AFPS change from RPI to CPI
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Today I sent out a new Newsletter, in which I attempt to set out the link to the Military Covenant and how Military Service differs from Civil Service etc.
I'm sorry but it's 7 pages.....but very easy reading.
It can be viewed online at :~
http://jlrrac.org/gallery/albums/use...wsletter_3.pdf
.....enjoy !!!!
I'm sorry but it's 7 pages.....but very easy reading.
It can be viewed online at :~
http://jlrrac.org/gallery/albums/use...wsletter_3.pdf
.....enjoy !!!!
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Tony,
This is slightly longer and not as easy on the eye, but some of it might make for useful reading for you. It relates to the impact of using CPI as the measure of price increases on private sector occupational pension schemes – consultation on Government proposals. Not public sector, admitadly, but there are some parallels.
http://www.dwp.gov.uk/docs/cpi-priva...ltation-ia.pdf
In essence, the effect of the move from RPI to CPI is to reduce the value of private sector benefits over the next 15 years by £83 billions (8.4% more than the December estimate - maybe the DWP PUS is of the same school as the MoD PUS..?). For 2 million relevant active members of pension schemes, the reduction in their annual rate of pension accrual is between £2,250 per year and £2,500 a year on average - in other words, they will be up to £2,500 a year worse off right now.. that is the implied drop in their remuneration. But they won't feel it until they retire - when their pensions will be up to 12% lower than would otherwise have been the case (in real terms) in 2027 and 20% lower in 2050.
In other words, £83 billions is being transferred from pensioners to the scheme owners and shareholders. This sort of revaluation makes the savings from RAF job losses look like a drop in the Ocean. You can bet your bottom dollar that George Osborne would quite happily delete those few words, and simply insert the word 'taxpayer'. Either way, and at the risk of instigating generation warfare, it makes retirement a far less certain place for even Generation X and the I-pod Generation, let alone either or both of those compared to baby boomers.
Playing Devil's Advocate, it puts the scale of the struggle you are going to face with your campaign in context I guess.
This is slightly longer and not as easy on the eye, but some of it might make for useful reading for you. It relates to the impact of using CPI as the measure of price increases on private sector occupational pension schemes – consultation on Government proposals. Not public sector, admitadly, but there are some parallels.
http://www.dwp.gov.uk/docs/cpi-priva...ltation-ia.pdf
In essence, the effect of the move from RPI to CPI is to reduce the value of private sector benefits over the next 15 years by £83 billions (8.4% more than the December estimate - maybe the DWP PUS is of the same school as the MoD PUS..?). For 2 million relevant active members of pension schemes, the reduction in their annual rate of pension accrual is between £2,250 per year and £2,500 a year on average - in other words, they will be up to £2,500 a year worse off right now.. that is the implied drop in their remuneration. But they won't feel it until they retire - when their pensions will be up to 12% lower than would otherwise have been the case (in real terms) in 2027 and 20% lower in 2050.
The total impact is found by summing the stock and flow impacts, i.e. costs (and equal benefits) of £83.0bn. The cash flow of these impacts will be felt over many years. For regulatory purposes it is helpful to convert this to an annual equivalent. The average annual benefits in the period to 2025 are £5.7bn. Please note that this figure does not relate to the cash flows of firms or the pensions of scheme members and is provided purely and solely for illustrative purposes.
Playing Devil's Advocate, it puts the scale of the struggle you are going to face with your campaign in context I guess.
Whatever happens HMRC will be hovering, ready to pick your pockets by means testing over 65 and long term married tax codes. And don't forget only the basic part of the state pension will be increased annually.
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Our first press release.............
PRESS RELEASE
PROTECT THE MILITARY PENSION
PETITION
The Coalition Government have failed to observe the Military Covenant and has sanctioned the devaluation of the Armed Forces Pension Scheme. We, as veterans are disappointed by the failure to discharge their promise to uphold the Military Covenant and have therefore organised a petition to help voice our concern. Currently the petition has achieved 4,000 electronic and actual signatures and can be found online at:
Protect Military Pensions
The Royal British Legion, the Forces Pension Society and a number of senior serving and retired generals have written to the Government voicing their concerns but we, as veterans wished to voice are own concern. The petition provides that opportunity and has been supported by a range of people from very senior officers in all three services to junior ranks, along with many veterans and civilians, many with gallantry medals and decorations for their service.
