RPI to CPI Early Day Motion 1032

Haybob

At last some action is beginning!

Along with Ford workers BA workers and Devonport Dockers are now looking to fight the injustice.

Devonport Dockers
http://www.thisisdevon.co.uk/news/Devonport-Dockyard-workers-warn-pension-strike/article-3399601-detail/article.html

A typical Tory responce
http://www.telegraph.co.uk/finance/jobs/8433197/Former-BA-pension-trustee-disappointed-by-Theresa-May-failing.html#

Action by members
http://www.telegraph.co.uk/finance/jobs/8435961/BA-pensioners-to-vote-on-link-between-inflation-and-income.html

Letter to Telegraph
http://www.telegraph.co.uk/finance/jobs/8433687/Former-BA-pension-trustee-Mike-Posts-letter-in-full.html

TREVORCOLMAN

The Government have said previously that it was the public sector pay increases that caused inflation.

With public sector pay increases on a 2 year freeze what will they blame now?

TREVORCOLMAN

Ripoff wrote: »

This Country seems to have two inflation rates now, one that Business and the City they use (RPI) and one that the people and pensioners who have been forced onto the lesser CPI indexing by this Coalition Government. Don't forget that Tax Allowances for all are being indexed to CPI next year. How can this Government insist that CPI is the country's inflation rate when business and the city don't even use it? SEE LINK BELOW:

This link really is the proof that the City regard RPI as the true inflation rate else why would they be asking for RPI indexed linked bonds if RPI goes above 6%.

BT and Tesco are already providing RPI indexed bonds but in BT's case they offer their pensioners the lesser CPI increases.

http://www.citywire.co.uk/money/inflation-rpi-over-6-could-force-companies-to-issue-index-linked-bonds/a484294?re=13692&ea=276899&utm_source=BulkEmail_Money_Daily&utm_medium=BulkEmail_Money_Daily&utm_campaign=BulkEmail_Money_Daily

Have you noticed also that the finance section of lots of papers only list RPI?

quinnect

The government is now claiming that the difference in the indexes is due to CPI better measuring what people actually do as prices rise. The notion is that people substitute lower priced goods as prices rise. To my mind this ignore the notion of quality, which certainly is taken account of in RPI. You are not in CPI mcomparing like with like. Also the quality of what people buy falls with inflation surely quality would be zero by now. Leaving this aside I believe geometric mean used for CPI does not actually measure substitution it merely estimates it because it is lower than the arithmetic mean used for RPI. Does anyone actually know the maths of that. Is it a true measure or not?

MEY_3

It's a red herring anyway. RPI and CPI are supposed to measure inflation. If you take a basket of goods then substitute cheaper goods for those already used in the basket it is not comparing like with like. If Hobnobs are Y price using another brand of biscuits at x price is not a like for like comparison, so it is not a guide to anything. All product substitution does is creates a drive to the bottom.

scottiepaul

Not sure what use the legal opinion will be. The position for RPI hardcoded in Trust Deed and Rules is extremely clear and the Government aren't doing anything to change that. Indeed the explicitly shyed away from a statutory override where RPI was written into Scheme Rules.

Where RPI is hardcoded, you can only switch to CPI for future pensionable service (and when the new legislation is in you will need to go through 60 day consultation). Haven't heard of a single scheme attempting to override a hardcoded reference to RPI for past service, and any who did would fail under section 67.

The point is that a statutory reference doesn't hardcode RPI.

Seems to me that on the basis of the questions posted on the OPA website, it is asking the wrong questions?

RichandJ

scottiepaul wrote: »

Not sure what use the legal opinion will be. The position for RPI hardcoded in Trust Deed and Rules is extremely clear and the Government aren't doing anything to change that. Indeed the explicitly shyed away from a statutory override where RPI was written into Scheme Rules.

Where RPI is hardcoded, you can only switch to CPI for future pensionable service (and when the new legislation is in you will need to go through 60 day consultation). Haven't heard of a single scheme attempting to override a hardcoded reference to RPI for past service, and any who did would fail under section 67.

The point is that a statutory reference doesn't hardcode RPI.

Seems to me that on the basis of the questions posted on the OPA website, it is asking the wrong questions?

Please, please don't let anyone do that. Haven't we got enough different date determined tranches already.

IME so far I also haven't seen any hard code RPI indexation schemes trying to move to CPI.

spenderdave

Just to say that my pension scheme, Ferranti now administered by Prudential, and in my case deferred, has just sent me notification that they will shortly be issuing an endorsement to the policy schedule:

"The basis for determining pension increases (both prior to and after retirement) will no longer reference any increase Order and will solely refer to Retail Prices Index. This change is required as any such Order no longer provides for increases in the Retail Prices Index."

Very clear and I can relax now. Let us hope that other providers do similar.

JohnB47

spenderdave wrote: »

Just to say that my pension scheme, Ferranti now administered by Prudential, and in my case deferred, has just sent me notification that they will shortly be issuing an endorsement to the policy schedule:

"The basis for determining pension increases (both prior to and after retirement) will no longer reference any increase Order and will solely refer to Retail Prices Index. This change is required as any such Order no longer provides for increases in the Retail Prices Index."

Very clear and I can relax now. Let us hope that other providers do similar.

Wow. Lucky you. I can only wonder at why your provider has actually done this. Surely it is too much to hope that the likes of BT, who boasted to the markets that they were forced to follow the governments lead, will similarly change their regulations?

spenderdave

Actually the old Ferranti pension scheme is somewhat unusual for a company which went bust. Due to very careful management in the 1980s, when the company went into administration in 1991 the pension scheme was very well funded. Being a closed scheme with a fixed number of members it now has more than adequate funds to meet its obligations. Index linking is capped at 5% by the scheme, so this RPI change is really just a tidying up exercise.

I will be very pleased when my pension starts being paid in 3 years time...