RPI to CPI Early Day Motion 1032

Ripoff_2

Prof_as_was wrote: »

People have every right to maintain that the 'CPI for RPI' proposal is defensible on political or economic grounds, or because they think occupational pensioners get more than they deserve, or whatever. But tThis is the wrong site for them and such arguments. This is Moneysavingexpert.com, and I don't think it's meant to be about saving Treasury or BT shareholders' money - is it?

The site is about Money Saving, you are quite right, so it is exactly the right site for this issue because it's about saving people thousands of pounds. I don't think you can say people shouldn't offer alternative arguements though just because they disagree with the thrust of the saving element of the original argument. A debate on this issue is healthy in a democracy and though I personally do not agree with some of the negitive comments I welcome the interest and feedback

Martin Lewis is going to speak to the pensions minister directly about pension issues and has asked for questions to put to him so I can't think of a better site to voice our opinions. It also makes people aware of this excellent source of information and advertises the site to more people.

I would hope that people will explore the site and see how much more it also has to offer, including the the people with opposite views.

Prof_as_was

Ripoff: "I don't think you can say people shouldn't offer alternative
arguments though just because they disagree with the thrust of
the saving element of the original argument. A debate on this
issue is healthy in a democracy and though I personally do not
agree with some of the negitive comments I welcome the interest
and feedback".

Yup, Ripoff is right - as usual. We have to deal with this stuff. So

Old Slaphead: What about (a) the taxpayer - as the treasury
doesn't have any money of it's own, (b) little old
ladies/gentlemen having to pay more for their landline rental
and (c) the little old taxpaying ladies/gentlemen who will have
to pay for both?

FCOL, it's little old ladies/gentlemen and taxpayers who are under attack from 'CPI for RPI', who EDM1032 is seeking to defend (and only by modestly asking for a pause for reflection). Many many of them are living very tightly off small, paid for occupational pensions, now proposed to be seriously reduced by a highly questionable alteration to (a welching on?) their inflation protection agreements. (Not making them up, my late little old mum for example, her very modest widow's mite paid for monthly, career-long, by my low-grade Civil Servant, responsible, prudent little old dad. Not benefits.) That's the issue here.

The Treasury that 'doesn't have any money of its own' nevertheless has income and expenditure, and is in the happy position of being able to arrange the size of its own income through legislation. (Also, it keeps back 'contingency funds' (came to light in the Falklands war) - and so it should - but that's not germane here.) Progressive income tax is one main source of Treasury income. You know how it works - the little old ladies/gentlemen (like my mother) on nothing or a standard rate, higher rates for some, sophisticated avoidance and tax-exempt pension savings for a few. There is a lot more to be said about how more could be got from progressive income tax without troubling the little oldies, from better targetting of various other forms of tax, from more vigorous tax enforcement and collection (seems to be getting advocated on the streets at the moment), but I'm the one who who thinks this site is not best served by political attitudinising, so I won't go there. I highly recommend Tax Research UK instead.

It is true (if that's the point being made) that the Treasury has unfortunately neglected to hold the public occupational pensioners' contributions in an invested fund, but instead has disposed of it otherwise as fast as they come in. Our public occupational pension funds have been misused, accounted as income tax, spent as income tax. Parallels with the private sector spring to mind. So long-established, so taken for granted, has been this Treasury malpractice, that no-one would ever so much as think of jumping off a yacht. But if the huge sums paid in over the years had been properly ring-fenced and invested, things would now look and be very different.

As it is, the present Government's techniques for balancing the national books are focussed on reducing expenditure rather than increasing income - that's part of our grand national political narrative, the sort of thing I prefer to see debated elsewhere than on Moneysavingexpert. The point here, on MSE, and in respect of EDM1032, is that we have here MSE subscribers crying foul on a unilateral Govt default against a set of individual citizens, on a contractual and moral responsibility - pretty much partial default on debt repayment due to miilions of old people (many of them little). Webb says CPI is a more appropriate measure of inflation for pensioners - he seems to be alone on that and without evidence, and to have failed to check with the authorities he should have checked with, authorities who are expressing discomfort with the idea. My MP, who decines to support 1032, has a different story. He tells me at length and in detail that the Government must save money, in part by this measure, so as to restore the national finances; he says that thanks to such measures as this, the national finances will soon be back in order; but he does not say that the little old people will get their true inflation protection back as soon as the deficit is overcome, growth is restored, and the broad sunlight uplands regained. Until that assurance is concretely given, the 'necessity of the current deficit crisis' argument looks (and I am sure is) bogus, Arthur Daley. I'm about to press my MP about this, but I'm not holding my breath - I have put the same point, politely and constructively, months ago, to each of Cameron, Clegg, Duncan-Smitth and Webb. None have answered. There is no answer, I think.

