RPI to CPI Early Day Motion 1032

Interested_Taxpayer

ordinaryman wrote: »

Thank you

BoxerfanUK.
I agree, the only organisations with the financial 'clout' to mount a legal challenge are the Unions. Question is will they be prepared to argue the case for pensioners since, presumably their main concerns will be for their members. What we could do with is a line in to the National Pensioners Groups and find out what actions they are planning and whether these include a legal challenge to the Government's proposals. Does anyone know of contact addresses or phone numbers/email addresses which we can follow up?

The Civil Service Pensioners' Alliance (www.cspa.co.uk) report on their home page that they will be meeting with their lawyers and hope to have a report for consideration by their Executive Council towards the end of January. In addition, they held a conference on 23 November last year to build wider support against the move to the CPI. They say many pensioner organisations supported the event and many others including the Trade Unions were invited. However, as yet there is no report of the outcome.

You don't need to be a former Civil Servant to join the CSPA. Maybe that is what we should all do?

aprimay

I would like to thank people for the work and information they have given on this issue.I recently noted the call for a more coordinated approach. I noticed that on 14/1/11 the FT.reported that the TUC.had called a meeting of its 55 affiliated unions for the end of the month to discuss action to be taken against the government austerity measures.The switch to CPI being one of the issues raised.Unfortunately there was no mention of any sort of legal challenge.

Ripoff_2

All, you may find this of interest [URL="mhtml:{6EF71D81-FCE8-447B-947D-380BDD9A9C3B}mid://00000020/!x-usc:http://www.ifs.org.uk/publications/5301"]http://www.ifs.org.uk/publications/5301[/URL] It's a link to an IFS publication on this matter. As I thought Steve Webb and Co are being very selective in their choice of sound bites!

I have read your comments and agree that we need a combined effort of legal challenges. We also need a main rallying point because pensioner groups appear to be very fragmented, this forum is not the ideal place but it's all we have at the moment.

The www.Mumsnet.com idea is very good and seems to have the ear of Government, perhaps we need a www.pensionernet.com or something that we all can align to. We need to become as one because WE are all in this together! How do we make that happen?

Ripoff_2

RPI to CPI change to create legal minefield see URL
http://www.schemexpert.com/Defined-benefit/RPI-CPI-shift-will-create-legal-minefield You may need to register!

Well done Steve Webb and this Conservative led Government for making lawyers even richer at the expense of the least able to afford it. Is this what the Liberals Democrats call wealth distribution? take money from pensioners and pension schemes and give it to the lawyers, and the city.....????

The Universities Superannuation Scheme, the UK’s second largest private sector scheme, is to follow the lead of the BT plan, the UK’s largest, in adopting a lower measure of inflation

Here we go one of many I suggest, which makes a mockery of what Steve Webb wrote to me saying that CPI was only the statutory minimum and schemes could still make more generous increases if they wish. I did point out that given the choice schemes would revert to the statutory minimum, BT and now USS have proved that to be correct..........HOW MANY MORE WILL NOW FOLLOW?

ordinaryman

Hi all!
I've been in touch with the Public Service Pensioners' Council (PSPC) which represents quite a large number of associations, many of them, though not all, in the field of education. They told me that lawyers whom they have consulted have advised against legal action because they believe that the Government's case for using CPI cannot really be challenged in that it is up to the Minister to decide upon which measure of indexation to apply. However they also added that they would support any organisation or association which was prepared to consider legal action.
Going back to an earlier comment someone has made, there may be some mileage in arguing that because RPI has been used for the past 30 odd years in Pension Scheme Literature, many public sector pensioners believed that 'de facto' their pensions were tied into this measure. Its the argument that 'any reasonable person would reasonably assume that their pensions would continue to rise by the RPI because they had it in writing that they would' I don't know whether this would stand up in law however. I'll continue to contact unions and associations to try and find out what they are doing. By the way, is there a lawyer who contributes to this forum, and who might proffer some free advice? Just a thought!

JohnB47

Ripoff wrote: »

All, you may find this of interest [URL="mhtml:{6EF71D81-FCE8-447B-947D-380BDD9A9C3B}mid://00000020/!x-usc:http://www.ifs.org.uk/publications/5301"]http://www.ifs.org.uk/publications/5301[/URL] It's a link to an IFS publication on this matter. As I thought Steve Webb and Co are being very selective in their choice of sound bites!

