RPI to CPI Early Day Motion 1032

JohnB47

Ripoff wrote: »

JohnB47, They should be putting it up on the site soon I must have been a little too quick for them but you can download the petition from http://home.btconnect.com/AP_Publications/effectscalc/ in the meantime.

Thank you.

Ripoff_2

The real cost of this change to Private pensioners see link for full details http://www.bbc.co.uk/blogs/thereporters/robertpeston/2011/02/rpi_to_cpi_costs_pension_saver.html

has now gone up from £76.6bn to £83bn in two months, this means as a private pensioner you become poorer over time while your ex-employer and shareholders become richer, at your expense......and this Tory Led Government says this is FAIR......If that's their definition of fairness then heaven help the so called other FAIR policies they have introduced........This really does prove how this is, as I have always said, WRONG, it's a betrayal of trust, deception and theft by this Government.

But here's the stupid thing, it doesn't go back to the Government but the employers/shareholders, it reduces the personal spending power of millions of private pensioners but in a market economy that functions on people spending, dahhhhh take £83bn's worth of spending power from private pensioners, who would most likely spend that money in the economy, then the market economy must suffer, the economy fails to grow and the deficit gets worse??????


Quote from the article "but the calculation may upset the millions of people affected by the changes, since it says that the effect of the move from RPI to CPI for protecting the value of future pensions is to reduce the value of their benefits over the next 15 years by £83bn - which is 8.4 per cent more than the £76.6bn December estimate of the erosion of their wealth."

Andy_L

pjala wrote: »

So what you are saying is that you are conveniently ignoring the employers contribution because it is public sector.

No, I'm not ignoring it. I'm clearly stating its exists, given an estimate of its value and pointed out that, ultimatly, it comes from the treasury (ie tax payer) and explained why it exists

pjala wrote: »

Not surprising considering you are not in the public sector - sounds like pension envy to me.

Old Slaphead, do you want to tell Pjala how wrong they are or shall I?

teacher_retired

A recent comment by pajala that I was being selfish in my views has I must admit had me reflecting for some days now. This is a contributor who I have gained much respect for for so it set me wondering about what it is that is upsetting me so much about this issue. I think it is the dictatorial style of government that upsets me the most coupled with dishonesty.
It is not limited to the present coalition. I was very upset when G Brown & Ed Balls made their £5 billion pa tax raid on pensions in the private sector which laid the foundations for the current pensions crisis.
I am very old fashioned and believe that when two parties reach an aggreement they should shake hands and honour their promises. An old fashioned view this much derided by some of our contributors and clearly out of fashion. Yet I stick by it. I believe in honour and sticking to your word.
Of the current situation it is the dictatorial style of imposing this change without negotiation either with the parties concerned or parliament that upsets me.
No talk of this change being for the current parliament or while the crisis lasts. No talk of getting the right balance for the future. No talk of the pre-election promises of protecting accrued rights.
Then I consider the retired council worker on a pension of £6 - £10k and consider the effect this change will have on their future - for ever.
When I reflect on all these issues I come to the conclusion that I will continue the fight because I believe it is a just cause.
After all what are we asking the government to do? Live by their promises and talk and negotiate with people?
Certainly Pajala is right - I am concerned about my & my families position and in that aspect I am selfish. But I believe in all these other issues and old fashioned concepts of honour and integrity - an idealistic view for which I shall doubtless be much derided.
However I believe what this EDM is about is fairness and a period of reflection and discussion and negotiation before this critical change is made. Is that really so much to ask?

MEY_3

Now there's a word; "Integrity" Almost seems like blasphemy when using that word these days doesn't it?

Old_Slaphead

Andy_L wrote: »

Old Slaphead, do you want to tell Pjala how wrong they are or shall I?

I'll tell him/her - I'm pretty sure that you work in the public sector.

On the strength of your previous postings you are one of the few people on this forum who really understand public sector pensions and takes a balanced view - I certainly think twice when arguing against you.

pjala clearly isn't reading these postings properly before replying!

Goldwing1

The BBC has latched onto it now.
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2011/02/rpi_to_cpi_costs_pension_saver.html

JamesU

From template letter to MPs provided by CSPA link in posts above:

Social security (uprating order):

Q1: Is this uprating order the one that provides the statutory authority for the state pension increase and by default an overide for the switch from RPI to CPI on public and private sector pensions (provided RPI not specific in scheme rules)?