As to the cost of landlines to little old ladies/gentlemen, again there are false categorisations and distinctions being invented here for polemical effect - and anyway is this not a function of the very wonderful unfettered market, a matter of private individual calculation and choice between the little old ladies/gentlemen and the telecomms shareholders, nobody else's business? Again I don't want to use/abuse MSE by arguing that particular toss here. But I can appropriately suggest that many lol/gs dependent on occupational pensions may end up making savings by withdrawing from the landline market altogether if its charges inflate at RPI or higher (as do the railways) while their income infaltion keep-up is pinned to CPI. All is interconnected, all money is circulated, it's the economy, s.....

Sapphire

1. Pensions should continue to be linked to RPI, not CPI, given that pensioners would definitely be much worse off if they were linked to CPI. Soon-to-be pensioners in particular, i.e. within the next ten years, have been promised that their pensions would be linked to RPI, and planned accordingly, so this is what should continue to happen. (State pensions are in any case too low now, compared to those of other countries.)

2. One way of increasing the state pension would be to not pay it to retirees who have £30,000 or more coming in through other pensions, investments or income (quite a lot of people), and using the money from this to raise the pensions of those receiving below this amount. Relatively well-of pensioners do not need the state pension, whereas many of those below this income certainly do.

3. Also stop winter fuel payments and other benefits to those above £30,000. I have even been told (usually laughingly) by such people that they do not need the money either from these benefits or from the state pension. (Certainly stop winter fuel payments to anyone living abroad, generally in a hot climate!)

4. Raise the state pensions of all pensioners below £30,000. Britain's pensioners should not be receiving less than pensioners in other European countries. Those who have been productive members of society, often for 40–50 years, but who have been on modest incomes due to the nature of their professions and so have not been able to amass fortunes, should be financially comfortable once they retire.

Ripoff_2

Sapphire wrote: »

1. Pensions should continue to be linked to RPI, not CPI, given that pensioners would definitely be much worse off if they were linked to CPI. Soon-to-be pensioners in particular, i.e. within the next ten years, have been promised that their pensions would be linked to RPI, and planned accordingly, so this is what should continue to happen. (State pensions are in any case too low now, compared to those of other countries.)

2. One way of increasing the state pension would be to not pay it to retirees who have £30,000 or more coming in through other pensions, investments or income (quite a lot of people), and using the money from this to raise the pensions of those receiving below this amount. Relatively well-of pensioners do not need the state pension, whereas many of those below this income certainly do.

3. Also stop winter fuel payments and other benefits to those above £30,000. I have even been told (usually laughingly) by such people that they do not need the money either from these benefits or from the state pension. (Certainly stop winter fuel payments to anyone living abroad, generally in a hot climate!)

4. Raise the state pensions of all pensioners below £30,000. Britain's pensioners should not be receiving less than pensioners in other European countries. Those who have been productive members of society, often for 40–50 years, but who have been on modest incomes due to the nature of their professions and so have not been able to amass fortunes, should be financially comfortable once they retire.

Interesting points, the problem I see though is that all the poeple even on good pensions have paid for a state pension and to then have it taken off them would seem unfair. However, there could be a mechanisim that allowed them to opt in or out. That way if they were really kind people they could opt out and the money could then be used to top up others state pension. If they themselves then fell on hard times for whatever reason they could then opt back in. This system could apply to all universal benefits but as it stands at the moment no one can actually give up their universal benefits. Maybe this could be looked at by the Government, it shouldn't be that hard I would have thought.

You have to remember though that these are universal benefits so that ALL people irrespective of income have a stake in the society. If you take this away then they will argue "Why should we pay for something we are not getting", I think it has to be freedom of choice to give up the benefit or not.

Thanks for your contribution and I hope you have written to your MP and Steve Webb on this issue.

Ripoff_2

45 MP's have now signed the EDM 1032. LAB = 30 LD=4 CON = 0 Oth= 10 Keep asking them to sign we need more to do so. Thanks

Sapphire

Ripoff wrote: »

Interesting points, the problem I see though is that all the poeple even on good pensions have paid for a state pension and to then have it taken off them would seem unfair. However, there could be a mechanisim that allowed them to opt in or out. That way if they were really kind people they could opt out and the money could then be used to top up others state pension. If they themselves then fell on hard times for whatever reason they could then opt back in. This system could apply to all universal benefits but as it stands at the moment no one can actually give up their universal benefits. Maybe this could be looked at by the Government, it shouldn't be that hard I would have thought.

