RPI to CPI Early Day Motion 1032

Ripoff_2

Stargazer57 wrote: »

Have you actually read the article?

I see that both Ripoff and MEY said "Thank You to teacher retired For This Useful Post"

Stargazer, my thanks are not for the content but for the link and efforts by the person who posts the information. You are quite right in pointing out what the article says and you are quite right to highlight it, so many thanks for that.

I think you already know my position on this.....No matter what Hutton, Steve Webb, the Government, the Unions or anyone else for that matter tries to spin this change. To change the pension indexing in this manner with all I have said before about it and all the professionals have said is simply WRONG and no matter what the final outcome, it will always be WRONG.

As I have said before this is a matter of RIGHT and WRONG and this is plain and simply WRONG. It's a betrayal, a CON TRICK, it's decitful and it's theft. Simple as that really.

JamesU

MEY wrote: »

I cannot for the life of me see how you can support Hutton but also support the fight against CPI. Hutton's so called savings rely heavily on the CPI change.

The switch to CPI was made by the Government without meaningful consultation, and I doubt it was within Lord Hutton's remit to criticise this (but he was explicit on the 25% devaluation of pensions due to previous reforms and RPI/CPI switch in interim report). Then final reporting had to be written according to CPI, whole point of independent review, as far as I understand it anyway. I found Lord Hutton's report informative and objective, with elements within it that I agree with, but in my view any such changes should be in conjunction with RPI and not CPI. I see no contradiction here myself, but just a quick post for clarification so that you are not overly perplexed by this.

JamesU

teacher_retired

JamesU wrote: »

The switch to CPI was made by the Government without meaningful consultation, and I doubt it was within Lord Hutton's remit to criticise this (but he was explicit on the 25% devaluation of pensions due to previous reforms and RPI/CPI switch in interim report). Then final reporting had to be written according to CPI, whole point of independent review, as far as I understand it anyway. I found Lord Hutton's report informative and objective, with elements within it that I agree with, but in my view any such changes should be in conjunction with RPI and not CPI. I see no contradiction here myself, but just a quick post for clarification so that you are not overly perplexed by this.

JamesU

I think the big issue is will the government start talking & really negotiating with the unions. RPI is the starting point it seems to me and the EDM is a good starting point. The whole issue of how to measure inflation as it affects those with pensions is the important issue. A modified cpi reflecting these concerns may be a possibly acceptable solution but before anything can develop the unions need to somehow get the government away from their present dictatorial 'things are not negotiable line'.

Old_Slaphead

MEY wrote: »

Keep up, Old Slaphead! The link was published previously I believe but here it is again in case I'm wrong, and I got it elsewhere.

http://www.taxresearch.org.uk/Blog/page/2/

Admonishing me for not paying attention - think it's you who needs to get your act together. Link previously published or not? You're not really sure are you (just to help you out, the answer is - it wasn't).

MEY_3

I was meaning "Keep up!" humorously, Old Slaphead, as you hadn't added much of late. As I said, I wasn't sure of its whereabouts and I hadn't got time to search through but thought I may still have it as a "favourite" so I added it, so that you didn't have to search for it.

Apologies for ruffling your feathers!

JamesU

Stargazer57 wrote: »

What it shows is that even without the Hutton reforms, the cost of public sector pensions on the key measure of affordability (as a percentage of GDP) has already peaked and is set to decline markedly over the years ahead. That’s because public sector pensions have already been quite significantly reformed, the two main changes being higher employee contributions and the shift from RPI to the generally lower CPI for indexing purposes.

So in order to make public sector pensions affordable, they had to make the change which this thread, with its 800+ posts opposes.

Stargazer, The table you are referring to in the newspaper article describes the combined effect of the previous Labour Government pension reforms on the cost of pensions as a %GDP using only CPI as the index. In order to substantiate your view that the previous reforms and the switch from RPI to CPI are neccessary in order to make public sector pensions more affordable, presumably it would be neccessary to look at the effects of the previous pension reforms in conjunction with both the RPI and CPI indices, and you have not done this. The best comparison I can find is in the table below from the Pensions Policy Institute:



The PPI states that "Had pension increases remained linked to RPI, the cost to the taxpayer would have increased from 1.2% of GDP in 2010 to around 1.3% of GDP by 2020, before falling back to around 1.2% by 2040." So in effect a combination of the previous Labour reforms and the use of RPI as index link (not CPI) would have kept the cost of public sector pensions at the same level at 1.2% of GDP as can seen in the table above and also read in the link below:
http://www.pensionspolicyinstitute.org.uk/default.asp?p=12&publication=0276&

So without further information, I find it difficult to accept your view that the switch from RPI to CPI is neccessary in order to ensure the affordability of public sector pensions.

