RPI to CPI Early Day Motion 1032

MEY_3

Old_Slaphead wrote: »

I went out with a few friends last night who are public sector (NHS & LG) and brought up the topic of RPI/CPI.

The concensus was that they were far more worried about
(a) what's going to happen to their jobs
(b) what's going to happen to their pension schemes
than whether they'll be losing 10% of their pension in around 30 years time.

Not sure of your point. Of course the immediate fear for each of them is more likely to be their job. As for their pension schemes, if they don't stick up for the accural value of them now for when they eventually retire, why do they worry about pensions at all I wonder?

viridens

Old_Slaphead wrote: »

I went out with a few friends last night who are public sector (NHS & LG) and brought up the topic of RPI/CPI.

The concensus was that they were far more worried about
(a) what's going to happen to their jobs
(b) what's going to happen to their pension schemes
than whether they'll be losing 10% of their pension in around 30 years time.

So what is your point?

(a) If I was still working I would also focus on my immediate job security and have these same worries. Will their worries & focus remain the same at retirement? -Or are you suggesting that your friends are too stupid to comprehend how the RPI/CPI change could adversely impact on their own futures?

Either way, I'm sure it would have not been too difficult for you to educate and enlighten by gently explaining how they will now be paying more for progressively less after retirement. -(Or do you dispute this?)
As PS workers, what reason would they have to not support the EDM 1032 cause & associated action, if aware of it?

(b) Surely "What's going to happen to their pension schemes" is a prime topic of this thread. They are right to be concerned.

Perhaps you should tell also them to make the most of 'going out' on a Saturday night. They will find it progressively harder in future, especially after retirement with a CPI'd pension.

Old_Slaphead

JamesU wrote: »

OldSlaphead, you made an error in your estimations though. Irrespective of their age or when they retire, the value of your friends' current pensions will decrease in real terms by a minimum of 26% in 30 years time (and not 10%) due to the switch from RPI to CPI. We went through those calculations here:
JamesU

You're assuming that they're going to retire immediately which is not the case.
How can you say what the RPI/CPI differences will be - do you have a crystal ball? The annual difference for the past 20 years has been 0.69% which net of tax is 0.57% (most FS scheme members will be sufficiently well off to pay some tax). With ongoing moves to link wages, benefits, pensions etc to CPI, the difference will become progressively smaller anyway.

Old_Slaphead

viridens wrote: »

Or are you suggesting that your friends are too stupid to comprehend how the RPI/CPI change could adversely impact on their own futures?

Or maybe they have a sense of perspective. They're sufficiently intelligent to realise that even with CPI their pension scheme is still very, very good and is unlikely to be available for much longer.

They also realise that the benefits don't come for free and that someone has to pay for them. That might be from higher taxes for or fewer jobs for public sector workers.

As to the point - I'm really only endorsing some of the comments made in #716 & #718 with a bit of on the ground research (try it with a few of your friends/collegues who are younger than say 50)

Old_Slaphead

Interested_Taxpayer wrote: »

Amazing what a few glasses of sherry and someone who can't or won't tell the correct story will do.

I would love to reply to your comment but, as it's off topic, I'll refrain from doing so.

Ripoff_2

Old_Slaphead wrote: »

You're assuming that they're going to retire immediately which is not the case.
How can you say what the RPI/CPI differences will be - do you have a crystal ball? The annual difference for the past 20 years has been 0.69% which net of tax is 0.57% (most FS scheme members will be sufficiently well off to pay some tax). With ongoing moves to link wages, benefits, pensions etc to CPI, the difference will become progressively smaller anyway.

Hi Old Slaphead, back from hibernation I see.

Thanks for discussing the issue with your colleagues any form of discussion is welcome, as long as you tell the full facts.

1) What we do know is that the variance is between 0.4% to 0.8% and the Government has said it will be 0.8%, the ONS has said it will be 1.18% over the next 5 years. Therefore the loss over 30 years for a pension of £3640 based on an average inflation of 3% and 0.8% variance is a whopping £23,000. Increase inflation and the loss is far greater. This is irrespective of what happens to wages and tax, this loss will be real unless the variance is less and inflation is less but these figures are on the lower limit. This is in fact about the best case scenario.

2) We also know that the amount per year de-valued is exponential. You mentioned your colleagues were not looking 30 years ahead, but did you tell them the effects are year on year, and then compounded year on year after that. The 30 years is to show how great the loss is over time, but the loss has already started for them, even though they have not taken their pension yet. By the time they take their pension, the reduction will be far greater than even the example shown. It's a very clever stealth tax this change in that it has started now and people will be paying for it for the rest of their lives, either working or in retirement.