THE FACTS
The Coalition say:
It is right to use one index for state, public private pensions and social security benefits and the Consumer Price Index (CPI) is appropriate.
The Veterans answer that with:
The Armed Forces Pension Scheme stands apart from other public schemes for many reasons the greatest being the Military Covenant (see newsletter 3). The Armed Forces Pay Review Body adjusted previous pay recommendations over the years by taking into account RPI and the none-contributory pension scheme and adjusting the X factor. Unlike other public pensions the RPI has been imbedded within the Military Pension for many years.
The Coalition Say:
CPI is the headline measure of inflation in Great Britain forming the target for the Bank of England Monetary Policy Committee (MPC)
The Veterans answer that with:
This clearly is not the case, the primary role of the MPC is to keep the inflation rate within the government’s target set for them. Interest rates are not set with pensions in mind although it clearly has an impact.
The Coalition Say:
CPI excludes mortgage interest payments, which are not relevant to the majority of pensioners and benefit recipients: only 7% of pensioners have mortgages
The Veterans answer that with:
This is a misuse of statistics, the figure does not include service personnel. In fact following a request under the Freedom of Information Act the DWP admitted they have no figures for service pensioners who have a mortgage.
The most relevant point to note is that a service career often comes to an end after 22 years at the age of 40. Getting on the housing ladder then becomes an option that is taken much later in life for Armed Forces personnel rather than those in civilian life. This is one of the main reasons why it is so important to align service pensions with the RPI.
The CPI does not take account of the mortgage interest rate, rent, and many other costs associated with housing, which can be the largest item in any family budget.
Many spouses of service pensioners gave up working to be with their husbands/wives and children when they were posted within the UK or abroad, reducing their ability to accrue a private or public sector pension or a career. This is reflected in the military pay structure, through the X Factor.
The Coalition Say:
The methodology used to calculate the CPI takes into account the fact that many people tend to trade down to cheaper goods when prices rise - the RPI does not
The Veterans answer that with:
The stated aim of the DWP’s is to “protect the purchasing power of pensions” it seems
contradictory to use the CPI, which takes account of those needing to trade down.
The Coalition Say:
Such is the scale of the economic problems that we inherited that no part of society, not even the armed forces can be fully exempt from the need to find ways to reduce the budget deficit.
The Veterans would suggest:
The Armed Forces face restraints on their budget just the same as everybody else, however, the Armed Forces are unique in their pension needs and this must be taken account of.
Previous Newsletters
Newsletter I
http://jlrrac.org/gallery/albums/use...wsletter_1.pdf
Newsletter 2:
http://jlrrac.org/gallery/albums/use...wsletter_2.pdf
Newsletter 3
http://jlrrac.org/gallery/albums/use...wsletter_3.pdf
PROTECT THE MILITARY PENSION
PETITION
The Coalition Government have failed to observe the Military Covenant and has sanctioned the devaluation of the Armed Forces Pension Scheme. We, as veterans are disappointed by the failure to discharge their promise to uphold the Military Covenant and have therefore organised a petition to help voice our concern. Currently the petition has achieved 4,000 electronic and actual signatures and can be found online at:
Protect Military Pensions
The Royal British Legion, the Forces Pension Society and a number of senior serving and retired generals have written to the Government voicing their concerns but we, as veterans wished to voice are own concern. The petition provides that opportunity and has been supported by a range of people from very senior officers in all three services to junior ranks, along with many veterans and civilians, many with gallantry medals and decorations for their service.
THE FACTS
The Coalition say:
It is right to use one index for state, public private pensions and social security benefits and the Consumer Price Index (CPI) is appropriate.
The Veterans answer that with:
The Armed Forces Pension Scheme stands apart from other public schemes for many reasons the greatest being the Military Covenant (see newsletter 3). The Armed Forces Pay Review Body adjusted previous pay recommendations over the years by taking into account RPI and the none-contributory pension scheme and adjusting the X factor. Unlike other public pensions the RPI has been imbedded within the Military Pension for many years.
