Tata pension - change from RPI to CPI and maybe more

kidmugsy

jamesd wrote: »

kidmugsy you know that retrospective changes to accrued pension benefits have happened many times so please stop the stuff with uk1.

If none come to mind here's a pair for private and public pensions:

1. Change to minimum pension age of 55 instead of 50
2. Increase in state pension age

Two contributions to why so many people visiting this forum express deep distrust over pensions. So let's add to that distrust. Reckless, reckless stuff. And all because of pre-referendum hysteria, and a minister who has handled his PR badly.

PensionTech

1. Change to minimum pension age of 55 instead of 50

Granted - but doesn't change the actuarial value of the benefits, which is of course what is protected.

2. Increase in state pension age

I have more sympathy for this, being based on decades of mortality research and equality legislation, than for a fairly thin and extremely rushed argument that goes - and I quote from the consultation - "While the failure of a DB pension scheme is unpleasant for members, we strongly believe that in normal circumstances entry into the PPF and PPF compensation payments is an adequate outcome. However, we are also clear that there are very specific circumstances surrounding TSUK and the BSPS. It is imperative that the Government does everything in its power to support the steel industry and those directly affected by the situation at TSUK." In other words, the PPF is usually fine and they don't actually have a problem with the value of benefits it would provide, much as they haven't had a problem with the benefits it provides for hundreds of thousands of other people, but because the Government needs to make a show of supporting the steel industry, they can introduce special measures for them that could jeopardise benefits for all other DB members. It's hard not to see this as a cheap political manoeuvre to cover up criticism of the govt's handling of the steel crisis.

The state pension is, of course, a benefit, rather than a contractual accrued right.

PensionTech

Are you suggesting that they could do this just for TATA or for every scheme, simply because of the TATA situation?

They could do this for any scheme they choose. If introduced for Tata - in other words, if in this case they manage to bypass the firm legal principle that the value of member benefits must not be reduced without consent - there is absolutely no reason why they can do this for Tata Steel now but not, if they felt like it a couple of years down the line, another politically sensitive company.

uk1

With great respect ... as they say ... ... the hairs that you choose to split seem somewhat uneven.

The government isn't trying to be seen to save the steel industry. They are genuinely trying to save the industry. Why would they not do so? Why do you ascribe different motives and something different? It makes no sense for them to want anything else.

Clearly if you are starting from the standpoint that nationalisation is worthy of anything it may cost to the rest of us, then everything else they to avoid nationalisation is wrong.

So far as this theme of breakdown of trust about anything and everything, sensible people understand that things do change and should mistrust those that place principles above common sense and responding in way that sorts out todays problems in the context of today and tommorow rather than what happened yesterday. Sensible people understand this and accept and trust pragmatic solutions that cope with a changing world, as long that is that they are intelligent, open minded and it is explained patiently too them.

The PPF is a lifeboat that is a magnet for icebergs. Your favoured solution increases the size and number of icebergs.



Jeff

PensionTech wrote: »

Granted - but doesn't change the actuarial value of the benefits.

I have more sympathy for this, being based on decades of mortality research and equality legislation, than for a fairly thin and extremely rushed argument that goes - and I quote from the consultation - "While the failure of a DB pension scheme is unpleasant for members, we strongly believe that in normal circumstances entry into the PPF and PPF compensation payments is an adequate outcome. However, we are also clear that there are very specific circumstances surrounding TSUK and the BSPS. It is imperative that the Government does everything in its power to support the steel industry and those directly affected by the situation at TSUK." In other words, the PPF is usually fine, but because the Government needs to make a show of supporting the steel industry, they can introduce special measures for them that could jeopardise benefits for all other DB members. It's hard not to see this as a cheap political manoeuvre to cover up criticism of the govt's handling of the steel crisis.

The state pension is, of course, a benefit, rather than a contractual accrued right.

uk1

I am finding your views on this topic a moving target that I cannot focus clearly on.

Previously you argued passionately in every post that the government shouldn't under any circumstances make retrospective changes to pension funds because of the breakdown of trust etc, and you argued with me at every point they shouldn't do so. Now you are suggesting they should retrospectively change the rules for this component.

Am I misunderstanding the attatchment you have to not changing rules under any circumstances retrospectively?

Jeff

PensionTech wrote: »

They could do this for any scheme they choose. If introduced for Tata - in other words, if in this case they manage to bypass the firm legal principle that the value of member benefits must not be reduced without consent - there is absolutely no reason why they can do this for Tata Steel now but not, if they felt like it a couple of years down the line, another politically sensitive company.

PensionTech

There are other measures, many other measures, that Mr Javid could be taking to help Tata Steel as a company but appears not to have exhausted. So this is not a last resort. It is a first. The fact that the discussion even moves on to how to save the steel industry shows that this is a political issue and not one of member outcomes. Why should millions of other people have their pension promises put at risk because the steel industry is suffering?

PensionTech

I am finding your views on this topic a moving target that I cannot focus clearly on.

Previously you argued passionately in every post that the government shouldn't under any circumstances make retrospective changes to pension funds because of the breakdown of trust etc, and you argued with me at every point they shouldn't do so. Now you are suggesting they should retrospectively change the rules for this component.

Am I misunderstanding the attatchment you have to not changing rules under any circumstances retrospectively?

I'm not sure what you're talking about. I explained what the government could do if this goes ahead, not what I thought it should do. That was, after all, your question. This is the exact opposite of what I think should happen; I thought I had been rather clear about that.

And as for a moving target - hardly, though I find that quite ironic from somebody who started with some vague thoughts such as "this might improve member confidence", but after having successive arguments shot down will now fight to the dying breath to save the apparently beleaguered PPF. Or perhaps you are now deeply concerned about the UK steel industry. I'm having a challenge keeping up. It would appear that you are determined to argue for this being a good idea because you originally took that position, but justifying the basis after the fact.

uk1

But it is the pension scheme that is the obstacle to saving the company from a new owner taking it. You do understand that don't you?


Jeff

PensionTech wrote: »

There are other measures, many other measures, that Mr Javid could be taking to help Tata Steel as a company but appears not to have exhausted. So this is not a last resort. It is a first. The fact that the discussion even moves on to how to save the steel industry shows that this is a political issue and not one of member outcomes. Why should millions of other people have their pension promises put at risk because the steel industry is suffering?

PensionTech

But it is the pension scheme that is the obstacle to saving the company from a new owner taking it. You do understand that don't you?

I do indeed. I also understand that there are other measures that can be taken, which wouldn't require rewriting primary legislation, to separate the pension scheme from the company.

kidmugsy

PensionTech wrote: »

By the way, I mentioned earlier that ... the govt could also remove pre-97 increases in payment altogether using much the same reasoning. Reading the consultation more closely, it appears that this is exactly what they are in fact trying to do.

Ah. Now, I can see a potential widespread benefit to doing that. They could then impose the same rule change on all the "public sector" pensions - one must be even-handed, must one not - and save the taxpayer gazillions. I take it all back: retrospective breaking of faith is a wonderful thing, so wonderful that it must be immediately extended to MPs, civil servants, NHS employees, members of the TPS, and LGPS, etc etc.