What is clear is that the combined effect of the previous Labour pension reforms (see Table 1, page 15, in PPI link above) and the switch from RPI to CPI (without meaningful consultation and justification by the Government) has lead to a 15-25% reduction in the value of public sector pensions as stated by the Pensions Policy Institute (page 7, link above) and the Independent Public Service Pensions Commitee (Lord Hutton's interim report, E11, page 9, link below):
http://www.hm-treasury.gov.uk/d/hutton_pensionsinterim_071010.pdf

But from what I can see, what is less clear is:

(i) What % of GDP is considered an acceptable level for the affordability of public sector pensions. Without this information I find it difficult to rationalise what is affordable or unaffordable. Do you have any thoughts or ideas on this?

(ii) Do you have links which you can post from reputable organisations/reports which describe the neccessity to switch from RPI to CPI in order to make public sector pensions affordable?

(iii) To the best of my knowledge reputable organisations such as the PPI and IPSPC (both linked above) did not put forward recommendations to switch from RPI to CPI. This decision was taken by the Government on the premis that CPI was a better measure of pensioners' inflationary experiences, and not on the basis of pension affordability. So I am interested to understand more specifically your reasons why "in order to make public sector pensions affordable, they had to make the change."


JamesU

Haybob

I
I am surprised to read that some of you are not familiar with the Trade Unionist Mark Serwotka. In my view he is always able to articulate his cases with lucid fluency and at the same time being very succinct. He has often spoken up for public servant pensions and to preserve the link to the RPI.

The sneaky underhand removal of our RPI inflation link must rank as one of the all time great stealth steals. However, this Government has made it crystal clear that this change in not for negotiation, so how can the unions bring any pressure to change this intransient attitude without threatening and mobilising for strike action? Although I encourage all to keep writing letters and signing petitions, I believe that our fate will be principally sealed by whether the unions want to defend our RPI or not and if so how they can get the backing of their members.

Stargazer57

JamesU wrote: »

So without further information, I find it difficult to accept your view that the switch from RPI to CPI is neccessary in order to ensure the affordability of public sector pensions.

...
But from what I can see, what is less clear is:

(i) What % of GDP is considered an acceptable level for the affordability of public sector pensions. Without this information I find it difficult to rationalise what is affordable or unaffordable. Do you have any thoughts or ideas on this?

I assume the poster who linked to Jeremy Warner's article did so because he thought the headline There's nothing unaffordable about public sector pensions was helpful support to the EDM. I suspected, and subsequent posts bear me out, that he hadn't read further than the headline, because if he had it would become clear that the public sector pensions that Warner thinks are affordable are those with CPI (not RPI) increases. My post was made to draw attention to this point.

Warner's approach is that if the cost as a percentage of GDP is no higher than it is in 2009/10 then it is affordable. Your approach is that it is affordable even if the cost of public sector pensions rises because, on the benefits you support they do eventually fall back to the current level in 30 years time. Hutton hasn't said what is affordable. I think he has merely said that public sector pensions should target the replacement ratios that Turner said were OK. As these would be paid from higher ages than at present I suspect that would lead to lower costs than current.

It was Warner who used the word affordable. I've never expressed a view. What I would say is that public sector pensions cost more in 2009/10 than they had ever cost before. It is also the year when our public spending deficit reached a peacetime record. So I think it is strange that Warner (and you) should think it represents some sort of baseline of acceptability.

JamesU wrote: »

(ii) Do you have links which you can post from reputable organisations/reports which describe the neccessity to switch from RPI to CPI in order to make public sector pensions affordable?

I haven't checked, so I don't know. If I were you I'd be more worried that mildly sympathetic journalists like Warner haven't called for RPI to be reinstated. I suspect, as other posters on this thread have speculated, that the Unions will be happy to sacrifice RPI indexation if they can water down Hutton's proposals because the members who pay their subs will care more about Hutton than indexation.

JamesU wrote: »

(iii) To the best of my knowledge reputable organisations such as the PPI and IPSPC (both linked above) did not put forward recommendations to switch from RPI to CPI. This decision was taken by the Government on the premis that CPI was a better measure of pensioners' inflationary experiences, and not on the basis of pension affordability. So I am interested to understand more specifically your reasons why "in order to make public sector pensions affordable, they had to make the change."

