RPI to CPI

Discussion in 'Current Affairs' started by ERM1, Aug 25, 2010.

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  1. Can anyone explain to me how the change from Retail Prices Index (RPI) to Consumer Prices Index (CPI) will impact upon:

    The future value of my pension
    Pension On Divorce calcualtions or
    Cash Equivalent Transfer Values (transfer out to another pension scheme) :?
     
  2. I'm waiting for a response from Glasgow on this very point. I'll post whatever answer I get.

    IMD
     
  3. YEP to the 1st question :wink: http://www.navy-net.co.uk/Forums/viewtopic/p=474606.html
     
  4. Of course it is likely to impact on pensions in payment and preserved pensions as well...... which may well include you!
     
  5. Typically CPI is lower than RPI. Last month it was running at about 1.5% less. This means that your pension is increased by the smaller amount each year, thus the compound effect is very significant over the average lif of a pension.

    CPI not only excludes things like interest rates and housing costs but is calculated in a different way.

    Take a look at the Mail article in yesterday's paper and the article about poor MOD management at defencemanagement.com.

    The FPS are working hard to highlight the injustice of this as, given Service life styles, when you leave at IP most of you will not have paid for your mortgage - therefore RPI is fairer for you.
     
  6. Not this year ..... I was reduced by 2p per month - I mean, how am I expected to keep up the level of weekend ale consumption if they cut the pension iaw the new index ..... !! 8O

    :(
     
  7. Pensions should not have increased in April this year because RPI was running at -1.4%. The 2004 Finance Act stipulates that a member's pension, once in payment, may not decrease save in special circumstances and RPI running at a negative value was not one of them.



    PS can't explain what happened to your 2p.
     
  8. :wink: Depends on the Month that they take the RPI from, in that particular scheme, think the State pension etc is set in September each year?? and has a 2.5% floor min rise. My Oc/P Scheme is set in December and was a 0.9% rise. The RPI Figure in April, is not used.
     
  9. I think the AFPS scheme rates are are set in September not April as commonly expected. Preumably this is the weakest month, in terms of increase over time, identified bythe treasury.
     
  10. The rise took effect from April based on September's Headline Rate of RPI. In future it will be September's CPI. As they always use the September rate as the reference point, April's rise is known in the previous October. For public sector pensions there is no safety net - save for the fact that they cannot reflect a negative rate.

    The state pension will have its increases linked to the best of Average Pay Increase, CPI or 2.5% in April 2011.
     
  11. Historically (for RPI) it is not the weakest month. A chum of mine has gone back over the stats since the Pensions Increase Act came in (1971 I believe) and using September rate is more advantageous than using the year's average.
     
  12. Quick correction Average earnings, CPI or 2.5% is from April 2012. For next year only it is Average earnings, RPI or 2.5%.
     

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