The Coalition Say:
CPI is the headline measure of inflation in Great Britain forming the target for the Bank of England Monetary Policy Committee (MPC)
The Veterans answer that with:
This clearly is not the case, the primary role of the MPC is to keep the inflation rate within the government’s target set for them. Interest rates are not set with pensions in mind although it clearly has an impact.
The Coalition Say:
CPI excludes mortgage interest payments, which are not relevant to the majority of pensioners and benefit recipients: only 7% of pensioners have mortgages
The Veterans answer that with:
This is a misuse of statistics, the figure does not include service personnel. In fact following a request under the Freedom of Information Act the DWP admitted they have no figures for service pensioners who have a mortgage.
The most relevant point to note is that a service career often comes to an end after 22 years at the age of 40. Getting on the housing ladder then becomes an option that is taken much later in life for Armed Forces personnel rather than those in civilian life. This is one of the main reasons why it is so important to align service pensions with the RPI.
The CPI does not take account of the mortgage interest rate, rent, and many other costs associated with housing, which can be the largest item in any family budget.
Many spouses of service pensioners gave up working to be with their husbands/wives and children when they were posted within the UK or abroad, reducing their ability to accrue a private or public sector pension or a career. This is reflected in the military pay structure, through the X Factor.
The Coalition Say:
The methodology used to calculate the CPI takes into account the fact that many people tend to trade down to cheaper goods when prices rise - the RPI does not
The Veterans answer that with:
The stated aim of the DWP’s is to “protect the purchasing power of pensions” it seems
contradictory to use the CPI, which takes account of those needing to trade down.
The Coalition Say:
Such is the scale of the economic problems that we inherited that no part of society, not even the armed forces can be fully exempt from the need to find ways to reduce the budget deficit.
The Veterans would suggest:
The Armed Forces face restraints on their budget just the same as everybody else, however, the Armed Forces are unique in their pension needs and this must be taken account of.
Previous Newsletters
Newsletter I
http://jlrrac.org/gallery/albums/use...wsletter_1.pdf
Newsletter 2:
http://jlrrac.org/gallery/albums/use...wsletter_2.pdf
Newsletter 3
http://jlrrac.org/gallery/albums/use...wsletter_3.pdf
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Yes, thanks for that....
An interesting point. I put a FoI request in to the Bank of England asking what do they use for their pensions...CPI or RPI. No Answer. So I asked my MP to ask.... Months past then I recieved a note from my MP with the replies she had recieved.
Bet you can't guess what the Bank of England use to link their pension to inflation.....
Errrrrrrrrrr RPI !!
It appears one rule for them and another rule for the rabble !
An interesting point. I put a FoI request in to the Bank of England asking what do they use for their pensions...CPI or RPI. No Answer. So I asked my MP to ask.... Months past then I recieved a note from my MP with the replies she had recieved.
Bet you can't guess what the Bank of England use to link their pension to inflation.....
Errrrrrrrrrr RPI !!
It appears one rule for them and another rule for the rabble !
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Bit of a side issue, but....
Would anybody know whether a Service pension granted early on the grounds of invalidity in service (i.e. disability due wounds/injury) is taxable (or not)?
Just got a chitty from Pension Paymaster indicating that tax deductions had been hiked to 27.5%. Hadn't paid much attention to this before - or received any similar notices. Is this just some sort of abstract clawback?
I'm aware that HM Revenue often attributes a higher tax coding (putative and puntworthy) on the basis that if the tax-payer doesn't query it, everybody's apparently happy with their status quo. End result is a pension decrease of course, and that's why I noticed it.
I know, I'm slack and a natural victim of bureaucracy. Comes from years of wifely brow-beating.
Just got a chitty from Pension Paymaster indicating that tax deductions had been hiked to 27.5%. Hadn't paid much attention to this before - or received any similar notices. Is this just some sort of abstract clawback?
I'm aware that HM Revenue often attributes a higher tax coding (putative and puntworthy) on the basis that if the tax-payer doesn't query it, everybody's apparently happy with their status quo. End result is a pension decrease of course, and that's why I noticed it.
I know, I'm slack and a natural victim of bureaucracy. Comes from years of wifely brow-beating.
