RPI to CPI Early Day Motion 1032

Old_Slaphead

Haybob wrote: »

Hello Old Slaphead

I'm still baffled when you stated that LGPS are not self funded. All research that I have done says they are. How are they funded?

Hi Haybob,

I refer you back to #167.

The LGPS is termed as a "funded" scheme which basically means the fund keeps and invests employees and employers (ie council taxpayers) contributions. Despite the fact that the council/national taxpayer contribute around 20% or 3x employee contribution the schemes are still woefully "underfunded" ie. the fund can currently only payout approx 75% of accrual pension liabilities.

Why when they are "self funded" are they allowed to get into debt - quite simply the benefits paid out are worth far more than the combined employee/employer contribution - probably due to in part increased member longevity and also too much largess in taking on new staff at high pay rates.

Old_Slaphead

teacher_retired wrote: »

Old_Slaphead wrote: »

Indeed it is your very personal and insulting style

Please quote some examples of where I have been insulting.

I've been called Old D**khead, idiot, chips on shoulder etc etc and I don't believe I've retaliated.

My, what I believe to be jovial posting #647, was in response to Interest Taxpayers jibe that I'd been 'on the sherry' - a comment I took in good humour.

Interested_Taxpayer

Old_Slaphead wrote: »

Interested_Taxpayer wrote: »

Don't need it when I have your intoxicating wit & repartee to look forward to -

Doesn't sound like you took it in good humour to me Dr Old Slaphead or is it Mr Socrates today?

Now can we get back on thread please!

PS It's Interested Taxpayer thank you.

JamesU

SallyG wrote: »

CETVs are used for pension sharing on divorce - people contemplating sharing final salary pensions who have been updating initial CETVs for further court hearings are reporting massive " overnight" drops in CETV offers recalculated using CPI.

SallyG, I also mentioned the issue surrounding CETVs with the switch from RPI to CPI a little further up the thread. Similar arrangements inevitably now in place for any final salary transfers, QROPs etc aswell (irrespective of the merit in doing this, which is a different matter).

Did you hear about the devaluation of CETVs on any links that you can refer to? And do you know if the differences have been quantified?

JamesU

Aberdeenangarse

Detested_Taxpayer wrote: »

PS It's Detested Taxpayer thank you.

I think we knew that :rotfl:

teacher_retired

EDM 1032 Full Wording
That this House notes the Government's proposal to use the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) for the price indexation of benefits, tax credits and public service pensions; further notes that the CPI is consistently lower than the RPI; expresses concern over the impact that this will have on the incomes of pensioners and other vulnerable groups; recognises the concerns held by the Royal Statistical Society and the UK Statistics Authority that CPI excludes many housing costs which are borne by the majority of pensioner households; and calls on the Government to take these concerns into account and postpone the change from RPI to CPI until the appropriateness of CPI as a measure of price increases borne by pensioner households can be fully evaluated.[/QUOTE]

I think it is now worth looking at where we started from and what has been achieved.
At the start of this thread the public were largely unaware of this change to cpi. I think it is fair to say that this issue is now fully in the public arena and this thread has played a major part in acheiving that -so well done to all contributors.
Where to now?
In December D Cameron told union leaders that the change to cpi was 'absolutely not negotiable'. Thus the seeds for a major dispute were sown for he immediately alienated the whole public sector from his leading civil servant to the hard working individuals who clean his street. Add to this a fair section of the private sector and the usually silent but significant 'grey vote'.
It seems to me that a period of industrial action will follow. In my own area I am amazed that the heateachers union NAHT report 68% of their members are prepared to strike over this issue. I cannot recall such a feeling at any time in the past.
To what extent I am correct will become evident I suspect on March 26th at the first major protest.
We will hear the usual bendy etc protests of how selfish we all are and how we should all fade away. Well these voices have all been heard before and as in the past they will be ignored and eventually the dispute will be resolved and life will go on.
Eventually I suspect the government will realise if it wants to stay in power it will have to discuss, negotiate and reach a settlement. No doubt this is a year or so off but I think it is worth reflecting on what a suitable compromise could be.
It seems to me there are two areas namely those 'accrued' pensions already paid for and the future pensions yet to be paid for.
I think both parties will have to compromise and it is here again that our starting point comes back into focus.
I think the give from the unions point of view will be to consider moving away from rpi.
I think the give from the governments point of view will be to modify cpi to meet the criteria highlighted in EDM1032.
This would mean that because of the way cpi is calculated it would always be slightly lower than rpi but if it included major pensioner costs such as council tax, possibly rentals/mortgages etc it would at least reflect pensioner concerns.
As for accrued pensions a mathematical enhancement to take into account the difference in indices could be applied once as been hinted at in a previous post.
As with most disputes there will need to be give and take on both sides. Sadly I suspect it will be many months before the government is willing to get to that stage but I think it is worth considering what a future settlement might be that is acceptable to all.

annie_tanks

Scottiepaul //634//.. And depending on what your Rules say CPI has been applying since 1 January. So it's already in, for both increases (under s51(2) of the Pensions Act 1995) and revaluation (under the 2010 Revaluation Order)...
Private sector pensions are already applying this, ordered by pension trustees ;so its a double wamey for the private sector while the public sector pensioners still winge about their lot.Even a CPI increase for public sector pensions for what they get, is still a good deal.They should be made to buy an annuity with their actual payments and be done with it , and face no RPI/CPI increases for a decent pension..where the real world exists..

