Labour have failed on fairness’, 19th August 2008).

So what has changed from 2008 to 2010 where CPI is concerned, the measure of both RPI and CPI is exactly the same, but in opposition it’s wrong to use CPI but in Government it’s right to use CPI?.

Taken from the document again: However, to ensure the value of a basic State pension is at least as generous as under the previous uprating rules, the Government will increase the basic State pension in April 2011 by at least the equivalent of RPI. Here the Government recognises there is a problem with using CPI.They know and recognise that CPI provides a lesser increase than RPI. At least 1% and this change would be forever and is accumulative. It will cost private pensioners more over time by de-valuing their pension over the coming years.

It will be very interesting what you get back from your MP because I can not find anything in them that backs up Steve Webbs claims.

lowbrim

Linton wrote: »

I think you are confusing two separate issues. The one, which you seem to be arguing about, is whether poor pensioners should receive more than at present. There may well be good arguments for this BUT IMHO it is not the RPI/CPI issue.

The purpose of indexing, whether it's RPI or CPI, is to keep pensions at the same value. So the important question is, which index most accurately does this. In my personal experience, based on detailed data, of the past 5 years of retirement is that both are overly generous. The cost of "existing" has not increased by anything like the rise of either index.

You are clearly on a very big pension otherwise you would not make such a silly statement! For someone on say a £10k/yr pension are you saying that the increase in council tax, utility bills etc last year 2009/2010 when RPI was negative and pensioners got 0% was overly generous???

Stargazer57

Ripoff wrote: »

People paid for RPI indexing and expect to get RPI indexing, otherwise it's deception and theft.

Current pensioners and deferred pensioners and most people still at work earning a final salary pension did not pay for a pension anything like as valuable as they have been given. Final salary pensions have roughly doubled in value since 1997. The cut (to using CPI and RPI) will still leave almost everyone better off that they thought they would be when they earned their pension.

Old_Slaphead

Ripoff wrote: »

You seem to believe that ALL private and public pensioners are on fantastic pensions, they are NOT and again you miss the point in that people paid for these pensions, they are NOT given them free with the job.

How do you deduce that?

What I would say however is that they're not known as "gold plated" for nothing and the final salary schemes to which you're addressing your angst, are significantly better value (for the beneficiary) than anything else - by a country mile!

Anyone on an average salary of £25,000, paying in around 5-6% of their salary for 40 years can expect a pension of £16,700 (66% of their salary) for maybe 30 years. Even with a lesser degree of inflation-proofing that's still a helluva deal. (The employee pays 20% with the employer or taxpayer will be stumping up around 80% of cost).

Your building society analogy is well off the mark too. Governments have always tampered with pensions and any future benefits are to some extent a leap of faith. As for having "paid for rpi indexing" - pension beneficiaries also "paid for an expected a retirement of 10-15 years" but in reality they're going to get 20-25 at no extra cost!

And MPs signing up for EDM - given that it's turkeys voting for Christmas, I'm surprised that all 250+ Labour MPs and a few LibDems haven't signed up by now. Perhaps they realise that giving way a little here will give them more leverage when final salary schemes are revamped, big time, as they surely will be.


nb I note that last year when RPI was negative, public services pensions were not reduced accordingly!

As you say RipOff we'll just have to agree to disagree on this issue

Linton

lowbrim wrote: »

You are clearly on a very big pension otherwise you would not make such a silly statement! For someone on say a £10k/yr pension are you saying that the increase in council tax, utility bills etc last year 2009/2010 when RPI was negative and pensioners got 0% was overly generous???

Err - the state pension went up by 2.5%.

What has total pension got to do with the % increase in costs/year?

I am saying that over 5 years the cost of my basics (bills, council tax, food etc) has not increased by anything like 17%, the increase in RPI over that period.

If you have real data from your own personal experience that shows something different that would be interesting.

lowbrim

Linton wrote: »

Err - the state pension went up by 2.5%.

What has total pension got to do with the % increase in costs/year?

I am saying that over 5 years the cost of my basics (bills, council tax, food etc) has not increased by anything like 17%, the increase in RPI over that period.

If you have real data from your own personal experience that shows something different that would be interesting.

If you are just on a state pension that went up 2.5% (sorry I was quoting company pensions which had no increase in my previous post) last year are you seriously saying that it covered your increase in utility bills & rates & food. If you are on just a state pension you cannot afford to run a car so I will ignore those increases.

Total pension has a lot to do with it. The smaller the pension the lower the disposable income ie income after mortgage/rent, rates, utilities and actually feeding yourself.

If you have a pension that "just" covers these and they go up by 25% (which is actually conservative in the last few years my utility biill has gone up by 40% (oil/electricity & council tax 30%) but RPI (which includes non-essentials) goes up by 17% there is only one thing that is going to suffer my food shopping. So the more disposable income you have the more you are able to manage whether it is RPI or CPI.

Fred the shred (ex - TSB Chief Exec)is not going to worry which one it is. On a £400k/yr + pension as any increase will more than cover increases in council tax etc has he has most of his income is disposable!!

Ripoff_2

Just to let you all know that there is a statement in the commons by Steve Webb the pensions minister at 12:30 today 8/12/10 about pensions and indexing.

Old_Slaphead

Ripoff wrote: »

Just to let you all know that there is a statement in the commons by Steve Webb the pensions minister at 12:30 today 8/12/10 about pensions and indexing.

Seeing that, methinks the gentleman's not for turning.

Seemed to bat away most of Rachael Reeves questions without too much difficulty though, given Labour's record on pensions, that's not really surprising.