Military Pensions....what now?

[Hueymeister]

What are the effing government up to now?

[iRaven]

Huey

If you're talking about this BBC News - Military pensions 'not protected', Downing St says (http://www.bbc.co.uk/news/uk-politics-11743539)
then it's old news - linked to CPI rather than RPI.

CPI was higher than RPI in 1991, 1992, 1993, 1997, 2009 and the same in 1999 and 2002 - you win some, lose some. Also, RPI was negative in 2009! It would appear that CPI fluctuates far less than RPI so it gives a more settled growth - see graph in this PDF http://www.fandc.com/FundNets_FileLibrary/file/uk_ins_ldibulletin.pdf

Otherwise, I see nothing earth shatteringly new- or am I being thick?

iRaven

[draken55]

The recent Hutton Report made suggestions on possible future changes to Public Sector Pensions but ruled out any increase in Member contributions to AFPS.

However, HM Government had already decided in this years Budget to amend the indexation of benefits in payment by AFPS effective from 2011 by using the CPI (Consumer Prices Index) instead of RPI (Retail Prices Index).

CPI does not include housing costs or council tax and was felt by HMG "to be better attuned" to pensioners who are "more likely" to have paid off their mortgages. Historically CPI has been about 0.5% lower than RPI so the move will clearly save the Government money.

Perhaps HMG failed to appreciate the much greater impact the change will have on future increases to spouses pensions and especially Widow's and Widower's from AFPS whose spouses might die on active service at very young ages.

For this reason, the issue was raised by Lord Hutton in the Lords to-day but the Government response so far at least is that no change will be made:mad:

[Dengue_Dude]

. . . and there was I thinking that CPI was a Crash Position Indicator . . . ho hum

Oh well, back to the drawing board.

[david parry]

I R ;) RPI Index has been greater than the CPI index for 22 out of the last 30 years you do the Math:rolleyes: The Occupational Pensioners' Alliance (http://www.opalliance.org.uk/RPI-CPI2.htm) Servicemen face losing 12% of payout due to pension calculation changes | Mail Online (http://www.dailymail.co.uk/news/article-1306242/Servicemen-face-losing-12-payout-pension-calculation-changes.html)

[Al R]

It will be interesting to see what the punchy new Minister for Defence, Personnel, Welfare and Veterans does - given the fact he is ex SAS of course. Whoops.. :rolleyes:.

However, Defence Minister Andrew Robathan said it would not be possible to treat the armed forces differently from other public servants. "Given the economic wreckage left behind by Labour, tough decisions have had to be made to deal with the fiscal challenges the country is facing," he said.

It looks like the wagons are well and truly circled. I remember a cartoon from ages ago, featuring a terrified Jim Callaghan and Dennis Healey trying frantically to pass a telephone handset to each other, as some CDS barked at them down the line. The strapline read ''Dennis - if you want to disband the Royal Marines, you bloody well tell 'em''.

The problem is made worse by the fact that AFPS exceptionally for even public sector pensions, pays out so early - so any changes are hugely amplified. I can see that an exception should be made for dependents and widows, but arguing that a fit and healthy 40 year old leaving the Colours, should be given special treatment isn't going to cut much mustard. Interesting that John Moore-Bick at FPS is discussing the matter with the TUC though.

Give this quick quiz a go..?

The Forces Pension Society - New member Questionnaire (http://www.forcespensionsociety.org/pquiz/)

[davejb]

tics say military pensions should be made a special case

and


But a Ministry of Defence spokesman said: "It is not possible to treat the armed forces differently from other public servants. Attempting to retrospectively change previous pension schemes could not be done - it would be too expensive, especially given the current financial situation."


That's okay then - if it's too difficult to change an existing pension scheme, then feel free to leave mine alone, I'll stay linked to the RPI thankyou. Given that CPI, RPI etc tend to be based on 'baskets' that allegedly reflect a true cost of living whilst (as the Daily Mash had it) the basket included such essentials as moustache wax whilst ignoring things like bread, we're already on a downhill slope.

I understand that it is now being realised that pensions are unsustainable at current levels into the future, but an already earned pension (and for those still in, whatever part they have already earned) should be sacrosanct - it was part of the agrrement I made, I kept my part of the bargain, and with all due respect my pension is a welcome supplement to what I currently earn - I couldn't live off it.

