RPI to CPI Early Day Motion 1032

Andy_L

JamesU wrote: »

. 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



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

From that link it says
"Pension increases
The legislation providing for annual increases of pensions from the PCPF is the same as that applying to other public service pension schemes. The Pensions Increase Act 1971 and sections 59 and 59A of the Social Security Pensions Act 1975 provide that “official pensions” are to be increased annually by the same percentage as the additional State Pension.17"

To me your quote seems similiar to the situation with other public sector schemes - informal paperwork refers to RPI indexation its only in the full rules that the 2 acts are mentioned

JamesU

Andy_L wrote: »

To me your quote seems similiar to the situation with other public sector schemes - informal paperwork refers to RPI indexation its only in the full rules that the 2 acts are mentioned

Yes, and this seems right, the statutory rules must surely apply, cannot imagine a plausible reason why the MP's PCPF should not switch to CPI in keeping with the current changes to private and public sector pensions. But not sure why the Parliamentary report (Sept 10) kept RPI throughout the document some six months after the switch from RPI to CPI was announced. They are usually very well written and informative, and do not come across as informal documents, hence the ambiguity discussed in the last post. Perhaps it was technically correct to report the MP pensions in this way in Sept 2010 given the uprating order was approved at the later date in Parliament, around March 2011. In any case, I still look forward to seeing sight of updated documentary evidence to confirm that the MP's PCPF is definitely uprated according to CPI to remove this ambiguity.

JamesU

Andy_L

JamesU wrote: »

But not sure why the Parliamentary report (Sept 10) kept RPI throughout the document some six months after the switch from RPI to CPI was announced. They are usually very well written and informative, and do not come across as informal documents, hence the ambiguity discussed in the last post. Perhaps it was technically correct to report the MP pensions in this way in Sept 2010 given the uprating order was approved at the later date in Parliament, around March 2011.

Digging through the report the "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" bit appears to be a quote from the recomendations of the SSRB review that was written in July 2010.I suspect that was due to be published so soon after the budget that there was no oportunity for it to be recalculated & rewritten to reflect the change

"I still look forward to seeing sight of updated documentary evidence to confirm that the MP's PCPF is definitely uprated according to CPI to remove this ambiguityy"

At the moment there is no ambiguity, the scheme rules mean it is uprated by CPI. The RPI reference above is a recomendation on what should happen to accrued service if the SSRB's recomendation of a move to a career average scheme is followed

Ripoff_2

Andy_L wrote: »

Digging through the report the "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" bit appears to be a quote from the recomendations of the SSRB review that was written in July 2010.I suspect that was due to be published so soon after the budget that there was no oportunity for it to be recalculated & rewritten to reflect the change

"I still look forward to seeing sight of updated documentary evidence to confirm that the MP's PCPF is definitely uprated according to CPI to remove this ambiguityy"

At the moment there is no ambiguity, the scheme rules mean it is uprated by CPI. The RPI reference above is a recomendation on what should happen to accrued service if the SSRB's recomendation of a move to a career average scheme is followed

"Pensions Increases" on page 6 and the link at the top of page 7 seems to confirm that the MP's pensions have moved to CPI and should have done so from April 2011 uprating.

Page 35 confirms the position before the change or should I say before the RPI to CPI change was rushed in.

I wanted to know if the CPI change has actually happened to them from April 2011 like the rest of us. Therefore I have raised this with my Tory MP and asked him to confirm the exact position.

Goldwing1

Extract from the Civil Service Pensioners' Alliance Newsletter No 70;

"On 09 June 2011, the Treasury Solicitor sought and was granted a delay in proceedings on the grounds of their counsel’s unavailability and, in their view, the tight timetable. So, it now seems unlikely that our case will be heard before September or October 2011."

FLAPJACK

I am confused....I have been following this thread for a while, am I correct in saying that it's about protecting the rights of Pensioners not yet getting a FS pension in payment?


I have read the following from the "This is money" website dated 3/3/11.
Quote:

Speculation has been rife that the Government would allow Pension Schemes to switch the link for annual payout rises from RPI to CPI...which tends to be lower.

The Government said today (3/3/11) that companies will not be allowed to override exsisting rules that explicitly promise to link payouts to RPI.
Pensons Minister Steve webb argued that such a change could undermine peoples confidence in saving into a pension scheme.

He said :

"Contrary to press speculation, we do not plan to grant schemes a modification power to make it easier to use CPI where they do not already have the power to amend scheme rules.
We believe that member's trust in schemes and the scheme rules could be severely damaged if we intervene to give schemes the power to change their rules where the scheme does not already have a power."

The decision means that schemes with the RPI "hardwired" into the rules will NOT be able to switch to the (generally) lower CPI index. All pension schemes that promise to raise benefits each year in line with the "minimum" level set by the Government will be affected. But those that state that they will increase pensions by at least RPI have been spared.

