RPI to CPI Early Day Motion 1032

MEY_3

Old Slaphead - You do indeed make lots of sweeping generalisations. Divorce or separation is not a "lifestyle choice". It may be a decision that one faces but to blithely assume it is a lifestyle choice is crass. It may well be an imperative. But of course, you deliberately fog the issue yet again. Whether you like it or not, the bone of contention is not about whether pensions should be uprated or not, nor whether mortgage rates are included, and never was. Only you and a few similarly-minded people have tried misguidedly to steer matters in that direction. It is about whether or not CPI is more or less representative of pensioners' loss of buying power than RPI. Whether the said pensioners were given to understand that their pensions were uplifted (or not) each year in line with something approaching the equivalence of that loss of buying power.
As a taxpayer you may feel aggrieved but I am convinced lots of taxpayers also have their own grievances ( I know I do) about how their money is spent and somehow I think this issue is nowhere near the top of their list, when we have errant expenses claims, bonus-be-riched bankers who had to be bailed out, tax avoiding companies, tax avoiding millionaires etc., etc.
And I am still not sure why taxpayers shouldn't pay anyway. The pensioners that are public servants have their schemes via their employer. Private companies operate such schemes too. The difference here is that the employer happens to be the state.
And to transpose the argument, why should stockbroker fees (included in CPI) be more relevant to a pensioner than mortgage rates, anyway? What we really need is a truly representative index of the pensioner inflation experience (as has been often mentioned on this thread). That is what public service pensioners signed up to - whether that happens to suit you or not.

viridens

More musings

I still belive that a pension promised should be a pension delivered, especially when promised by Her Majesty's Government.
If I have financial problems, I cannot re-write and change the rules retrospectively to reduce my obligations simply because I did not think ahead or choose to prioritise my spending elswhere. Government plan to do just that.

Consequently, I will protest when HMG plan for me to be progressively shafted by their retrospective change in scheme rules, especially when I can see that this will actually have a minimal effect on the projected pensions 'black hole' or the economy generally during my lifetime. In fact reducing my disposible income will limit my state effectiveness as a consumer, and could mean that I require state aid sooner -unless Government also introduce pensioner euthanasia as a final solution.

I was unambiguously promised in black and white both when joining my pension scheme & at retirement that the spending power of my pension would be protected by linking to RPI, the proper measure of inflation. Suddenly, rules are rewritten and my pension is apparently to be progressively eroded by linking to CPI, a notional measurement introduced as a target for the Bank of England to hit, and now apparently the 'preferred' measure of inflation. CPI was never intended for, and NOT fit for this new purpose, a fact confirmed by many independent experts. I believe that opposition to this change is warranted by logic and natural justice.

Suddenly, I have unexpected worries about the viability of my pension long term. It is too late for me to add to what I was led to believe was adequate provision. What do I do about this? Maybe I should return to the 'jobs market' to build up some contingency savings for my old age.

Not too long retired, maybe I am not a bad prospect as an employee. I have credible qualifications, extensive experience in several specialisms, impeccable references, a proper work ethic, & could afford to work more cheaply since my earnings are reinforced by a pension. Maybe I am a better prospect than a new graduate, and could well take a job which could have been filled by one. Or maybe I'll just go for a simple check-out job at Tesco (& get a discount on my baked beans)..

Retirees in competition with other job seekers. Will this really help the economy or state?

BoxerfanUK

Old_Slaphead wrote: »

Presumably either you or you ex partner saw it as that.

Do you now expect the taxpayer to contribute to your mortgage costs (in the form of a higher indexing for your pemsion) because of that ?

Old ****head u r not really worthy of a reply after that pathetic comment

Linton

viridens wrote: »

.....


Suddenly, I have unexpected worries about the viability of my pension. It is too late for me to add to what I was led to believe was adequate provision? What do I do about this? Maybe will I return to the 'jobs market' to build up some savings as a contingency.

.....

From my experiences I dont believe you have anything to worry about. The important thing is that one's pension more or less rises in line with experienced prices.

I am retired but not yet old enough to draw my State Pension. Unlike I suspect most peope who have got upset about this issue I have detailed spending data going back to well before I retired.

The "basic" expense items I monitor (eg food, utilities, insurance,council tax) are very much the same year on year, only really varying with technology - eg standard of house insulation, dialup moving to broadband, car efficiency etc.

Over the past 10 years for which I have the detailed information the £ cost of my basic expenditure has increased perhaps by 1% a year. Its difficult to say exactly because year to year variation is much larger than that.

To be specific, my basic expenses in Y/E March 2001 were £9796, those in Y/E March 2011 were £10894. I have made no effort to economise and so there has been no change in standard of living.

In the same period RPI increased by over 30% and CPI by about 25%.

So I conclude that the excitement generated by the CPI/RPI change is misguided and that both indices exaggerate the real effect of ongoing inflation.