You have to remember though that these are universal benefits so that ALL people irrespective of income have a stake in the society. If you take this away then they will argue "Why should we pay for something we are not getting", I think it has to be freedom of choice to give up the benefit or not.

Thanks for your contribution and I hope you have written to your MP and Steve Webb on this issue.

If it was left to individuals, very few people – no matter how much money they had – would opt not to receive benefits including pensions. It's against human nature. And they have no choice but to pay during their working life.

Old_Slaphead

Prof_as_was wrote: »

FCOL, it's little old ladies/gentlemen and taxpayers who are under attack from 'CPI for RPI', who EDM1032 is seeking to defend (and only by modestly asking for a pause for reflection). Many many of them are living very tightly off small, paid for occupational pensions, now proposed to be seriously reduced by a highly questionable alteration to (a welching on?) their inflation protection agreements. (Not making them up, my late little old mum for example, her very modest widow's mite paid for monthly, career-long, by my low-grade Civil Servant, responsible, prudent little old dad. Not benefits.) That's the issue here.

The change will have negligible effect (around 0.5%pa compound) on 'small, paid for occupational pensions'.

Like you, my mother also benefited from a small widow's pension from dad's CS career. The indexation change when compounded would have cost her, over say 20 years, around £120pa on her £200pm pension ie the equivalent of halving winter fuel allowance. Smaller amounts in the early years & larger amounts later when her expenditure requirements were much less.

The damage caused by recent governments to non-gold plated final salary schemes has been immeasurably worse and this is the topic that people should be protesting about. There are millions of people who have little or no pension provision

Of course the RPI/CPI change will mainly affect the well off with larger pensions and those people benefiting from early retirement at 50/55/60 who will be drawing pension benefits (mostly taxpayer sponsored) for many, many years. But this latter group have the opportunity to make up the deficit by working a few extra years.

Goldwing1

Update.
I asked for written evidence. The reply I received was;

"Mr Green has asked the House of Commons library to provide him with a briefing on this issue. He will be back in touch in due course."

Looks like the question is a little more difficult to answer. Keep badgering those MP's.

Ripoff_2

Old_Slaphead wrote: »

The change will have negligible effect (around 0.5%pa compound) on 'small, paid for occupational pensions'.

Like you, my mother also benefited from a small widow's pension from dad's CS career. The indexation change when compounded would have cost her, over say 20 years, around £120pa on her £200pm pension ie the equivalent of halving winter fuel allowance. Smaller amounts in the early years & larger amounts later when her expenditure requirements were much less.

The damage caused by recent governments to non-gold plated final salary schemes has been immeasurably worse and this is the topic that people should be protesting about. There are millions of people who have little or no pension provision

Of course the RPI/CPI change will mainly affect the well off with larger pensions and those people benefiting from early retirement at 50/55/60 who will be drawing pension benefits (mostly taxpayer sponsored) for many, many years. But this latter group have the opportunity to make up the deficit by working a few extra years.

I am sorry but I can not let you get away with you saying that this effect is negligible (around 0.5%pa compound) on 'small, paid for occupational pensions'. The ONS's own figures quote that it is expected to be 1.18% for the next five years and that is compounded. This really will have a big effect on any deferred pensions to the tune of thousands of pounds and it will have a large effect over time on even modest pensions.

These are not Well Off pensioners we are talking about here, these are ordinary working people that did the right thing, paid into a pension as they were advised to do by successive Governments and worked all their life for 40 years in most cases and now you say they should go back to work.

I worked from being 16 and paid into my pension from then and I have really earned my company pension. I never took anything from the state so please don't dare tell me that I now don't deserve it and don't derserve what I paid for and was promised. The loss of RPI indexing is a betrayal and it is theft, it's what I and many like me paid for, this is the point here you seem to be missing.

People with no pensions have choices and most with no pensions did choose not to have one, they could have bought private pensions if they wished.

I am sorry but I totally disagree with you comment.

Linton

I think you are confusing two separate issues. The one, which you seem to be arguing about, is whether poor pensioners should receive more than at present. There may well be good arguments for this BUT IMHO it is not the RPI/CPI issue.

The purpose of indexing, whether it's RPI or CPI, is to keep pensions at the same value. So the important question is, which index most accurately does this. In my personal experience, based on detailed data, of the past 5 years of retirement is that both are overly generous. The cost of "existing" has not increased by anything like the rise of either index.