Whether you regard the PPI as reputable usually depends on whether you agree with what they are saying. Its previous Director used to work as Steve Webb's policy adviser so I suspect you wouldn't have been so keen on them if she was still in post! Hutton didn't say anything about CPI-linking because it had been announced before he started work.

MEY_3

"Stargazer57", That may be the way the wind seems to blow at the moment but the unions would be extremely foolish to think accepting Hutton or a modest dilution thereoff now, in exchange for sacrificing RPI, will be a safeguard. First, the loss of RPI in itself will be a significant loss to their members pensions, but there is absolutely no guarantee that this, or future governments won't return to the issue for another pound of flesh when it suits. We can all see that our governments will act not according to morality or integrity, or even to the advice of professional bodies, so nothing they ever utter can be relied upon. That means any stand by the unions has to be made now as any appeasement will not help those unions in the future.

viridens

What next?

• It has already been established by independent financial experts that the RPI/CPI switch swindle has no proper justification, since CPI indexation is not fit for purpose. (See previous posts).
• Other experts also make it clear that this swindle was a treasury plan, introduced without proper consultation or parliamentary discussion. (See below).

Quote: "Former Tory Shadow pensions minister Nigel Waterson has likened the Government’s decision to switch from RPI to CPI indexation to Gordon Brown’s raid on pension funds in 1997.
In an interview with Money Marketing, Waterson reveals the decision was never discussed during his time in opposition, indicating that the move was pushed through by the Treasury as a means of cutting costs.
The Government has claimed that CPI is a more appropriate measure of inflation than RPI, although there is no record of the Conservatives or the Liberal Democrats mentioning this before the coalition was formed." (3 March 2011)
from articles here .
http://www.moneymarketing.co.uk/politics/nigel-waterson-compares-rpi-cpi-move-to-browns-raid-on-pensions/1026974.article & here http://www.moneymarketing.co.uk/pensions/people-feel-overwhelmed-by-the-number-of-initiatives-and-consultations/1026996.article

MEY wrote: »

Like you, I have decided not to travel to the 26 March march, not because I don't believe the cuts are too savage but because my primary motive would be to campaign against CPI but unless an active group of anti-CPI-ers attended it would be an issue lost on the day. I'd rather use my resources to maintain the CPI fight in other ways. When I suggested on here that a group of us should attend the march I got no response. My feeling is that the TUC do not really want the CPI issue to deflect from the cuts agenda of the march.........
....Just think from a group union perspective how you would tackle this. Suffice it to say the unions may not be quite the natural ally we'd assume as we fight CPI.

Mey, I share your concern.

Action against the goverment pension attack is organised by the TUC and public sector union head offices. Their primary allegiance must be to their working members. After all, these members both elect them and pay their wages.* Their prime concern must be the immediate threats faced by these members: Planned job cuts, and 'paying more and working longer'. The RPI/CPI issue must rank well below these in their list of priorities. They serve very few retired members for whom this change is of immediate concern, not a future worry. *The same can be said for MPs of course, but I hope and trust the unions are, and remain more sympathetic to our cause.

When communicating with my union to encourage them to raise the profile of this topic, and even to mention EDM 1032, I certainly feel that their priorities are elsewhere. I'm sure that the CPI swindle aspect of the cuts will not be the most talked about on 26 March. I repeat, the only agenda with this matter at the top is our own.

I believe that the RPI/CPI change is an integral part of the proposed cuts and should not be separated out as a different issue. To allow TUC or any union to do so is dangerous, and could encourage this being conceded as a bargaining chip in the overall negotiations, sacrificing our cause for the 'greater good'. -Shame on them if they even consider this. Also, I don't hear much from them about 'legal challenges' and 'acquired rights' at the moment... I repeat once more, the only agenda with this matter at the top is our own.

This thread was started to support EDM 1032, although it has widened to a general discussion about the CPI/RPI indexing issue.

• Most folks here agree with the facts, for which clear evidence has been established, that the change to CPI is wrong. This change has now been agreed by parliament, is going ahead, and robust action is needed to counter this. Where do we go from here?
• It seems to me that there is much energy and impetus wasted here on in-fighting, justifying & defending the cause again and again in ever-increasing detail. This energy would be better spent on devising and pursuing action to move OUR cause forward. How about it?