Dave

[vecvechookattack]

Armed forces pensions 'must be protected' - UK Politics, UK - The Independent (http://www.independent.co.uk/news/uk/politics/armed-forces-pensions-must-be-protected-2133887.html?)

[Rigga]

Given that annual Pension changes are approx 1%-3% - that 0.5% variable discrepancy between RPI and CPI makes a big difference - and MY Mortgage could do with that difference!

Not impressed with yet more politicians reneging on "contracted" done-deals.

[Rigga]

Lunchbox,

I'm still buying pensions (and I expect payouts from four now) and I intend to keep buying pensions till the day I retire.

I always had the notion that successive fudging governments would keep reneging on deals - but that it would be the State Pension that disappeared from my grasp in my retirement, probably to be taken by Means Testing, and that my Military Pension would put me (us) above the State Pension limit.

With this buggerance I now fear for the validity of any UK-based pension to provide a decent retirement in ten years time (or eleven, or twelve, or...)

[Al R]

Lunchbox,

Private occupational schemes (BA etc) have just been given the green light (long known about) to be CPI linked now, and no longer RPI. When you consider that that one alone, has a £3.7 billions deficit, it could make a saving of 74% profits before tax. The reason from Pension Minister, Steve Webb yesterday? Pensioners apparantly, don't need RPI, which has traditionally always been linked to mortgages. The State forgets that one of its own quangos is aware that roughly 27% of people over the age of 65 still have a mortgage.

Webb defends CPI switch (http://www.professionalpensions.com/professional-pensions/news/1898256/webb-defends-cpi-switch)

The Office for National Statistics (ONS) figures for August/September showed that the CPI was 3.1%, while RPI was 4.7%. News released yesterday shows that CPI crept up to 3.2% while RPI was down to 4.5%. But, going from the last time I worked it out (Sept), this means that something as modest as the basic State pension will be £80 lower in value, in real terms, in 2011. Pensioners will lose out even more when the clandestine even smaller increases to SERPS and State Second Pension are taken into account and let us not forget the increase in VAT next year.

To make matters worse, CPI was only kept level partly by a lowering of second-hand cars prices, which pensioners tend not to need so much, but food and clothing (the real everyday necessities for pensioners), have been increasing in price. Thank god for Walkers though.
ONS.. the largest downward effects came from potato crisps and cauliflowers.I don’t wish to strike a discordant chord with the more senior folk here, but the real and greatest bombshells are yet to come. Baby boomers complain (rightly so perhaps) about their pensions being whittled away. But this disaster for them is nothing (especially when you take into account the relative benefits they enjoyed through positive social, health and educational changes as they grew up) to what it is going to be to the aspiring high earning professionals of tomorrow; those currently in their 20s and 30s and possibly 40s, who unless they take control of things and stop relying on being a passenger on some deranged financial rollercoaster, will be paying for Gordon Brown’s idiocy, vanity, arrogance and incompetence for the rest of their lives.

Mid life crisis? Not me guv. I’m just too busy being glad I am not a teenager – I really pity my kids going through Tertiary Education.. I've never had it so good.

Rigga, if you wish, you can still invest/save/draw income via a personal pension after retirement don't forget. Even if you draw no income from anywhere else, you can get 20% tax relief on savings up to a gross amount of £3600 per annum (I hope Mrs Rigga is having her annual allowance used to the Max as well). By way of information, if a pension isn't your bag, if you are a Higher Rate taxpayer and if you have 'time' on your side, take advice on something like a Maximum Investment Plan or Venture Capital Trust. A MiP is now a far better product and far more appropriate for far more people than it used to be in the 1980s.

[VinRouge]

Baby boomers complain (rightly so perhaps) about their pensions being whittled away.

I would suggest they read this then and learn to "suck it up". The boomers dont know how good they had it.

The Pinch: How the Baby Boomers Took Their Children's Future - And How They Can Give it Back: Amazon.co.uk: David Willetts: Books (http://www.amazon.co.uk/Pinch-Boomers-Their-Childrens-Future/dp/1848872313/ref=sr_1_1?ie=UTF8&qid=1289988298&sr=8-1)

[Rigga]

Al R,

Looks like good advice to me, much appreciated - I'll look into those areas though I only have some spare cash.