Thanks for this Ripoff but yet again I seem to have a problem using your link. It may be just my PC but when I click on the above link, it inserts the characters

mhtml:{6EF71D81-FCE8-447B-947D-380BDD9A9C3B}mid://00000020/!x-usc:

in front of the real address which is

http://www.ifs.org.uk/publications/5301

Not sure what's going on there.

Also, I noticed the following statement in that document: "....but the case against the CPI may weaken, once currently announced changes to the system take full effect."

If that refers to the proposal to include housing costs (presumably including mortgage costs) in CPI, doesn't that rather weaken Steve Webbs argument that "....the RPI includes mortgage interest, which is irrelevant to the vast majority of pensioners - just 7% of pensioners still have a mortgage. Changes in the RPI can be heavily influenced by changes in mortgage rates...."

Are there "such currently announced changes" and can anyone supply a link to any official statement on that?

Thanks again.

Haybob

Ripoff wrote: »

All, you may find this of interest [URL="mhtml:{6EF71D81-FCE8-447B-947D-380BDD9A9C3B}mid://00000020/!x-usc:http://www.ifs.org.uk/publications/5301"]http://www.ifs.org.uk/publications/5301[/URL] It's a link to an IFS publication on this matter. As I thought Steve Webb and Co are being very selective in their choice of sound bites!

I have read your comments and agree that we need a combined effort of legal challenges. We also need a main rallying point because pensioner groups appear to be very fragmented, this forum is not the ideal place but it's all we have at the moment.

The www.Mumsnet.com idea is very good and seems to have the ear of Government, perhaps we need a www.pensionernet.com or something that we all can align to. We need to become as one because WE are all in this together! How do we make that happen?

I agree that we need a www.pensionernet.com it is very frustrating that there does not appear to be one focal point that we can all get behind. I can't see that waiting for a legal challenge is going to prevent this steal, it is only when they understand that thousands of affected people are angry and all have a vote that they may pause to listen. The Occupational Pensioners Alliance have sought a legal view http://www.opalliance.org.uk/ but we need a rallying point so that all affected can unite against this wrong.

MEY_3

"JohnB47"
In his Guardian Q and A Steve Webb was asked specifically when these changes were going to be made; Quote: I'd like to know at precisely what date do the government intend to adjust the criteria of CPI so as to measure individual inflation more accurately, as currently CPI is proven to be no more accurate, indeed less accurate than RPI ?" but he ignored it completely.
I'm currently putting together a response to his miserable online performance.
The point is that if they alter the CPI it is no longer the CPI, so what is the point? Their sole justification, such as it is, seems to be that it is the measure that the Bank of England use (however inappropriate for personal inflation). It is demonstrably missing costs, irrespective of mortgages, that occur in the RPI and has some totally irrelevant ones too.
Launching a pensioner website is all very well but how will it be financed and is it just going to be a "one issue - one off " affair? If not, what makes it different to the other pensioners organisations?
I still think the attack has to be two-pronged. First, to try to get ministers to make CPI more appropriate, not just to pensioners but all others that have housing costs. Second, pushing the valid argument that scheme members were only ever informed that RPI was the measure to be used in uplifts since its inception. Even disclaimers in literature do not cast any inference that other indexes may be used.
I contacted the Pensions Advisory Service (though I don't think they were the correct body) as advised by the Citizens Advice Bureau. My idea was that the trustees had a case to answer but PAS thought that even if I had been aware of the true state of affairs I would probably gone along with whatever the wording of the trust deed (BT) said. I pointed out in a follow up letter that by never casting any doubt on the RPI measure as used in all examples over at least 24 years, scheme members had no cause to query it or fight for clarification. I've not had a reply as yet. Trouble is what point would there be suing the trustees? They have no money as such nor can they unilaterally alter the trust deed.

Ripoff_2

JohnB47 wrote: »

Thanks for this Ripoff but yet again I seem to have a problem using your link. It may be just my PC but when I click on the above link, it inserts the characters

mhtml:{6EF71D81-FCE8-447B-947D-380BDD9A9C3B}mid://00000020/!x-usc:

in front of the real address which is

http://www.ifs.org.uk/publications/5301

Not sure what's going on there.

Also, I noticed the following statement in that document: "....but the case against the CPI may weaken, once currently announced changes to the system take full effect."