3) You mention their concerns were jobs and what might happen to their existing pensions, quite rightly so. But what kind of message does it send to the Government if people are apathetic about a change of this magnitude. The Government will be emboldened to make far greater changes to their pension terms and far greater job cuts then they would have ever thought possible, if people just allow this change to happen without a fight. If your friends stood up and said this change was a step too far, the Government would think twice about making far greater draconian cuts to their future pensions and consider any job cuts with greater care than they will at the moment. It’s the lack of protest and acceptance of this one change that will in fact cause them far greater distress in the future as the Government walks all over them. It’s now they need to fight, not when they have allowed the Government to get away with robbing them, because they will just rob them over and over again because they see them as weak and easy to mug.
　
However, if I had told your friends that I wanted 20% of their pension now. Then I suspect they would have said "NO WAY", but that is what a 1% variance does between RPI and CPI it takes 20% off there pension.

Or if I had put it another way to your friends, and said:

"At age 60 do you mind a loss of 1%, not that much is it?"

but then I say,

"at age 80 would you like a 20% loss of income, because that is exactly what this change means",

and then back it up by saying,

"and by the way, it's a loss year on year that gets greater per year as each year goes by, in effect you get poorer and poorer over time because the loss is compounded"

and finally I say,

"Oh yes and this is for life!"

They might then have a different view and would not be so complacent.

Hence why they should back the EDM and fight to stop this robbery, by taking action now!

Thicko2

I have been reflecting over the weekend on Halifax's behaviour in offering compensation to mortgage holders about the lack of explicit information in their offer details in their shift in the SVR rate they used for their customers.

As a pulic sector pension holder i cannot but help see similarities between this and the explicit reference to RPI in scheme details. Of course i am fully aware thanks to the excellent posts on here concerning the legislative process thst allows the government to vary the inflation rate but members (well certainly I, never was informed or forsee such a posibility).

Rather ironic when we as a nation has a signifcant stake in HBOS was my reflection.

annie_tanks

From Old Slaphead//725// that I fully endorse..
Or maybe they have a sense of perspective. They're sufficiently intelligent to realise that even with CPI their pension scheme is still very, very good and is unlikely to be available for much longer.
They also realise that the benefits don't come for free and that someone has to pay for them. That might be from higher taxes for or fewer jobs for public sector workers.

Old_Slaphead

Ripoff wrote: »

Hi Old Slaphead, back from hibernation I see.

Hello to you to Ripoff.

I don't dispute your overall sentiment although I do believe that most of your figures are greatly exaggerated.

All I am suggesting is that, from my rather unscientific straw poll, people currently have far greater short-term worries. Even, if the RPI/CPI situation is reversed, most seem to think that pension benefits will one way or another be dramatically scaled back anyway so the overall effect will probably be similar whatever happens.

The main people to feel the pinch will probably be those currently aged 50-60 with generous early retirement options ie those who'll spend the longest time in retirement.


For many DB contributors, now retirement age is being moved back to a sensible 65, losing 0.7% per year (nb that's the average for last 22 years - 0.3% in 7 Tory years and 0.9% in 13 Labour years) will only cost around 10% net by the time people hit their mid 80's. Most people don't need significant amounts at that age - what are they going to spend it on unless it's for the kids/grandkids inheritance.

Please explain your comment in 2........

but the loss has already started for them, even though they have not taken their pension

- how does this apply to people still in employment?

Finally,

"At age 60 do you mind a loss of 1%, not that much is it?"

shows how out of touch some people are. Many are / will soon be thinking about 70 as the standard retirement age - but not for Civil Servants/Police etc for at least the next decade or two. No wonder RPI is so unaffordable.

Haybob

I read that the Institute for Economic Affairs (right wing think tank much liked by the Tories) say that the older citizens are having it too easy. No doubt this will cheer Old Slaphead up, but it paints a clear picture of what is in store for pensioners unless they unite and fight against all injustices.

The think-tank estimated that by 2015 some £1.3bn could be saved by abolishing free bus travel, £700m from stopping free television licences, £2.1bn from scrapping the winter fuel allowance, £5.6bn from inflation-indexing state pension rises, and £5bn from raising the state pension age to 66 in 2015 instead of 2020 as currently planned.

I think that we can expect no inflation linking to any pension if they get their way and unfortunately there appears to be little fight if OldSlaphead is to be believed.

At least the Bankers can rest easy in their featherbeds thanks to all the appaling apathy shown by some.

http://www.telegraph.co.uk/finance/personalfinance/pensions/8341350/Pensioners-should-share-pain-of-spending-cuts-says-Institute-of-Economic-Affairs.html