RPI to CPI Early Day Motion 1032

JohnB47

Thanks hugheskevi.

hugheskevi wrote: »

BT's scheme relates to the legislation which governs what Additional State Pension is uprated by.

This is separate to the statutory minimum indexation and revaluation requirements which defined benefit schemes must satisfy..

Hmmmm. Not quite sure what you mean there. That's the first time I've heard it explained in that way. How does that line up with Steve Webbs statement that " ... the change for occupational pensions only affects the requirement for statutory minimum increases so schemes may continue to make more generous increases if they wish."

Perhaps when I've taken a look at the links you provided it will make more sense.

The job of the trustees is to run the scheme in accordance with scheme rules. Legal advice (taken by BT) appears to have deemed that those rules state that the scheme will be uprated in line with CPI.

BT, as the sponsoring employer, could choose to apply RPI (amending scheme rules accordingly) but the trustees alone cannot.

OK, seems we are in agreement on that point. But it seems that BT is favouring shareholders over current and future pensioners. Shameful, I think.

See page 22 of the document here

There is a thread here which discusses the issue.

Thanks. Will have a look now.

JohnB47

hugheskevi.

I've just had a look at the document you linked to. I've been there before and the problem is that page 22 refers on to two other documents which I cannot make head nor tail of. I try to follow them logically but I simply get lost in a legal tangle.

So, again, can anyone point to the actual text that gives rise to BTs interpretation?

Thanks.

hugheskevi

How does that line up with Steve Webbs statement that " ... the change for occupational pensions only affects the requirement for statutory minimum increases so schemes may continue to make more generous increases if they wish."

Steve Webb correctly says that schemes are free to index by more than the (new) statutory minimum requirement of CPI capped at 2.5%.

As BT uprates by much more than the statutory minimum even following the change to CPI, the changes to the statutory minimum rules are completely irrelevalent. Two completely different things are being talked about, although superficially they are similar.

actual text

Not sure of the precise reference in the Acts sorry, but the explanatory note on page 5 of this document may help with understanding as it is more understandable.

To summarise it, the Acts make the uprating of public service pensions the same as the uprating applied to Additional State Pension.

BT scheme rules replicate the public service arrangements by referencing the same Acts.

JohnB47

hugheskevi wrote: »

Steve Webb correctly says that schemes are free to index by more than the (new) statutory minimum requirement of CPI capped at 2.5%.

As BT uprates by much more than the statutory minimum even following the change to CPI, the changes to the statutory minimum rules are completely irrelevalent. Two completely different things are being talked about, although superficially they are similar.

Not sure of the precise reference in the Acts sorry, but the explanatory note on page 5 of this document may help with understanding as it is more understandable.

To summarise it, the Acts make the uprating of public service pensions the same as the uprating applied to Additional State Pension.

BT scheme rules replicate the public service arrangements by referencing the same Acts.

Thanks again, hugheskevi and thanks for the new link. I'll have a look.

OK. I'm at the same stage that I reached a few weeks ago with this subject. I've read the posts and I've thought about it and then I dived in with my own comments only to find a response that suggests that I really have no idea what I'm talking about (not for the first time, sadly).

First, you said "As BT uprates by much more than the statutory minimum even following the change to CPI ..."

I didn't think that they did before when they applied RPI each September. Now you're saying that they'll apply more than CPI each year?" Have I missed something?

"Two completely different things are being talked about, although superficially they are similar. "

I thought it was simply that the government had recently proposed to use the (previous years September) CPI figure as the measure by which public service pensions would be uprated each year. And that BT had been caught up in that because of the way the rules were drafted.

The "Additional State Pension" bit has me confused.

Could you please expand on that - I think I'm beginning to loose it.

Just had a thought - I'm not talking about State Pensions here. Are you?

Cheers.

hugheskevi

First, you said "As BT uprates by much more than the statutory minimum even following the change to CPI ..."

I didn't think that they did before when they applied RPI each September. Now you're saying that they'll apply more than CPI each year?" Have I missed something?

Schemes have to uprate by whatever is in their scheme rules, subject to a statutory minimum set by the Government. Previously the statutory minimum was RPI with a 2.5% cap. This has now changed to CPI with a 2.5% cap.

However, in the case of BT, their uprating - previously RPI with no cap, now CPI with no cap - under scheme rules is above the statutory minimum.

As such, changes to the statutory minimum (from RPI to CPI) are of no concern to BT. What matters for BT is are the scheme rules, which by matching public service pensions have moved from uprating by uncapped RPI to uprating by uncapped CPI.

"Two completely different things are being talked about, although superficially they are similar. "

I thought it was simply that the government had recently proposed to use the (previous years September) CPI figure as the measure by which public service pensions would be uprated each year. And that BT had been caught up in that because of the way the rules were drafted.

That is correct - this is one of the two things which gets talked about and confused, and is the correct issue for BT.

