RPI to CPI Early Day Motion 1032

Stargazer57

JamesU wrote: »

As mentioned in last post, I did not say there was an issue of hardship, so there is nothing to consider here.

Here's what you said:

I do not think it is justifiable for public or private sector workers on such modest final salary schemes to face a 17% reduction in income at retirement, rising to 26% reduction in income 10yrs into retirement. These are not "gold plate, fat cat" pensions, and lower income pensioners are going to suffer badly from this government intervention. And the maths works the same irrespective of whether it is private or public sector pensioners. This governmental tinkering of RPI/CPI effecting modest deferred pensions is an absolute disgrace.

Closer to home, you mentioned your own family member's pension of £200/mth which equates to £4800/yr, and which is hardly a fat cat pension is it? How would you feel if that £200/mth was reduced by 26% of its value leaving around £150/mth instead?

The effect on those with modest pensions will be very significant. In fact, far more significant because on an modest income one cannot afford an approx 25% pension income cut, whereas a "fat cat" with a "gold plated" pension on say £50K/yr will still be able to afford the odd luxury on £37.5K/yr.

So you described these pensions as modest four times in three paragraphs. To put my comment another way - one of the reasons these pensions might be seen as modest is that they relate to less than half a working career.

As for your other comments I could summarise them by saying you don't care that public sector employees are getting a lot more than they expected, they've got a book of rules that makes them think they're entitled to it, so they are going to do their very best to hang onto it, even if some people think they don't deserve it. I recall Fred Goodwin deploying a similar argument, and we know what happened to his pension.

JamesU

Stargazer57 wrote: »

Here's what you said:
So you described these pensions as modest four times in three paragraphs. To put my comment another way - one of the reasons these pensions might be seen as modest is that they relate to less than half a working career.

Correct, I did state at least four times that a final salary pension of £4K is modest. That is my subjective view and I could be right or wrong on this. I was showing the effect of a switch from RPI to CPI on deferred pensions, and I have done that considering what I felt was a modest deferred pension. If others feel this is not a modest pension, so be it, I can live with my cataclysmic error in judgement here. And for sure the deferred final salary relates to less than half a working career. But I will leave it to you to decide what variables to consider before you jump to your conclusions: in 1/80 x No of years x final salary. It is not rocket science, just schoolboy maths. Take your pick on which variable is greater and which is smaller, big clue: length of service vs final salary.

Stargazer57 wrote: »

As for your other comments I could summarise them by saying you don't care that public sector employees are getting a lot more than they expected,

Correct. I do not care that the public sector workers are getting "more than they expected" as they are just receiving what they are contractually entitled to receive. But going forwards, as a taxpayer I do actually care and would argue strongly that employees' future pension entitlements need to be comensurate with affordability. It is rather presumptious of you to think that you know my mind and views better than I do. And as I keep explaining, your constant discussion of employee expectation is completely irrelevant as it is contractual terms and obligations that matter.

Stargazer57 wrote: »

they've got a book of rules that makes them think they're entitled to it, so they are going to do their very best to hang onto it, even if some people think they don't deserve it.

Personally I doubt the current rule books will remain in place as part of T+Cs for existing employees over time, and certainly hope this is not the case if the pension entitlements on offer are unaffordable. The T+Cs of contracts need to be changed when there is a lack of affordability, and existing members can choose to accept them or move on. But I feel their accrued rights and those of deferred members should remain intact because of the previous contractual obligations that were in place.

Stargazer57 wrote: »

I recall Fred Goodwin deploying a similar argument, and we know what happened to his pension.

Not sure if this is really relevant to a previous employee with a modest deferred pension.

JamesU

Ripoff_2

EDM1032 The count is still rising 57 in total MP's have signed

LAB = 42 LD = 4 Con =0 other = 11

But we need more, many more keep those letters and emails going in, thanks. It's NOT a waste of time because it keeps it on the radar, so to speak.

Ripoff_2

Unison are also supporting this action see unisonactive.blogspot.com/2010/12/lobby-your-mp-to-fight-cpi-switch.html

JamesU

Goldenyears wrote: »

In the case of public sector pensions I want to return to what the actual rules say about uprating, in particular to the Principal Civil Service Scheme that many are based on.
Hughskevi rightly pointed out many posts ago that the scheme rules trump the scheme guides. But then he said the uprating in the rules is governed by legislation such as the Social Security Pensions Act 1975 without specific reference to RPI. The current PSCS rules actually refer to both, but I think the 1975 Act reference is to uprating salary of a returning employee. The RPI references are quite specific in Section 1.13 (February 2010 rev).

Goldenyears, do you have a link to the PSCS scheme rules (trust deeds even better I suppose)? There is some interesting discussion (particularly p.5 onwards) regarding PCSPS in the link here:

http://www.prospect.org.uk/dl/pdf/21773_3296002897.pdf/as/2010-00958-Circular:-Standard-CPI-Indexation-Version-29-06-2010.pdf

JamesU

Goldenyears

JamesU wrote: »

Goldenyears, do you have a link to the PSCS scheme rules (trust deeds even better I suppose)? There is some interesting discussion (particularly p.5 onwards) regarding PCSPS in the link here:

http://www.prospect.org.uk/dl/pdf/21773_3296002897.pdf/as/2010-00958-Circular:-Standard-CPI-Indexation-Version-29-06-2010.pdf

JamesU

The PCSPS rules are at http://www.civilservice.gov.uk/my-civil-service/pensions/governance-and-rules/scheme-rules.aspx

as PDFs. I quoted from "The 1972 Section".

