RPI to CPI Early Day Motion 1032

hugheskevi

the fire brigades and police pension schemes have RPI written into the rules but it is changing over to CPI

Do you have a link showing the explicit reference in the scheme rules to RPI?

I think that both are linked to the Social Security uprating of Additional Pension, which is increased annually in line with the level of general inflation in the opinion of the Secretary of State of the Department for Works and Pensions.

Historically this view was based upon RPI, now it is CPI.

That is very different to there being an explicit reference to RPI in the scheme rules.

JamesU

Ripoff wrote: »

[URL="mhtml:%7B6EF71D81-FCE8-447B-947D-380BDD9A9C3B%7Dmid://00000097/%21x-usc:http://www.24dash.com/news/central_government/2011-05-31-Bank-of-England-Pension-Fund-Ignores-CPI"]http://www.24dash.com/news/central_government/2011-05-31-Bank-of-England-Pension-Fund-Ignores-CPI[/URL]

Had problems opening that link so just in case, other links here also:

http://www.efinancialnews.com/story/2011-05-31/bank-of-england-pensioners-escape-inflation-cut

http://blogs.wsj.com/source/2011/06/01/bank-of-england%E2%80%99s-pensioners-escape-inflation-cut/?mod=WSJBlog&mod=WSJ_source_blog

JamesU

Ripoff_2

This applies ONLY for BT Pensioners who read this thread.

The BT CWU union members have voted at conference to tackle the RPI to CPI issue with BT. This is positive news at last for many BT pensioners, but it is only the start of the fight for justice. You still NEED to write a personal letter to Accenture and put your case for the restoration of RPI indexing, if you have not done so already. Personal letters of complaint can only add to the unions fight, the more that Accenture receive the more BT will have to take notice.


The full text of the motion carried by this year’s CWU conference is as follows:

‘Conference notes that following the Government’s switch from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI) as their measure for inflation, BT has changed the BT Pension Scheme (BTPS) indexation arrangements and is using CPI for Section A and B pensions in payment and deferred pensions, as well as Section C deferred pensions. The move to using CPI, which is based on the current wording of the Trust Deed, is highly likely to be detrimental to BTPS members as the CPI consistently results in a lower rate of inflation than the RPI.

Conference wholeheartedly supports the CWU’s opposition to BT’s switch to CPI especially given the recent changes to the BTPS.

Conference instructs the T&FSE to investigate whether there is a potential legal route that could be used to reverse the CPI decision by BT; to negotiate with BT other ways of mitigating the changes for Section A/B members; and to campaign to seek the reinstatement of the RPI as the measure for inflation.’

Interested_Taxpayer

We get our day in court

The High Court has agreed to hear our case week beginning 4 July.

Let's hope our people do a good job of blowing the Treasury arguments clear out of the water.

Not long to wait now.

www.cspa.co.uk/index.htm

JamesU

Interested_Taxpayer wrote: »

We get our day in court
The High Court has agreed to hear our case week beginning 4 July.
Let's hope our people do a good job of blowing the Treasury arguments clear out of the water. Not long to wait now.
www.cspa.co.uk/index.htm

I am rather apprehensive on the outcome myself, but certainly hope the justification for using CPI as a "more appropriate" measure of inflation relative to RPI is scrutinised and addressed properly. But feel this issue may be sidetracked and considered less relevant because from a legal perspective the focus may be on statutory regulations which are more clear cut legislatively, as discussed in depth in many posts earlier in the thread.

The lack of sufficient justification and consultation on the merit for using CPI as a measure of inflation seems to be covered well by unions based on their sites, reports and documentation. So, irrespective of what weight this carries from a legal perspective, I feel confident this issue will at least be relayed quite well through the solicitors at the judicial review.

However I feel there is a key issue which has not been addressed at all, and this is the lack of any impact assessment on public sector pensions during the switch from RPI to CPI. This important evaluation has been completely sidetracked by the Government (see e.g. post #992 for details on how this has happened) and has also not been reported in the media. The media has only reported the very significant, but lesser impact, of a switch from RPI to CPI on private sector pensions in the region of £100 billion (see e.g. posts #983, #987). This will of course add weight to any solicitors’ arguments in relation to the significant effect on private sector pensions. But no impact assessment has been reported on the greater impact likely on public sector pensions, and which must also run into pension losses which, at lowest estimates, are likely to be in the region of £150 billion and possibly more (then in addition, approx £100 billion losses to private sector pensions).

Intuitively one would think an impact assessment on both private and public sector pensions should have been made before any switch from RPI to CPI was considered, given it effects millions of private and public sector pensions. In the private sector this was carried out retrospectively after the switch from RPI to CPI. And within the public sector, no impact assessment has been reported by the Government to quantify the losses to public sector pensions. Highlighting the magnitude of the likely losses to public sector pensions, and the fact these have not been assessed and reported, could have additional and significant bearing on the inappropriateness of the switch from RPI to CPI as it stands at present. So, I hope the unions' solicitors in both the private and public sector are aware of this important issue, as it could add significant weight to their arguments. Similarly, if OPs have contact with their unions, it may be beneficial to bring this issue to the attention of the unions involved to ensure their solicitors are fully conversant with this issue prior to the judicial review.

