Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • 50Twuncle
    • By 50Twuncle 14th May 18, 10:08 AM
    • 8,561Posts
    • 2,023Thanks
    50Twuncle
    Retrospective changes to pension
    • #1
    • 14th May 18, 10:08 AM
    Retrospective changes to pension 14th May 18 at 10:08 AM
    Can a company - retrospectively change the T&C of a pension - already in payment - when it makes the conditions worse for the payee ?
    I am talking about annual increases in payment....
Page 1
    • Brynsam
    • By Brynsam 14th May 18, 10:12 AM
    • 1,563 Posts
    • 1,135 Thanks
    Brynsam
    • #2
    • 14th May 18, 10:12 AM
    • #2
    • 14th May 18, 10:12 AM
    Could you be a bit more explicit about the change? Are you referring to the fact that pre-6 April 1988 GMP no longer gets increases?
    • 50Twuncle
    • By 50Twuncle 14th May 18, 10:15 AM
    • 8,561 Posts
    • 2,023 Thanks
    50Twuncle
    • #3
    • 14th May 18, 10:15 AM
    • #3
    • 14th May 18, 10:15 AM
    Could you be a bit more explicit about the change? Are you referring to the fact that pre-6 April 1988 GMP no longer gets increases?
    Originally posted by Brynsam
    No - I mean the rate of increase has changed from RPI to CPI
    This, over the years - will make a substantial difference
    • Brynsam
    • By Brynsam 14th May 18, 10:26 AM
    • 1,563 Posts
    • 1,135 Thanks
    Brynsam
    • #4
    • 14th May 18, 10:26 AM
    • #4
    • 14th May 18, 10:26 AM
    Depends entirely on the rules of the scheme. If these refer to 'inflation increases' but don't cite which index (and most rules don't specify it has to be RPI) then yes, it is possible that CPI could be used.

    Technically it's not a retrospective change because it doesn't affect entitlements you have already built up/are receiving. It only affects future payments.
    • 50Twuncle
    • By 50Twuncle 14th May 18, 10:47 AM
    • 8,561 Posts
    • 2,023 Thanks
    50Twuncle
    • #5
    • 14th May 18, 10:47 AM
    • #5
    • 14th May 18, 10:47 AM
    Depends entirely on the rules of the scheme. If these refer to 'inflation increases' but don't cite which index (and most rules don't specify it has to be RPI) then yes, it is possible that CPI could be used.

    Technically it's not a retrospective change because it doesn't affect entitlements you have already built up/are receiving. It only affects future payments.
    Originally posted by Brynsam
    The rules state that any pension increases will be RPI - But they have sent a letter out to (all ?) payees - stating that as from next year - they are only paying CPI increases .....
    When I said " retrospective" - I meant those already in receipt of pensions
    Since I am now 54 (ill health pension) - this will make a big difference by the time I am 100 !!
    • Brynsam
    • By Brynsam 14th May 18, 10:53 AM
    • 1,563 Posts
    • 1,135 Thanks
    Brynsam
    • #6
    • 14th May 18, 10:53 AM
    • #6
    • 14th May 18, 10:53 AM
    The rules state that any pension increases will be RPI - But they have sent a letter out to (all ?) payees - stating that as from next year - they are only paying CPI increases .....
    When I said " retrospective" - I meant those already in receipt of pensions
    Since I am now 54 (ill health pension) - this will make a big difference by the time I am 100 !!
    Originally posted by 50Twuncle
    Much turns on the precise wording of the rules. It could be that they say something along the lines of 'increases to pensions in payment will, from the scheme's normal retirement date, be linked to RPI' (i.e. there is flexibility to pay CPI until then in the case of early retirements).

    I'd go back to the scheme and query it, especially if the rules specifically say RPI for pensions in payment.
    • molerat
    • By molerat 14th May 18, 11:40 AM
    • 19,305 Posts
    • 13,519 Thanks
    molerat
    • #7
    • 14th May 18, 11:40 AM
    • #7
    • 14th May 18, 11:40 AM
    BT are currently going through the courts on this one, they lost in the high court and are now going to appeal. Very strange for a pension to do this before the BT case is done and dusted.
    Last edited by molerat; 14-05-2018 at 11:43 AM.
    https://www.helpforheroes.org.uk/give-support/donate-now/
    • xylophone
    • By xylophone 14th May 18, 11:57 AM
    • 26,483 Posts
    • 15,724 Thanks
    xylophone
    • #8
    • 14th May 18, 11:57 AM
    • #8
    • 14th May 18, 11:57 AM
    http://www.pensions-expert.com/DB-Derisking/Go-Ahead-pension-scheme-moves-from-RPI-to-CPI?ct=true




    http://www.nortonrosefulbright.com/knowledge/publications/145265/pensions-briefing-rpi-and-cpi-12-things-you-should-know

