EDM1629: Public Sector Pensions - switch from CPI back to RPI

RichandJ

Ripoff wrote: »

The 3.1% was used for the uprating of pensions at CPI in September but with an inflation rate of 5.5% RPI now, the uprating should have been 4.6% RPI in September.

The variance would not have been so great, Steve Webb & Co used 3.1% CPI, so the variance is 2.4% not the 0.9% it would have been if RPI had been used for the uprating. (5.5%-4.6%=0.9%) Thus it really does go to show how drastic this change to CPI is, it's cost in real terms to date is 1.5% less and that will rise next month when inflation is even higher, so it's not that disingenuous.

No, you're comparing bicycles & fish. You can compare the difference in the same month's figures but not cherry pick numbers from different months that seem to support your argument. This month's figure is irrelevant anyway as the September figure is always the pertinent one for indexation.

Haybob

Sorry if Iam being a little pedantic but not all pensions are uprated using the September inflation figure, eg BT Section C use the December inflation figure.

Ripoff_2

RichandJ wrote: »

No, you're comparing bicycles & fish. You can compare the difference in the same month's figures but not cherry pick numbers from different months that seem to support your argument. This month's figure is irrelevant anyway as the September figure is always the pertinent one for indexation.

Not really, what I am saying is that as it stands now and assuming by September this year inflation has not dropped back to any where near 3.1% and it stays as high as this then the variance will be 1.5%. I am trying to point out that as inflation increases the variance gets worse and thus the loss is greater by this change to CPI indexing. Time will tell what the inflation rate will be in September but as it stands it doesn't look as though it will anywhere near 3.1%.

viridens

Given that:
-we are 8 months on from the announcement of the planned change to CPI
-The Pensions increase order was passed by the house of Commons without a vote in February
-the order has now been approved by the House of Lords

Can anyone shed light on the history and timing of these new EDMs?

RichandJ

Haybob wrote: »

Sorry if Iam being a little pedantic but not all pensions are uprated using the September inflation figure, eg BT Section C use the December inflation figure.

I will concede that as one of the schemes I administer also uses December. However I would contend that a majority probably use September, especially those which are or were public sector.

Ripoff, that's still not the point, September is what has been used for the 2011 uprating order. Would you have given back the 5% 2009 increase because the figure affecting 2010 was negative ?

JamesU

viridens wrote: »

-The Pensions increase order was passed by the house of Commons without a vote in February
-the order has now been approved by the House of Lords

Viridens, the debate and vote (247/19) can be read in full in the transcript here:

Parliamentary debate and vote on switch to CPI (via Pensions Uprating Order, 17th Feb 2011)
http://www.publications.parliament.uk/pa/cm201011/cmhansrd/chan121.pdf

JamesU

viridens

JamesU
I stand corrected. My fault for believing info from my trade union.
Revised query below.

Given that:
-we are 8 months on from the announcement of the planned change to CPI
-The Pensions increase order was passed by the house of Commons with only 19 'noes' in February
-the order has now been approved by the House of Lords

Can anyone shed light on the history and timing of these new EDMs?

JamesU

On EDM1629, the Labour party have endorsed their view that it is acceptable to reduce the value of public sector pensions by a switch to CPI, albeit for only a few years rather than permanently. So both the ConDems and Labour party are of the view there is some form of fundamental right, under accenuating circumstances such as a large deficit, to reduce the value of final salary pensions in the public and private sector by switching from RPI to CPI. I do not accept this reasoning. Government is elected and given a mandate to use taxpayers money to pursue their policies in the interests of the electorate and that funding is discretionary, in effect it can be used for whatever purpose is considered appropriate. By contrast, public sector pensions are a future liability and not discretionary spending. The Government has a commitment and obligation throught legally binding contracts to provide previous employees with pensions that have increased in value according to a suitable index when they retire. Both parties are aware that CPI provides a lower method of indexing and can be used to make savings, and that this would be detrimental to the long term value of pensions. But neither party has a justified right to raid final salary pensions to make savings. This is why I support EDM1032 and why I do not accept EDM1629.

The political tit-for-tat on the issue of RPI/CPI during the debate on the Pensions Uprating Order in February was quite remarkable to read, and it was clear that a storm was brewing. But instead of proper evidence, rational debate, understanding and transparency on the present and future cost of public sector pensions and any real requirement to use CPI on the grounds of affordability (as opposed to saving money at the expense of pensioners), the issue seems to have become a political football with those pensioners effected by the changes trampled underneath and forgotten in the process.

Appreciate others may find EDM1629 a suitable short term compromise. I would be happier if the Labour party had made an effort to hold the ConDems to account on the key issue of why a switch from RPI to CPI is a necessity to make public sector pensions more affordable given the structural reforms already undertaken, cap and share and further reforms implemented following the Hutton report.

There does appear to be a political battle beginning here between the parties, just hope the rights and needs of pensioners and the electorate are not forgotten in the process

JamesU

MEY_3

Loughton_Monkey wrote: »

New EDM

"This house considers that Red Minibrand and his bunch of marxist colleagues should resign herewith from opposition and forever shut whichever orifice this garbage comes from. This country is a democracy, and so he should simply vote against the changes, but if they get through, then tough!"

Mmmm! I thought this is the sort of personalised (and may I say in this case juvenile) type of rant that some of you who have offered thanks here, only very recently appeared to condemn.

EDMs are a (small) part of the democratic process and anyone who can think the Labour Party have even a whiff of the Marxist about them must be either seriously deluded or completely ignorant about Marxism - possibly both.

Only a handful of posts in and already the debate takes a turn away from the thread. I begin to despair!

Ripoff_2

RichandJ wrote: »

I will concede that as one of the schemes I administer also uses December. However I would contend that a majority probably use September, especially those which are or were public sector.

Ripoff, that's still not the point, September is what has been used for the 2011 uprating order. Would you have given back the 5% 2009 increase because the figure affecting 2010 was negative ?

Richard, we could argue about figures etc till the cows come home. What really matters is that this change is Wrong, it's not Right to use CPI as they are doing and then justify using it as though they have right on their side, they do not and they know from the evidance provided by the professionals that that is the case, they didn't even consult them, therefore irrespective of any figures we might agree or disagree on, the fact is that this change is WRONG and RPI should be restored.

Ripoff