Reading this I have checked my scheme, it does actually mention RPI in the Trust Deeds and Rules...so I take it that's what is meant by "hardwired", I know like many other schemes it is now closed to new joiners and the ones who joined from a few years ago are Career Average...myself who retired 5 years ago went under the FS rules.....so have I (any my fellow pensioners) anything to worry about?.

I do feel for anyone working these days and particularly those who have been working a longtime only to see important matters changing before their very eyes.

All the very best to you and your campaign.

Interested_Taxpayer

Yes Goldwing1. FDA members have been sent the note below. Interestingly, "following advice from from the Treasury Solicitor the High Court has concluded". Treasury playing for time perhaps?

Judicial Review date delayed
The FDA's previous communication with members explained that the High Court had granted permission and expedition for a judicial review - launched by the FDA's legal advisers - of the Government's decision to switch the index for uprating public sector pensions from the retail prices index (RPI) to the consumer prices index (CPI), and that the hearing was scheduled to be heard in early July.
The FDA's solicitors have now informed us that, following advice from the Treasury Solicitor, the High Court has concluded that the FDA's legal challenge - in conjunction with Prospect, the GMB, the Civil Service Pensioners' Alliance, the Police Federation and the National Association of Retired Police Officers - should be heard together with the case filed a number of other unions, including PCS. Therefore, due to the short time frame available, the High Court does not consider it possible for the cases to be heard in July as previously stated. Due to the Judiciary Long Vacation in August, It now looks likely that the hearing will take place in early October, although an exact date has yet to be set. We will, of course, keep members updated on this issue.

hugheskevi

I am confused....I have been following this thread for a while, am I correct in saying that it's about protecting the rights of Pensioners not yet getting a FS pension in payment?

Partially right, but it also includes those yet to receive their pension.

Teminology is important - indexation refers to how pensions increase once in payment. Revaluation refers to how the pension increases prior to it coming into payment.

The change from RPI to CPI affects both revaluation and indexation for those in the public sector.

Those in private sector schemes may or may not be affected, it depends on their scheme rules. Those in companies that used to be in the public sector decades ago often have the same types of rules as the public sector, so also have changed to CPI for both indexation and revaluation.

Overall, most private sector schemes have changed from RPI to CPI for revaluation, but remained with RPI for indexation but it varies from scheme to scheme.

Reading this I have checked my scheme, it does actually mention RPI in the Trust Deeds and Rules...so I take it that's what is meant by "hardwired",

Yes. Although even then there could be ambiguity. For example, the rules could state something like "Indexation will be in line with statutory minimum indexation, currently RPI capped at 5%" for example. That could be interpreted either as you have indexation based on statutory minimum OR that you have indexation of RPI capped at 5%.

so have I (any my fellow pensioners) anything to worry about?.

Probably not, but you would want to make absolutely sure of what your scheme's trustees have decided about the interpretation of your scheme's rules.

FLAPJACK

Hi Hugheskevi,

Thanks for your prompt reply...indeed you are correct the rules state " Annual increase in pension payments will be measured by the RPI in Dec, upto a maximum of 5% or if more a figure agreed by the trustees."

Fantastic how I read today that the BofE pension scheme is sticking to RPI....you couldn't make this up could you?

Thanks again and I will be watchful.

Ripoff_2

Ripoff wrote: »

I wanted to know if the CPI change has actually happened to them from April 2011 like the rest of us. Therefore I have raised this with my Tory MP and asked him to confirm the exact position.

I asked the following question of my Tory MP. "Could you confirm exactly what uprating index is now being applied to MP's pension please. Have MP's pensions moved to CPI from April 2011 like mine or have they remained on RPI indexing like the BOE pension scheme."

The reply I received was "The short answer is we don't know yet" his words exactly. The letter then goes on to say that in 2009 the previous Government invited the Senior Salaries Review Board (SSRB) to undertake a review and make recommendations etc. But it appears that under the coalition agreement the Government has committed itself to consulting the Independent Parliamentary Standards Authority (IPSA) on how to move away from Final Salary pension for MP's etc. but the IPSA is not due to take responsibility for MP's pensions till 2012/13.

So I have taken that to read, NO they haven't until 2012/13 at the earliest but the HoC Library note SN/BT 5434 makes clear, the Parliamentary Contributory Pension Fund is an "official pension". Therefore it should have been affected by the same up-rating order as the public and many private sector pensions. There were no exemptions.

Why he couldn't have answered YES or NO is beyond me but it leads me to think that though it should have been maybe it has not been? why else did he not say Yes or No? It was a straight question.

Perhaps an ex-MP who reads this forum could confirm if their pension was increased by CPI in April 2011 or not? or do we have to restort to a freedom of information request?