    Do you have a copy of your Scheme Rules?
    • Finst
    • By Finst 14th May 18, 1:16 PM
    • 146 Posts
    • 126 Thanks
    Finst
    • #9
    • 14th May 18, 1:16 PM
    • #9
    • 14th May 18, 1:16 PM
    As others have said, this varies so heavily on the exact legal wording of your pension scheme rules. There have (and will continue to be for some time) various court cases testing different types of wording.


    The short answer is no, if your scheme rules guarantee RPI then they cannot change this to CPI for service already built up. But its quite common for rules to give enough leeway to justify a change to CPI (or even RPIJ, which is somewhere in between).


    For example, many rules say "RPI, or such other index published by the Government that the Trustees feel is appropriate", or "RPI, or another replacement index". RPI has had its status as an official government statistic withdrawn (due to some strong technical arguments that its formula overstates true inflation), which has led to another round of pension schemes considering whether it is still the right measure of inflation to use.

    I guess the question is, can you do anything about it? First port of call would probably be to question the Trustees on their justification for changing measure. If that answer isn't satisfactory, internal complaints process and then Ombudsman? However, if the Trustees have agreed to the change, they'll almost certainly have received legal advice confirming they can make the change, so I'd be surprised if you got anywhere.
    • brewerdave
    • By brewerdave 14th May 18, 2:32 PM
    • 5,092 Posts
    • 2,241 Thanks
    brewerdave
    As others have said, this varies so heavily on the exact legal wording of your pension scheme rules. There have (and will continue to be for some time) various court cases testing different types of wording.


    The short answer is no, if your scheme rules guarantee RPI then they cannot change this to CPI for service already built up. But its quite common for rules to give enough leeway to justify a change to CPI (or even RPIJ, which is somewhere in between).


    For example, many rules say "RPI, or such other index published by the Government that the Trustees feel is appropriate", or "RPI, or another replacement index". RPI has had its status as an official government statistic withdrawn (due to some strong technical arguments that its formula overstates true inflation), which has led to another round of pension schemes considering whether it is still the right measure of inflation to use.

    I guess the question is, can you do anything about it? First port of call would probably be to question the Trustees on their justification for changing measure. If that answer isn't satisfactory, internal complaints process and then Ombudsman? However, if the Trustees have agreed to the change, they'll almost certainly have received legal advice confirming they can make the change, so I'd be surprised if you got anywhere.
    Originally posted by Finst
    You will probably find that the Trustees are under significant pressure from the parent Company to minimise future Company contributions
    • Silvertabby
    • By Silvertabby 14th May 18, 2:51 PM
    • 3,242 Posts
    • 4,663 Thanks
    Silvertabby
    Most public sector pension schemes (including OP's Civil Service) switched from RPI to CPI for both pre-retirement and pensioner members from April 2011.

    I can't comment on old Civil Service scheme leaflets, but old LGPS leaflets certainly say that deferred and in payment pensions will increase each year in line with RPI. However, the tiny print in the scheme regs does indicate that the information in the leaflets may be subject to change. I expect that the Civil Service will have similar notes.

    Public sector unions took a case contesting the change to the High Court, but it was rejected. I was told - strictly off the record - by a union rep that it had been decided not to take this any further because they didn't want Joe Public to know exactly what a good deal the public sector pensions were in comparison with private pensions.
    Last edited by Silvertabby; 14-05-2018 at 3:00 PM.
    • Brynsam
    • By Brynsam 14th May 18, 3:44 PM
    • 1,563 Posts
    • 1,135 Thanks
    Brynsam
    You will probably find that the Trustees are under significant pressure from the parent Company to minimise future Company contributions
    Originally posted by brewerdave
    That is likely to be true - but it isn't a justification for bending under pressure, unless there are good reasons to do so (pleasing the employer isn't one of them).
    • kidmugsy
    • By kidmugsy 14th May 18, 5:12 PM
    • 11,576 Posts
    • 8,101 Thanks
    kidmugsy
    Most public sector pension schemes (including OP's Civil Service) switched from RPI to CPI for both pre-retirement and pensioner members from April 2011.
    Originally posted by Silvertabby
    My principal DB scheme made the same switch even though it is not a public sector scheme. It turned out that although the leaflets over the years had always chattered about RPI-linking, the scheme rules specified linking to inflation in the same way as for ... civil servants I think it was. Naturally the rules governed what happened.