JamesU

Goldenyears wrote: »

I quoted from "The 1972 Section".

This version of the Scheme rules is using RPI throughout. So I guess the key question is whether or not the revaluation order can simply override the Scheme rules in all cases (deferred members, current, those who have AVCs etc). I am not a pension or legal expert either, so cannot say anything with certainty, but on page 5 of the link in my last post, the key reference seems to be to Section 150 of the SSA Act 1992, and the wording from part Section 2a seems to refer exclusively to value reductions year to year rather than an index switch, hence perhaps the non-commital reply by PCSPS "would appear to grant the necessary discretion to switch the index for uprating additional pension from RPI to CPI."

JamesU

BaldGringo

Just received the following reply from Tunbridge Wells MP Greg Clark (con.)

Dear Mr ..........
Thank you for your email of 26th November regarding your support for EDM 1032 on index linking of pensions and benefits. I am grateful to you for letting me have your views on this issue.
You ask me to sign EDM 1032 but, as you may know, as a Minister, I am unable to sign EDMs and am bound by the Ministerial Code on this, but I will certanly write to the Pensions Minister, Steve Webb MP, to make him aware of your support, and I will be in touch again as soon as I receive his response.
With best wishes
Greg

StandUpAndBeCounted

Ripoff and others,

Thank-you for your posts.
I am a member of the British Airways NAPS (New Airways Pension Scheme), and I think we are about to suffer the same fate as members of the BT scheme, unless we can successfully fight it.

We were told our scheme uplifts pensions in payment, and deferred pensions, by RPI (but with a 5% cap), but it now transpires that although this was the intent, the actual instrument used (and stated in the trust deed) for this RPI uplift is actually the uplift set by the Government in the annual Pension Increase (Review) Orders.

Despite numerous official letter, newsletter and guidance material (which I have copies of) referring to RPI, and that clearly being the intent of the scheme, and the level to which the recently completed tri-annual valuation was based, this intent it now appears can be ignored because of a technicality. We will likely suffer reduced pensions as an unintended consequence of Government changes, that are not even now being aimed at private occupational schemes, but which nevertheless will still affect us. I however sympathise with everyone, public or private sector, current, deferred or retired member who is having their past service accrued benefit attacked by this change from RPI to CPI.

Many of us in NAPS within BA would also like to fight, not for more, but just for what we have all along been lead to believe we have been contributing towards in retirement.

It seems many of the "privatised" companies, like BT and BA are in a similar position. Although the numbers of members (either in service, deferred, or in retirement) are likely to be far smaller than in BT, due to the different size of the companies, we all have a common cause, and it would be nice if we could stand up and be counted collectively.

Please keep your informative posts coming,

regards,

Stand Up and Be Counted !

Ripoff_2

StandUpAndBeCounted wrote: »

Ripoff and others,

Thank-you for your posts.
I am a member of the British Airways NAPS (New Airways Pension Scheme), and I think we are about to suffer the same fate as members of the BT scheme, unless we can successfully fight it.

We were told our scheme uplifts pensions in payment, and deferred pensions, by RPI (but with a 5% cap), but it now transpires that although this was the intent, the actual instrument used (and stated in the trust deed) for this RPI uplift is actually the uplift set by the Government in the annual Pension Increase (Review) Orders.

Despite numerous official letter, newsletter and guidance material (which I have copies of) referring to RPI, and that clearly being the intent of the scheme, and the level to which the recently completed tri-annual valuation was based, this intent it now appears can be ignored because of a technicality. We will likely suffer reduced pensions as an unintended consequence of Government changes, that are not even now being aimed at private occupational schemes, but which nevertheless will still affect us. I however sympathise with everyone, public or private sector, current, deferred or retired member who is having their past service accrued benefit attacked by this change from RPI to CPI.

Many of us in NAPS within BA would also like to fight, not for more, but just for what we have all along been lead to believe we have been contributing towards in retirement.

It seems many of the "privatised" companies, like BT and BA are in a similar position. Although the numbers of members (either in service, deferred, or in retirement) are likely to be far smaller than in BT, due to the different size of the companies, we all have a common cause, and it would be nice if we could stand up and be counted collectively.

Please keep your informative posts coming,

regards,

Stand Up and Be Counted !

Hi, welcome aboard!!!

Yes we do now need to stand together and fight this on mass, so to speak. Might be worth joining NFOP it's £15 per year until Jan 1st then it goes up to £18.20. I have joined and intend to channel my fight through this organisation as it has the ears of the Government so I am led to believe. NFOP.ORG.UK for more info

Even more so after seeing the latest November inflation figures, CPI = 3.3% and RPI = 4.7%, this is a gap of 1.4% of which between 0.86 to 1% is totally due to the formula effect, the rest is the missing items in CPI. I have argued long and hard that the change from RPI to CPI should not be introduced until CPI is fit for purpose for anyones indexing.

As you say this fight is for "what we have all along been lead to believe we have been contributing towards in retirement." We are not seeking anymore just the fulfilment of the contract we believed we had and so much documentation said we had. In fact I have a document that actually says "Guaranteed to increase each year in line with RPI" that can't be any clearer and basically I want what I paid for, no more no less.

Keep watching the posts from time to time and get your colleagues to write to Steve Webb and their MP and ask them to sign EDM 1032 please.