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RPI / CPI (Read 9195 times)
Knocking On
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RPI / CPI
Mar 17th, 2011, 5:28pm
 
I have found the following info concerning the mooted RPI/CPI change and the effect on Pensions in payment.
From: The "This is Money" website 3/3/11

QUOTE:
Speculation has been rife that the Government would allow pension schemes to switch the link for annual payout rises from RPI to CPI.... which tends to be lower.

But the government said today (3/3/11) companies will not be allowed to override existing rules that explicitly promise to link payouts to RPI.
Pensions minister Steve Webb argued that such a change would undermine people's confidence in saving into a pension.

He said "Contrary to press speculation, we do not plan to grant schemes a modification power to make it easier to use CPI where they do not already have the power to amend scheme rules".

"We believe that members' trust in schemes and the scheme rules could be serverely damaged if we intervene to give schemes the power to change their rules where the scheme does not already have such a power.

The decision means that schemes with the RPI link "hardwired" into their rules will NOT be able to switch to the lower-paying CPI index.
All pension schemes that promise to raise benefits each year in line with the 'minimum level set by the Government' will be affected. But those that say they will increase pensions by at least RPI have been spared.

So how does this affect the BBC Pension scheme? - and us Pensioners-

Well, reading the Trust Deed and Rules (on "My Pension website") quote:

Section 9.1b:Increase of Pensions

The percentage increase in the Index published for the previous calendar year ending Dec 31st.

"INDEX" means the Government Index of Retail Prices, or such other published index of prices which the Trustees and the BBC may agree will be the index instead, following a change in the compilation of the Government Index.

It appears then that the BBC Scheme DOES have the power to change how the increase is measured in the Trust Deed and Rules...even though RPI is mentioned in the Rules and again in the Pensions Increases section of the My Pension website...which I take it is what is meant by "Hardwired" as RPI is actually is the Index actually quoted.

So any decision to change to CPI for the BBC Scheme will be an "in-house" decision... not one from Government, as thay have clearly stepped back from the issue should RPI be mentioned in Scheme rules.

I wonder what the BBC Trustees will be considering? I would hope that "Morally" they would look at pensions in payment as untouchable.....moreso as the Rules don't specify either way to which pensions the new Index would apply...should they indeed change which Index is used to calculate the Pension increases.
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Knocking On
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Re: RPI / CPI
Reply #1 - Mar 9th, 2012, 10:42pm
 
It was comforting to read in the recent BBC PA Newsletter a pretty robust confirmation that BBC Pensions in payment are to continue to rise with the rate of RPI NOT CPI.....it would take an act of Parliament to change this, as it is written into the BBC Pension Scheme Rules ...as I have mentioned before.

HOWEVER....

The ONS on 13th March are announcing that they are changing the "contents" of the basket of goods and services that they use to calculate RPI and CPI.

Call me cynical but is this a way of bringing RPI closer to the lower CPI?.

Then again with most FS Pensions now using the CPI measure, maybe this is a effort to ensure the CPI will always be low...thereby really hammering FS Pension Schemes.

If only the CPI basket is altered, then "we" of the generation with "Old" and "New" Scheme pensions are indeed very fortunate.
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JohnW
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Re: RPI / CPI
Reply #2 - Mar 10th, 2012, 1:00pm
 
Thanks, "Knocking On"!
I'm sure that you and I aren't the only ones who are concerned about this 'possibility'!!

If the Gov't/ONS can change what is 'included in the basket' then one could conceivably suppose they have the capability to manipulate both RPI and CPI anyway. Either way we're all screwed!!

Let's hope the "staff representatives" on the Pension Committee are alive to all of these possibilities, and ready to fight/are fighting any such proposals.

Wink I wonder if Mark Thompson (current DG) and any/all the other highly paid execs have their contributions paid into the BBC Pension Fund, or would they perhaps have "private" pensions? If so, wouldn't he/they be unaffected by any change made to the Beeb pension link? [Just thinking 'aloud' ... so to speak! Roll Eyes ]
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WG
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Re: RPI / CPI
Reply #3 - Mar 13th, 2012, 6:15pm
 
Suggest an Essentials Bundle for calculating inflation rates. Heating,  Council tax, Food, Mortage rates  and UK Travel are the 5 key elements because there is no other choice other than "go without".
Including luxury goods in the new bundle such as Ipads is surely unconstructive?
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Re: RPI / CPI
Reply #4 - Mar 14th, 2012, 9:44am
 
WG wrote on Mar 13th, 2012, 6:15pm:
Including luxury goods in the new bundle such as Ipads is surely unconstructive?


And electrical/electronic goods have a habit of reducing their price in real terms over the years. But, I suppose you can say that some prices go up, others go down, which is why we have the "basket" in the first place.
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Knocking On
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Re: RPI / CPI
Reply #5 - Oct 8th, 2012, 10:14pm
 
So it appears with todays news that the ONS are trying to go ahead with changing the way RPI is calculated as to bring it more in line with CPI.

Oh well........
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