    If anyone my age were to tell me that if he'd known about the difference between the rules and the leaflets he'd never have joined the scheme I'd tell him he was lying. It's annoying but those of us who didn't read the rules have only ourselves to blame for being surprised.

    EDIT: come to think of it we could blame the union for not warning us but that would be the height of hypocrisy since everyone acknowledged that the union was utterly useless on anything to do with pensions (and on most other things too).
    Free the dunston one next time too.
    • 50Twuncle
    • By 50Twuncle 14th May 18, 5:49 PM
    • 8,561 Posts
    • 2,023 Thanks
    50Twuncle
    Out of interest
    PCS union still offers its own staff a RPI based pension increase !!
    • atush
    • By atush 14th May 18, 6:36 PM
    • 17,173 Posts
    • 10,736 Thanks
    atush
    If you have taken an ill health retirement under age 55, I am surprised you expect to live to 100
    • 50Twuncle
    • By 50Twuncle 14th May 18, 6:41 PM
    • 8,561 Posts
    • 2,023 Thanks
    50Twuncle
    If you have taken an ill health retirement under age 55, I am surprised you expect to live to 100
    Originally posted by atush
    I was 47 at retirement !!
    Why not - being disabled does not mean death !
    I stand as much of a chance of making my ton as anyone else !!
    Last edited by 50Twuncle; 14-05-2018 at 8:10 PM.
    • brewerdave
    • By brewerdave 15th May 18, 8:25 AM
    • 5,092 Posts
    • 2,241 Thanks
    brewerdave
    That is likely to be true - but it isn't a justification for bending under pressure, unless there are good reasons to do so (pleasing the employer isn't one of them).
    Originally posted by Brynsam

    ...but if there is a shortfall in the "pot" (which is highly likely with most DB schemes) the trustees have to agree to a schedule of extra contributions made by the parent Company to fill/close the gap - probably politically easier to achieve if future liabilities have been reduced by changing from RPI to CPI!
    • p00hsticks
    • By p00hsticks 15th May 18, 9:30 AM
    • 6,380 Posts
    • 6,914 Thanks
    p00hsticks
    I was 47 at retirement !!
    Why not - being disabled does not mean death !
    I stand as much of a chance of making my ton as anyone else !!
    Originally posted by 50Twuncle

    There's a difference between being disabled and being in ill health though.....
    • Keep pedalling
    • By Keep pedalling 15th May 18, 9:47 AM
    • 5,411 Posts
    • 6,094 Thanks
    Keep pedalling
    BT are currently going through the courts on this one, they lost in the high court and are now going to appeal. Very strange for a pension to do this before the BT case is done and dusted.
    Originally posted by molerat
    Whatever ruling is final given in this case it does not set any precedent for any other pension scheme. The case refers to section C pensioners, those like myself on sections A & B have already been switched to CPI.

    Each pension scheme will have its own rules, and its the interpretation of the interpretation of those rules that is at the heart of this case.
    • lisyloo
    • By lisyloo 15th May 18, 10:49 AM
    • 22,482 Posts
    • 11,082 Thanks
    lisyloo
    I stand as much of a chance of making my ton as anyone else !!
    If youre 54 you can expect to live until 85/88 for male/female in england.
    http://www.bbc.co.uk/news/health-44107940

    Your poit about RPI/CPI still stands but 100 is optimistic.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,405Posts Today

8,956Users online

Martin's Twitter
  • RT @Dora_Haf: @MartinSLewis So many people on here saying they're great until you get your PROPER job. What if Your proper job Is ON zero?

  • RT @hslt88: @MartinSLewis I?m a trustee for a youth charity. We only have a limited pool of funds for flexible youth workers for holiday sc?

  • RT @Dan_i_elle_88: @MartinSLewis Loved working zero hour agency care work. Never out of work and I loved having the flexibility! Only left?

  • Follow Martin