Haybob

Its all very well if your disposable income after necessities leaves you with some spare cash. However your expenditure is greater that most affected annual pensions! The projected inflation in the future has been forecasted to be extremely high by some experts, there are many underlying factors that could see a significant rise. The period you quote has been recognised as a long period of low inflation, surely you can remember inflation rates in previous decades and the gap between CPI and RPI could reach 5% or more per year; no one knows. One thing is for sure the companies and government are damn certain they will be gaining much money if they can renege on the RPI inflation link.

Ripoff_2

Linton wrote: »

So I conclude that the excitement generated by the CPI/RPI change is misguided and that both indices exaggerate the real effect of ongoing inflation.

What you are failing to appreciate Linton is that this fight is about the Government changing the pension indexing from the recognised indexing RPI to another lesser indexing CPI and then claiming that CPI is a better measure of pensioner inflation when all the evidence says that it is not.

It's also about the Government NOT honouring it's promises given and honouring its commitments.

It's about private pensioners such as BT BA, having their pensions devalued because of this change and the money saved going back to shareholders and the sponsors, at the expense of the pensioner.

It's about RIGHT and WRONG and this change is fundamentally WRONG, it's a betrayal, it's deception, it's a con trick but worst of all it is theft.

People have paid for the RPI indexing in good faith and expected to be given what they were told and advised by their employers, Government and trustees, not have it changed by a Government that has no mandate for a change of this magnitude and without the Government doing a proper impact analysis and taking consideration from the professionals.

I can not comment on the figures you provided because I do not know your pension income and what pension increase you have received over the 10 year period. But I can say that your costs have risen 10% over that period and the difference to what you would have had as an income from CPI increases compared to RPI increases would have given you less money to fund the 10% increase.

That is a fact because CPI is at least 0.8% less year on year than RPI, as recognised by the Government. If inflation rises, which it looks like it is set to do then the difference increases and therefore the income to pay the extra 10% gets less and less as each year goes by with CPI, than it would have done with RPI indexing. I.e Your income is devalued more by CPI than RPI

These are the issues and not mortgage percentages, life choice's or any other things that people are throwing in to confuse the issue. This change is wrong and needs to be put right before next years uprating.

The EDM is has now been signed by 121 MP's

LAB = 98 LD = 4 CON = 0 OTH = 19

Linton

Haybob wrote: »

Its all very well if your disposable income after necessities leaves you with some spare cash. However your expenditure is greater that most affected annual pensions! The projected inflation in the future has been forecasted to be extremely high by some experts, there are many underlying factors that could see a significant rise. The period you quote has been recognised as a long period of low inflation, surely you can remember inflation rates in previous decades and the gap between CPI and RPI could reach 5% or more per year; no one knows. One thing is for sure the companies and government are damn certain they will be gaining much money if they can renege on the RPI inflation link.

Its actually much the same as a pair of state pensions with no other income.

I think you miss the point of a CPI or RPI link. It surely is to permit people to maintain their standard of living despite inflation. It isnt to make poor people richer however desirable an objective that might be.

I agree inflation rates may go higher, my point is that from my experience of the past 10 years both CPI and RPI over estimate the real costs.

As to whether companies and/or government benefit. I dont believe it makes any difference. If less money needs to be allocated (unnecessarily n my view ) in the future for inflation increases they will be better able to afford to make the base levels higher (or decrease prices/taxes). Similarly the insurance companies could provide better starting annuity rates for inflation linked pensions.

Haybob

I hope that you are right regarding inflation, however I think that you are being a little optomistic unless all studies regarding inflation are incorrect. There are many that take the view that pensioners will become far poorer, reading the link below regarding energy costs causes me concern.

http://www.ageuk.org.uk/latest-press/over-55s-an-average-30-per-month-worse-off/

Linton

Ripoff wrote: »

.....

I can not comment on the figures you provided because I do not know your pension income and what pension increase you have received over the 10 year period. But I can say that your costs have risen 10% over that period and the difference to what you would have had as an income from CPI increases compared to RPI increases would have given you less money to fund the 10% increase.

...

But even a CPI increase in pension would have more than matched my increased costs. Why should an inflation linking system provide even more than that?

As I see it the benefit morally guaranteed to inflation linked pensioners is that their standard of living will not be adversely affected by long term overall price increases. How that is achieved is a technical detail which can and should be monitored by the analysis of real data.

ISTM that the argument that pensioners should be paid more in general is one that can validly be made, but should not be confused with how much extra pensioners need to be paid to match inflation.

Linton

Haybob wrote: »

I hope that you are right regarding inflation, however I think that you are being a little optomistic unless all studies regarding inflation are incorrect. There are many that take the view that pensioners will become far poorer, reading the link below regarding energy costs causes me concern.

http://www.ageuk.org.uk/latest-press/over-55s-an-average-30-per-month-worse-off/

Using my figures direct energy costs are less than 10% of the total basic expenditure so I dont think you should be over concerned.