RPI to CPI Early Day Motion 1032

annie_tanks

Thanks Hayhob for the Telegraph link..embedded within the article is the following..

http://www.telegraph.co.uk/finance/personalfinance/comment/paulfarrow/8323713/Public-sector-pensions-workers-face-brutal-reality-check.html

" Public sector retirement promises have become a "Madoff-style pyramid, now collapsing under the weight of insufficient contributions, rising longevity and an ageing workforce", said the Centre for Policy Studies in its report, Self-sufficiency is the Key.

Over the past 10 years the amount paid in benefits by the five largest public service pension schemes has increased by 32 per cent. This rise has been driven by an increase in the number of pensioners, the expansion of the public sector workforce, longer life expectancy and the extension of pension rights for early leavers and women.

The worm is turning. Workers who entered the public sector for job security and a decent pension are now looking over their shoulders, unsure what the future will bring. It is a burden that the private sector has had to cope with for years. Welcome to our world"

...indeed..so why are private sector pension holders being hammered for the reduction from RPI to CPI..when most private sector pension funds are in a healthy state now.

Old_Slaphead

annie_tanks wrote: »

...indeed..so why are private sector pension holders being hammered for the reduction from RPI to CPI..when most private sector pension funds are in a healthy state now.

The schemes affected by RPI/CPI in the private sector are direct benefit (ie final salary) schemes and most of those are still in huge deficit - hence the attraction of lower payouts. These schemes are currently only available to around 10% of workforce many of whom work for ex nationalised utilities.

Private schemes that are "healthy" as you put it, are direct contribution schemes whereby the employer makes a contribution to employees own pension plan but is not guaranteeing the final benefits. That's will be dependant on how the underlying investments in the employees scheme performs ie all the risk is with the employee rather than employer.

Thicko2

Annie

If you read back into the thread earlier that was exactly my point on the NHS pension scheme currently being in such a healthy state and the report from the NAO which identified that across the piece changes made in 2007/08 have now put the public sector schemes back to norm.

This is ideological agaisnt public sector pensions and to help support private companies by reducing the amounts they have to pay into their schemes to benfit their shareholders.

viridens

Report here: http://www.thisismoney.co.uk/pensions/article.html?in_article_id=524138&in_page_id=6&position=moretopstories

We made a start. Every little helps.

kidmugsy

Ever since Gordon Brown introduced the CPI, and instructed its use by the Bank of England's Monetary Policy Committee, it's been patently obvious that it would eventually be used for pensions, Gilts and whatnot. It was typical of his political cowardice that he left the unpopular work to the coalition, but I don't really see how people can be surprised and how anyone - or, at least any Labour supporter - can be outraged. The State is broke. As Mr Byrne so waggishly said as he left office after the election, the money's all gone.

Goldwing1

I think yesterday at Westminster was a good start. The fact that the room wasn't big enough for everyone showed how the depth of feeling was underestimated. Yesterday the Telegraph posted an interesting article;
http://www.telegraph.co.uk/finance/economics/8353289/RSS-attacks-pensions-switch-to-CPI.html

cvd

I don't really see how people can be surprised and how anyone ... can be outraged

Osborne and Webb are being dishonest. Read the Telegraph piece linked in the last post.
If they had said the reason for making this change was that the country was broke and they needed to save money then that is a defensible point of view in my opinion. But that is not what they have said - they have said CPI is a better measure of pensioner inflation. This is a rather feeble attempt to distort official statistics. If you accept that argument then you must accept every other lie and distortion of official statistics.

Ripoff_2

All, I have always said that this is an issue of Right and Wrong and to say CPI is a better measure of pensioner inflation is wrong and to switch to a measure that is fundamentally flawed, knowing it is, is also wrong but perhaps some people still need more convincing, so don't take my word for it, take the professionals word for it.

The Royal Statistical Society (RSS) wrote to Sir Michael Scoholar Chair of the UK Statistics Authority and in a long letter about the RPI to CPI switch said:


I quote:"we do not feel that it currently serves the purpose of being a sufficiently good measure of price inflation as experienced by households to be used in uprating pensions and benefits or for the use of wage negotiations, thus not fully meeting Principle 1 of the Code of Practice" ("it" being CPI)


The RSS is a well recognized and a formative body on statistics, and in the letter it clearly states that CPI, although a good indicator of macroeconomics, it is not a sufficiently good measure for pension up rating.

The letter also brings into question whether in fact Steve Webb has broken the Code of Practice with switching to the CPI and using it for up rating. I believe there may well be a case to answer here.


Read the full letter at http://www.rss.org.uk/uploadedfiles/userfiles/files/Letter_Jill%20Leyland_Sir%20Michael%20Scholar_22%20Feb%202011%20.pdf


In many ways CVD post 738 sort of says the same thing Cameron, Osborne, Webb & Co are being dishonest, deceitful and worst of all thieves with this change and they know it and trying to justify it by saying "It's a better measure of pensioner inflation" is a lie and distortion of the statistics.

kidmugsy

@cvd, of course they're lying about the motivation. What do you think would happen if the Chancellor went about arguing in public that "the state is broke"? But broke it is.

Haybob

Excellent letter.

http://rel01.glcoord.org/index.php/pension-cut/parliament/236-cpi-consultation-exercise