If that refers to the proposal to include housing costs (presumably including mortgage costs) in CPI, doesn't that rather weaken Steve Webbs argument that "....the RPI includes mortgage interest, which is irrelevant to the vast majority of pensioners - just 7% of pensioners still have a mortgage. Changes in the RPI can be heavily influenced by changes in mortgage rates...."

Are there "such currently announced changes" and can anyone supply a link to any official statement on that?

Thanks again.

Sorry about the link problem JohnB47, I'll check it next time to make sure it works. The whole of Steve Webbs arguments have more holes in them than you would believe.

The problem is they are using this as a deficit reduction tool, they are not really bothered if it is right or wrong and are hitting public sector workers very hard indeed with it, everyone else in the private sector such as BT, USS, BA are being hit with the same blunt instrument.

The CPAC have advised the ONS to include housing costs (see older posts about this) but that does not solve the formula effect. You can see from SW's answer that this Government are not bothered about that, they are changing to CPI to take money from pensioners to put back in the public purse, some 13bn, and then a further 13bn from benefits. The poor and disadvantaged and the humble pensioner is paying indirectly for the bankers mistakes and their bonuses.

[URL="mhtml:{6EF71D81-FCE8-447B-947D-380BDD9A9C3B}mid://00000063/!x-usc:http://www.ifs.org.uk/bns/bn108.pdf"]http://www.ifs.org.uk/bns/bn108.pdf[/URL]. IFS Briefing note.

By the way the IFS did not endorse the change SW implies they say the following :"You raised the question of how these issues affect pensioners specificially. Unfortunately, I do not know whether the way the CPI is calculated would make it more appropriate for pensioners or not. An important thing to consider is the fact that the CPI allows for substitution only between goods that are very similar (e.g. different types of envelope from a certain type of shop in a certain region), so it seems reasonable to allow for some substitution here. In terms of the exclusion of housing costs, it seems as if pensioners as a group are just as likely to be "insulated" from housing costs as the rest of the population (see the above briefing note). Pensioners do however tend to spend less on housing than other households. Overall it's once again difficult to definitively state that the CPI is better or worse than the RPI, for instance, since there isn't really an objective way to weigh up these different considerations.

What certainly is true is that the CPI tends to be lower than the RPI (both due to the differences in coverage and the difference in the way it is calculated).

SW on the web chat more or less said that the IFS endorsed the change but as you can see from this, they are not endorsing it at all, they basically don't know but they do know it is lower than RPI.

Ripoff_2

All, just aside from this post I found this the other day and you may find it of interest.

Protect Your Wealth

Inflation is a stealth tax that is being used by the Government and the Bank
of England to a. Reduce the budget deficit (eroding purchasing power), and
b. funneling tax payers and savers cash onto the balance sheets of the
bailed out banks as savers are in receipt of interest net of tax at half the
CPI rate and similarly average workers pay rise is near half the CPI and far
below the RPI inflation measure of 4.7%.

At the end of the day savings/ capital taxes PLUS inflation are a means of
taking accumulated wealth from the haves and redistributing to the have
not's. Over the long run inflation ensures that those with accumulated
wealth will ultimately lose most of it to the state (unless their funds are
protected against UK inflation and taxation).

Unfortunately the coalition government has accelerated the trend of stealth
theft by withdrawing the National Savings Index Linked Certificates in June,
that allowed the people of Britain to at least protect upto £15,000 (per
issue) of their life time accumulated savings against RPI. Whilst also
declaring a switch in annual indexation from RPI to CPI which means under
reporting UK inflation by 1.5% against RPI and 3% against real UK inflation
(6.2%).

The Bank of England is going to keep printing money which is a positive for
asset prices such as stocks. For investors the strategy remains to invest in
inflation wealth protection and growth such as agricultural commodities,
gold, silver, metals and mining, TIPS, emerging economies such as China,
India, Russia, Chile, Brazil, and developed economies such as Australia and
Canada as their appreciating currencies will protect your investments
purchasing power in sterling.

This was extracted from [URL="mhtml:{6EF71D81-FCE8-447B-947D-380BDD9A9C3B}mid://00000064/!x-usc:http://www.marketoracle.co.uk/Article25806.html"]http://www.marketoracle.co.uk/Article25806.html[/URL] a
very interesting read indeed.