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

Ripoff_2

JamesU wrote: »

Ripoff, I feel this new EDM1629 could undermine a lot of the good work and substantial effort you made on EDM1032, and the substantial contributions that many other OPs have made there.

On this thread and 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 reimburse previous employees when they retire with pensions that have increased in value according to a suitable index. 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

Ripoff, can you delete #6?? Thanks.

JamesU

Deleted James as requested. I do agree with many of your comments but I see 1629 as the only way to get a proper debate on this whole issue, not perfect I know but what else do we have?

shaunrc

I thought that I would join the debate as I contributed to the previous post on the switch from RPI to CPI for pensions uprating when it was first announced last year. I am an economist who writes often about inflation and I also have the full CII examinations for pensions.

After following yesterday's Budget I have some strong views on the manipulation of inflation indices which is currently going on. Here is a sample from my article of today.

"This sleight of hand is at best sneaky and at worse disengenuous. Plainly using two different inflation rates has no logic and choosing them to suit yourself the most is in some ways rather insulting to the public as he is plainly hoping that it will be regarded as arcane and complex.

Over time the impact of this ruse will build up and become very significant. It is not possible to be precise about the cost because the gap between CPI and RPI is variable rather than a constant. When the original documents for switching from RPI to CPI as an inflation target were published I remember that at that time an annual difference of 0.7% per annum was estimated. Now this depended on previous circumstances but does give an idea"

The full article can be found on http://www.mindfulmoney.co.uk/wp/author/shaun-richards/

Interested_Taxpayer

All. The Civil Service Pensioners' Alliance is urging their members to write NOW to their MPs asking them to support both EDM 1629 and EDM 1625.

www.cspa.co.uk

MPs signing the EDMs is very important because:-

"If sufficient MPs pray against the 2011 Pension Increase (Review) Order by signing the EDMs, the Government may be forced into having to hold a further debate in the House of Commons, opening up the opportunity for the Order to be annulled. Therefore, please contact your MP urgently, requesting their support for both EDM 1629 and EDM 1625. The 2011 Pension Increase (Review) Order is due to become operative with effect from 11 April 2011. Therefore, time is of the essence"

The web site home page also reports on the possible legal challange against the switch to the CPI and all this is covered in Newsletter 66. Click on CPSA Newsletters on the left hand toolbar.

TIME FOR ACTION AGAIN FOLKS. WRITE TO OR EMAIL YOUR MP NOW.

viridens

Whilst these new EDMs and their high-profile proposers may hopefully breathe new life into the campaign, I share the concern of other posters that 1629 undermines some foundations of our cause and accepts the principle that CPI is fit for purpose. Although better late than never, I also wonder why it has been left to the 11th hour to begin this opposition when there has been every opportunity since last June.

I trust that if/when the EDMs are successful the proposers and supporters can formulate more convincing and robust arguments against CPI indexation than were evident on 17 Feb, when the vote was 247/19 in favour. http://www.publications.parliament.uk/pa/cm201011/cmhansrd/chan121.pdf

So off I go. I will write and email my local Con MP again, an Eton and Oxford man who's career "...has focused on pension fund management. For many years he has managed British and overseas pension funds and he now runs his own company".... He fully understands my concerns, but CPI is a more apprpriate measure blah blah. I will also badger my trade union again to actually mention these EDMs on their site and in emailshots, which they never have for EDM1032. And write more letters to the local press.
-Hope to see you behind a suitable pensioners' banner on Saturday.

JamesU

viridens wrote: »

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

Viridens and other OPs, the links below give dates the EDMs were submitted, full wording and any ammendments, and their ongoing status regarding the MPs supporting them:

Details on call to postpone the change from RPI to CPI until the appropriateness of CPI as a measure of price increases borne by pensioner households are more fully evaluated here:.
http://www.parliament.uk/edm/2010-11/1032
http://www.parliament.uk/edm/2010-11/1032#1032A1

Details on call for annulment of pensions uprating order (2011) here:
http://www.parliament.uk/edm/2010-11/1625

Details on call for annulment of pensions uprating order (2011) because it requires the uprating of public sector pensions using CPI here:
http://www.parliament.uk/edm/2010-11/1629

JamesU

Wolstan_Dixie

Well now chaps (and chapesses), I got my pay slip for my Local Government Pension Scheme pension today. It informs me that my pension will increase by 3.1% in April ie the September CPI.

As I understand it the LGPS rate should be linked to the State Pension rate? And the State Pension is being increased by RPI one last time this April?

So a double betrayal

RichandJ

Wolstan_Dixie wrote: »

Well now chaps (and chapesses), I got my pay slip for my Local Government Pension Scheme pension today. It informs me that my pension will increase by 3.1% in April ie the September CPI.

As I understand it the LGPS rate should be linked to the State Pension rate? And the State Pension is being increased by RPI one last time this April?

So a double betrayal

No, you don't understand it. LGPS pension increases are not linked to the increase in the Basic State Pension.

So no "double betrayal".

Does anyone really think local government pension administrators would decide, off their own bat, to unilaterally apply an increase to pensions other than what legislation states ? If so, I have this bridge you may be interested in.

viridens

RichardJ
That sound thrashing of a newbie poster seems a bit harsh.
I don't have your career experience either. Please treat me gently when you spot my mistakes.

Wolstan Dixie - I believe that most posters understand and share your disappointment with this first CPI'd pension increase.

Must get off now to walk to Hyde park with a few thousand friends..

RichandJ

viridens wrote: »

RichardJ
That sound thrashing of a newbie poster seems a bit harsh.
I don't have your career experience either. Please treat me gently when you spot my mistakes.

Wolstan Dixie - I believe that most posters understand and share your disappointment with this first CPI'd pension increase.

Must get off now to walk to Hyde park with a few thousand friends..

Can you keep the noise down as u go past my office then please. I'm on my 7th weekend in a row at work*, putting right 20 years of serial incompetence and stupidity, therefore I'm finding it a bit difficult to locate any charitable feeling toward anything ill-informed right now.

* which for a Monday to Friday 9-5er is not fun.

Wolstan_Dixie

Thats OK - I can take robustness.

In that case what is the statutory basis for using CPI for the LGPS?