JamesU

ordinaryman

I concur with you JamesU in expressing concern about the forthcoming Judicial Review and how the Coalition Government's case will be viewed by the Judges.

I suppose that if the only concern were to be the legal question as to whether the Minister has the power to make the change from RPI to CPI then the Coalition might be successful here. However, one would hope that any judgement would take account of the suddenness of this change, without any prior consultation or serious examination of the impact upon occupational pensions and the resulting consequences for pensioners. The Treasury have probably 'done the sums' to work out how much they would save. What they have not done is work out how much we would lose, and what effect this loss of income will have as inflation continues to go 'through the roof'

Yet another factor in a rounded consideration of the issue is the unfairness of this move in light of what has been the policy over the past 38 or 39 years and the fact that in many pension schemes, RPI is specifically referred to in relation to annual increases.
Let us hope that 'our' legal team will stress the fact that, although the Government claims that CPI is their 'preferred measure going forward' , the pensions of MPs will continue to rise by the RPI as will those of Mr. Mervyn King and the members of the Monetary Policy Committee. The old maxim of 'one law for the rich......' springs to mind here.

Another feature is the lack of credibility afforded to CPI by some fairly influential bodies such as the National Statistical Society and even by those bodies who advise Government on fiscal and economic matters. CPI as a measure of real inflation has not had a good press.

In fact, there is quite a long list of issues which a good legal team can employ in arguing against the action which the Government has taken. We can only hope that they will deploy these with maximum impact during the Judicial Review.
I remain optimistic that right and fairness will, in the end, prevail.

JamesU

Orinaryman, yes agree. Need to see how this shapes up.

BTW, maybe change your title by adding "assessement" or you are giving the wrong message as the title currently reads..."No impact on public sector cuts...", which is not really correct!

JamesU

ordinaryman

Thanks JamesU.
Sorry, of course I missed out the word 'assessment'
Thanks for pointing this out.

MEY_3

Let's not forget, either, that the precise definition of the ministers legal remit within the Acts is paramount. Is he/she dutybound to use a measure that reflects general prices/costs fluctuations or not? If so, then it has to be questioned as to why Mr Webb has persistently referred to CPI "being more appropriate to pensioners" in his justifications, and in the face of the RSS's emphatic rebuttal that CPI does not reflect general price/costs experiences.

I'm also keen to to see it raised as to why the Government may use RPI for some purposes and CPI for others, but fear that the legal men acting on their behalf may seek to narrow the scope of the challenge.

JamesU

ordinaryman wrote: »

Let us hope that 'our' legal team will stress the fact that, although the Government claims that CPI is their 'preferred measure going forward', the pensions of MPs will continue to rise by the RPI as will those of Mr. Mervyn King and the members of the Monetary Policy Committee. The old maxim of 'one law for the rich......' springs to mind here.

It seems a request through the Freedom of Information Act was required to establish Mr Mervin King and other employees at the Bank of England will continue to receive their pensions linked to RPI:

http://www.efinancialnews.com/story/2011-05-31/bank-of-england-pensioners-escape-inflation-cut

“Clifford Pocock, a trustee who resigned from the pensions board of UK airline BA over its recent decision to go along with the CPI change, wrote in a blog: “Members of the Bank of England’s own pension scheme enjoy benefit increases based on RPI, a measure which presumably reflects the Bank’s own inflation experience. You couldn’t make it up.” Pocock said that a BA colleague of his had written to the Bank under a Freedom of Information request, asking the institution to confirm it would stick with RPI, which it did.

However, perhaps a more reputable documentary source is required to confirm the information above regarding BoE pensions is indeed accurate.

Similarly, it would be useful for both the public, and solicitors at the judicial review, to understand exactly how MPs pensions are being indexed and revalued at present. Many assumed MPs pensions would automatically switch to CPI in a similar manner to that of the private and public sector pensions. But the latest overview of the Parliamentary Contributory Pension Fund (Sept 2010), which was written after the switch from RPI to CPI, states MPs pensions should continue to be uprated by RPI until after the next election (page 35). It would be very useful to clarify the real position at present to remove any ambiguity:

http://www.parliament.uk/briefingpapers/commons/lib/research/briefings/snbt-01844.pdf

"The SSRB (Senior Salaries Review Board) recommended retaining a Defined Benefit scheme for MPs, but based on career average earnings and with a higher retirement age. Changes recommended to the PCPF: We consider that the best balance between the conflicting pressures of reducing the taxpayer contribution to the PCPF and securing adequate and sustainable pensions for MPs would be achieved by retaining a defined benefit scheme, but based on career average revalued earnings and with a higher retirement age. We propose that this scheme should apply immediately after the next election to all MPs, Ministers and office holders. However, all current MPs would have their service to date preserved and uprated in future by the Retail Prices Index (RPI), with the current normal retirement age of 65. Revaluation of career average benefits: Lower of RPI and 2.5% for active members, deferred pensions and pensions in payment.

JamesU