RPI to CPI Early Day Motion 1032

cvd

I notice that there may be a contractual issue with pension members buying added years, commuting lump sums to pension etc, and this is often quoted when referring to a legal challenge.

I think that the point here is that the rates for these are usually decided by actuaries on a cost-neutral assumption - they do not cost the employer anything.
This means that those who chose to buy extra added years or commuted their lump sum to pension may, under certain circumstances, have been able to get a better deal on the open market if they had known that increases were only to go up with CPI. This is blatant misselling.

(Typically a single person entitled to an enhanced annuity because of medical problems. )

MEY_3

Old_Slaphead wrote: »

There are a few bigoted posters on this thread that shun reasoned debate in favour of abusive & sometimes rude comments (I'll exclude MEY from that observation).

That's most magnanimous of you! I'm honoured! Whatever have I done to be singled out for such attention?
More seriously, whatever our respective opinions we all have to remember that it is the opinions we should be criticising if we do not agree, not the writer. Sometimes this may seem like a fine line but is one we should take pains to not overstep.
When using forums like this, we are all generally more free with our views than we would be in other, face to face social situations. It just might be that if we all met we may actually like some of our "opponents" more than our "allies" and be happy to be in that bodega sharing a drink with them !
So, though I don't agree with David I will leave his opinions posted in my reply unless he wishes me to delete them.

BoxerfanUK

JamesU wrote: »

BoxerFan, Apology not accepted on my side. David has the right to debate objectively with reasons and is doing so. Think you should consider deleting post #860 as it is unjustified, and this post should then go to too. No point letting emotions blur judgement and all that...

JamesU

JamesU are absolutely right. I have edited my earlier comment, which was uncalled for.

David, I am sorry, I went a bit over the top there. As has been said, you are entitled to an opinion just as everyone else is. Ok feelings run a bit high on this thread at times, but that is no excuse for getting personal. Once again, my apologies :beer:

BoxerfanUK

Moving on. Chief Secretary to the Treasury Danny Alexander is on BBC Question Time next Thursday. I hope someone in the audience puts the RPI to CPI question on him.

DavidHayton

MEY wrote: »

So, though I don't agree with David I will leave his opinions posted in my reply unless he wishes me to delete them.

I'm quite happy for you to leave up what I have written. I think that my subsequent post makes it clear where I am coming from.

I'm not happy about the change from RPI to CPI, as this will cost me big money: http://www.nasuwt.org.uk/PayPensionsandConditions/England/Pensions/ChampioningPublicSectorPensions/TheChangeFromRPItoCPI/RPItoCPIReadyReckoner/NASUWT_006871

According to Robert Peston http://www.bbc.co.uk/blogs/thereporters/robertpeston/2011/02/rpi_to_cpi_costs_pension_saver.html it will cost us all £83 billion. But if it isn't saved here, what new taxes might appear, and what might be next in line for the chop? That's my worry. How's about contributions going up to 14% of salary, or the retirement age going up to 70, or a 90ths scheme, or a 100ths scheme?

David

DavidHayton

BoxerfanUK wrote: »

Moving on. Chief Secretary to the Treasury Danny Alexander is on BBC Question Time next Thursday. I hope someone in the audience puts the RPI to CPI question on him.

If they do, I bet one beer :beer:that he will say that "CPI is a better method of calculating the inflation rate," and waffle on about housing and components in the index until everyone else loses the will to carry on listening.

David

JamesU

DavidHayton wrote: »

I'm quite happy for you to leave up what I have written. I think that my subsequent post makes it clear where I am coming from.

I'm not happy about the change from RPI to CPI, as this will cost me big money: http://www.nasuwt.org.uk/PayPensionsandConditions/England/Pensions/ChampioningPublicSectorPensions/TheChangeFromRPItoCPI/RPItoCPIReadyReckoner/NASUWT_006871

The NASUWT calculator starts with a default of RPI/CPI difference of 0.5% but typically the Government used 0.75% until recently, and Steve Webb is now citing a figure of 0.87% in his impact analysis for the DWP:

http://www.dwp.gov.uk/docs/pensions-bill-2011-ia-annexc.pdf

JamesU

DavidHayton

JamesU wrote: »

Unfortunately the NASUWT calculator is not useful. It uses an RPI/CPI difference of 0.5% but typically the Government used 0.75% until recently, Steve Webb is now citing a figure of 0.87% in his impact analysis for the DWP:

http://www.dwp.gov.uk/docs/pensions-bill-2011-ia-annexc.pdf

Teachers will be quite off the mark in their prediction of future pension reductions due to CPI if they use that calculator.

JamesU

The values in there can easily be changed to whatever you like. Ii have been working on 5% RPI and 4% CPI - frightening. Would cost me £37,501 over 20 years (per £10,000 that I start with).
It has the same effect as delaying my pension age by almost four years. And if I live longer, it gets worse.

David

JamesU

DavidHayton wrote: »

The values in there can easily be changed to whatever you like.

Thanks, you are right, overlooked fact the calculator just starts at a 0.5% default, have updated post above.

JamesU

Old_Slaphead

DavidHayton wrote: »

The values in there can easily be changed to whatever you like. Ii have been working on 5% RPI and 4% CPI - frightening. Would cost me £37,501 over 20 years (per £10,000 that I start with).
It has the same effect as delaying my pension age by almost four years. And if I live longer, it gets worse.

David

Assuming, on your figures, that you get the same (ie £10,000) pension in yeear 1 - the 'loss' after 20 year is £32878 against an average pension of £16500pa ie 2 rather than 4 years pension.

Historical figures suggest your 1% figure is high - over the last 22 years the difference has been 0.69%pa - under Labour 0.95% and Conservatives 0.3%

Also, bear in mind, that this level of pension will be taxable so the actual cash loss will be less.