MEY_3

annie_tanks wrote: »

Scottiepaul //634//.. And depending on what your Rules say CPI has been applying since 1 January. So it's already in, for both increases (under s51(2) of the Pensions Act 1995) and revaluation (under the 2010 Revaluation Order)...
Private sector pensions are already applying this, ordered by pension trustees ;so its a double wamey for the private sector while the public sector pensioners still winge about their lot.Even a CPI increase for public sector pensions for what they get, is still a good deal.They should be made to buy an annuity with their actual payments and be done with it , and face no RPI/CPI increases for a decent pension..where the real world exists..

I'm a private sector pensioner but the trust deed is tied to the relevant Parliamentary Acts. Where does your stance leave me and my colleagues?

Would you also treat current pensioners, deferred pensioners, current employees and future employees exactly the same, under your "proposal"?

How many times has it to be said that the indexation is meant to ameliorate the effects of loss of purchasing value. It was not, nor should be some rather arbitrary % figure convenient to government, whether you agree with it or not.

You also seem to be unaware that CPI is also going to be used for the uprating of the state pension too, after next year, so this issue stretches beyond public and private sector pensions.

annie_tanks

Hi Mey..you miss my point entirely..and the original post from scottiepaul..it is NOT my stance but what is actually happening..from Jan/01/2011 all private pension funds care of their trustees and actuaries are seriously considering using CPI for increases and revaluation..for the defined rights/final salary bit.
Things are further complicated when the person in a private pension has a hybrid pension,ie a final salary pension bit closed continuing with an occupational pension.
Yes I know the accumulative effect of using CPI instead of RPI..that is why when considering retirement from a private pension it is imperative to get some serious advise how to max it.
My beef is the public sector pensions that are still not being inadequetly funded by these people, massively propped up by the government/tax payer called the pension deficit.To bridge this the government is trying to increase what public sector people should pay and further use CPI for future pension payments.This makes sense..but to hammer private pension funds in a similar fashion for the defined benefit rights is downright robbery.
If I were you Mey I would be onto my private pension fund and ask them how they are tackling this and how it affects you, now and in the future.
My strong advise is for people in private pensions to take control of their occupational part of pensions by switching their funds and stuff in as much AVC's as is possible.If you had switched to equities 2 years ago you would have made 30% extra by now..now that is worth taking control for your future..is it not..

MEY_3

annie_tanks wrote: »

Hi Mey..you miss my point entirely..and the original post from scottiepaul..it is NOT my stance but what is actually happening..from Jan/01/2011 all private pension funds care of their trustees and actuaries are seriously considering using CPI for increases and revaluation..for the defined rights/final salary bit.
Things are further complicated when the person in a private pension has a hybrid pension,ie a final salary pension bit closed continuing with an occupational pension.
Yes I know the accumulative effect of using CPI instead of RPI..that is why when considering retirement from a private pension it is imperative to get some serious advise how to max it.
My beef is the public sector pensions that are still not being inadequetly funded by these people, massively propped up by the government/tax payer called the pension deficit.To bridge this the government is trying to increase what public sector people should pay and further use CPI for future pension payments.This makes sense..but to hammer private pension funds in a similar fashion for the defined benefit rights is downright robbery.
If I were you Mey I would be onto my private pension fund and ask them how they are tackling this and how it affects you, now and in the future.
My strong advise is for people in private pensions to take control of their occupational part of pensions by switching their funds and stuff in as much AVC's as is possible.If you had switched to equities 2 years ago you would have made 30% extra by now..now that is worth taking control for your future..is it not..

Maybe we are talking at cross-purposes but perhaps that is down to terminology. You talked of private sector pensions in your original post. Now you talk of private pensions. I am of the former (private sector occupational) but not the latter. Already drawing my pension. My pension is affected because it is linked to the Parliamentary Acts and my former employer now says it must use CPI in accordance with that.

When I spoke of your stance I was referring to "Even a CPI increase for public sector pensions for what they get, is still a good deal. They should be made to buy an annuity with their actual payments and be done with it , and face no RPI/CPI increases for a decent pension..where the real world exists.. ". Where do you fit current private sector deferred pensioners into this scenario, for example? Do you propose that they should lose index linking and have to buy an annuity?

My point is that you are dealing alike with at least four separate situations for some private and publice service pensioners; a) pensioners, b) deferred pensioners, C)current employee/members/and (d) future employee/members. Whatever happens in the future, categories a and b above are caught now. As for using CPI for future pensions I cannot agree that it makes sense. It makes sense if you are the government and want to save money but please read any quote from Steve Webb MP. He says CPI is more apt and categorically denies it is being introduced to save money.