APS PENSION UPDATE ...
The latest from Captaibn Mike Post:-
Dear all
I hope that you are enduring the current health emergency with fortitude.
The reason that I am writing to you is because once again your help is needed. The Treasury and the UK Statistics Authority are currently consulting on when to change the method used to calculate the Retail Prices Index (RPI) https://www.gov.uk/government/consultations/a-consultation-on-the-reform-to-retail-prices-index-rpi-methodology .
The consultation closes at 23.59 BST on 22 April 2020. As you know there has been a debate about which index is the best measure of inflation - this is a little academic when, for example, Which reports that care home costs are increasing at over twice the rate of inflation, be it RPI or CPIH. The Government has decided that it will change the way in which the RPI is calculated. The consequence of the change will be that the RPI will be 1% lower in the future with a massive compound effect on pensions and investments protected against inflation by the RPI. The consultation asks if the change should take place in 2030 or 2025 or any other date.
Alarmingly the consultation makes no reference to compensation. If no compensation is paid to holders of RPI-protected pensions or RPI-protected investments, this will effectively be a default on the government’s obligation. The consequence will be massively diminished lifetime pension income and returns for pension funds. Here is a headline from the Easter Day edition of The Sunday Times: Pension fund changes will cost BT £1.7bn Members will be ‘thousands of pounds worse off’.
At a time of global pandemic it might be thought inappropriate to be insisting that the effect of a decision to diminish the value of the RPI without compensation should be resisted, however the severe adverse effect of not resisting would be felt by pensioners for many years. It is vitally important that the interests of long-lived pensioners should be successfully defended at this time of economic turmoil and uncertainty.
ABAP is finalising its own response in which it asks to be associated with the responses from both the APS and the NAPS Trustees. MPs are influenced by constituents’ concerns.
Will you please therefore email an individual response to the consultation before 23.59 on 22 April 2020? https://www.gov.uk/government/consultations/a-consultation-on-the-reform-to-retail-prices-index-rpi-methodology
All you need to say is that whenever the changed method of calculating the RPI is introduced, be it 2030, 2025 or any date in between, a failure to compensate holders of RPI-protected pensions and RPI-protected investments would be an effective Government default on its obligations - which would be quite shocking behaviour by a UK government.
Also send a copy of your response to your MP whose email address may be found at https://www.theyworkforyou.com/mp/
Many thanks in anticipation. We must not let this seismic transfer of wealth away from pensioners and pension funds be sneaked in whilst the country is struggling with the Covid-19 emergency.
Regards to all
Mike Post
Dear all
A couple of you have pointed out to me that there is an update, dated 16 April (or yesterday), on the RPI Consultation website stating that the consultation will now close on 21 August, not 22 April, because of the difficulties caused by the Covid-19 emergency. https://www.gov.uk/government/consultations/a-consultation-on-the-reform-to-retail-prices-index-rpi-methodology
Thank you for those of you who have already responded and please respond to the consultation in any case if you have not yet responded. Importantly, please copy your response to your MP.
We will now have more time to spread the word about the disgraceful proposal that the government should deliberately default on the payment of RPI increases to pensioners and investors whose pensions and investments are protected by the RPI. There are many, many pensioners in the UK who receive RPI-protected pensions who are blissfully unaware of the proposals in the consultation.
Regards to all.
Mike Post