Q2: If not as in Q1, what is it for?

"pray against" the Pensions (Increase) Order: applying the change to public service pensions by signing an EDM which will be tabled shortly"

Do not understand how this order is different to the Social security (increase) order. Could somebody clarify briefly in point form:

Q3: What the Pensions (Increase) order achieves
Q4: What happens when it is implemented

Thanks, just a bit confused on these legislative procedures.

JamesU

hugheskevi

Is this uprating order the one that provides the statutory authority for the state pension increase

Yes

and by default an overide for the switch from RPI to CPI on public and private sector pensions (provided RPI not specific in scheme rules)?

It only links private sector pensions to CPI if the scheme rules link increases to this particular piece of legislation. This applies mostly to companies which were once in the public sector, eg BT.

Private sector schemes can also be moved onto CPI revaluation/indexation through the Revaluation Order (see below).

What the Pensions (Increase) order achieves

It says pensions must be increased. When originally legislated, it said that this would be based on an annual review.

The 1975 Social security (increase) order states that the increase set out in the 1971 act will be in line with that used for Additional Pension.

So basically consider the two acts as two sides of the same coin as far as this RPI/CPI uprating is concerned - the 1971 act says pensions must be increased, and the 1975 act clarifies how this increase will be assessed and applied.

What happens when it is implemented

Not much, it just means the move from RPI to CPI is formally confirmed, but in practical terms that is just another percentage in a long list of percentages.

More significant is that as formal legislation, it can be challenged by judicial review. Remember, the Govt. can say whatever it wishes about future intentions, but it is not until legislative steps are taken that official (legal) challenges can be made to it.

Revaluation Order

It is also worthwhile appreciating the significance of the Revaluation Order. This sets out the minimum revaluation (ie increases to pensions not yet in payment to deferred members) and indexation. This was previously RPI capped at 2.5% and in future will be CPI capped at 2.5%.

This only impacts on private sector schemes (as public sector schemes have more generous indexation/revaluation so will always meet the minimum requirements, hence are not constrained by them).

Many private sector schemes link their increases for deferred members to the statutory minimum. This depends on their scheme rules. If the rules specify some other rule for revaluation, then they do not change to CPI.

As such, this changes their revaluation from being based on RPI capped at 2.5% to CPI capped at 2.5% but has nothing at all to do with the 1971 or 1975 acts. The same applies for indexation, but it is more common for schemes to do something other than the statutory minimum for indexation so only a small proportion are affected by this.

JamesU

Hugheskevi, Thanks for clarifying this, did re-read salient posts in the first few pages from yourself and other OPs first, but was foxed by the various "orders". Is it therefore correct to say that if legislated as planned:

(a) Public: switch from RPI to CPI by default overide of social security uprating order (as in your post #114). Then irrespective of public sector scheme rules (e.g. PCSPS referring to RPI, as in posts #147/148) the indexation and revaluation will be according to CPI in future, with no practical legal recourse possible.

(b) Public pension initially to private and similar schemes e.g. BT: switch to CPI in line with public sector above unless there are specific scheme rules in place specifying RPI (as in your summary, post #60).

(c) Private: RPI to CPI switch dependent of scheme rules, but the Government has not gone as far as to provide a statutory overide for the private sector (link 1 below) but the employer may still be able to switch to CPI anyway as "listed changes" after a 60 day consultation period (link 2 below, first paragraph, p2).

http://www.dwp.gov.uk/docs/cpi-private-pensions-consultation.pdf

http://www.hymans.co.uk/knowledgecentre/Documents/60%20Second%20Summaries/1012%20CPI%2060SNS.pdf

If my understanding above is correct, not sure what legal challenges can be brought by individuals in different sectors. Useful to have a reasonable understanding of the consequences of the Governments actions and to what extent individuals are unable to intervene. Might add weight when canvassing MPs on the issue of EDM. Another overview on the legislative issues for those interested in link below:

http://www.bluefingroup.co.uk/docs/Update%20-%20Inflation-proofing%20and%20occupational%20pensions%20%28130710%29.pdf

JamesU