The other issue is that of the change to the statutory minimum uprating mentioned above, which is not relevant for BT. Steve Webb's statement earlier in the thread was referring to the change to the statutory minimum.

The "Additional State Pension" bit has me confused.

Could you please expand on that - I think I'm beginning to loose it.

Each year public service pensions have to be uprated.

The amount by which they are uprated is tied to the amount by which Additional State Pension is increased by. Historically, Additional State Pension has always increased by RPI. In future Additional State Pension will be increased by CPI. Hence public service pensions will also increase by CPI, as that is what the uprating order will specify for Additional Pension.

Just had a thought - I'm not talking about State Pensions here. Are you?

I'm talking about BT pensions, public service pensions and State Additional Pension - they all interact in this case for a variety of reasons which aren't immediately obvious

Ripoff_2

hugheskevi wrote: »

Schemes have to uprate by whatever is in their scheme rules, subject to a statutory minimum set by the Government. Previously the statutory minimum was RPI with a 2.5% cap. This has now changed to CPI with a 2.5% cap.

However, in the case of BT, their uprating - previously RPI with no cap, now CPI with no cap - under scheme rules is above the statutory minimum.

As such, changes to the statutory minimum (from RPI to CPI) are of no concern to BT. What matters for BT is are the scheme rules, which by matching public service pensions have moved from uprating by uncapped RPI to uprating by uncapped CPI.



That is correct - this is one of the two things which gets talked about and confused, and is the correct issue for BT.

The other issue is that of the change to the statutory minimum uprating mentioned above, which is not relevant for BT. Steve Webb's statement earlier in the thread was referring to the change to the statutory minimum.



Each year public service pensions have to be uprated.

The amount by which they are uprated is tied to the amount by which Additional State Pension is increased by. Historically, Additional State Pension has always increased by RPI. In future Additional State Pension will be increased by CPI. Hence public service pensions will also increase by CPI, as that is what the uprating order will specify for Additional Pension.



I'm talking about BT pensions, public service pensions and State Additional Pension - they all interact in this case for a variety of reasons which aren't immediately obvious

Having read all the comments about the uprating, I believe I am still right in saying that BT if they so wished could simply allow the Trustees to pay RPI by a slight amendment to the rules. They could honour all the documents that have always refered to RPI and the express belief by ALL employees that BT's pension was RPI indexed. So many documents refer to RPI indexing that it is really immoral of BT to revert to the CPI knowing that a simple change in the rules would solve this issue.

The status quo would be maintained at no extra cost to BT as they were paying RPI increases anyway. There is nothing to stop them doing this apart from the fact that BT saves £2.9bn from pensioners which it can now give to shareholders. Where does BT's loyalty lie?

For anyone reading this who is not BT, just for clarity. BT people had been told they had a fully indexed linked pension based on RPI and in those years there was never ever any mention of the fact that the indexing was actually in the control of the Government. Even after privatisation when BT practices changed and they moved into the private arena, the saving grace of all that caused the employees was that BT had a good fully RPI indexed linked pension, this is why so many BT pensioners are up in arms now about this change, they see it as an act of betrayal and many feel they have been misled, if not lied to.

JohnB47

OK hugheskevi, I understand now, thanks.

Ripoff - couldn't agree more.

Goldwing1

This seems to be going quiet.

I don't know how to do it and I'm not sure I'd be the right person anyway but how about setting up a Facebook campaign to really get the message out there

Ripoff_2

Goldwing1 wrote: »

This seems to be going quiet.

I don't know how to do it and I'm not sure I'd be the right person anyway but how about setting up a Facebook campaign to really get the message out there

I have already set up a Twitter ID as Ripoff_pensions and a facebook ID could well be the next step. Do many pensioners use Twitter and Facebook, I don't know and getting the message out there is the real issue. From what I am picking up from all this is that there are many people who are opposed to this change but just don't feel they have a voice. They are frustrated that their MP's are stonewalling them and they feel unrepresented, am I right in that view?

On another point. The EDM campaign has not gone away we still need more MP's to sign it so keep badgering them. At the moment 77 MP's have signed

LAB = 60 LD = 4 CON = 0 Oth = 13

Goldwing1

Ripoff wrote: »

I have already set up a Twitter ID as Ripoff_pensions and a facebook ID could well be the next step. Do many pensioners use Twitter and Facebook, I don't know and getting the message out there is the real issue. From what I am picking up from all this is that there are many people who are opposed to this change but just don't feel they have a voice. They are frustrated that their MP's are stonewalling them and they feel unrepresented, am I right in that view?

On another point. The EDM campaign has not gone away we still need more MP's to sign it so keep badgering them. At the moment 77 MP's have signed

LAB = 60 LD = 4 CON = 0 Oth = 13

It's not just pensioners now but pensioners to come. I'm still awaiting a final answer from Damian Green and will start reminding him next week.