The Great Pension Robbery Explained. Part 1: RPI to CPI

In the June 2010 Budget the Chancellor announced without consultation that the Government will “switch to a system where we up-rate public service pensions in line with consumer prices rather than retail prices”. That is a switch from the Retail Price Index to the Consumer Price Index.CPI and RPI are calculated from the same underlying price data but there are significant differences, notably the following:

1. Various housing elements included in RPI are excluded from CPI including mortgage interest payments and council tax.


2. CPI is generally calculated using a geometric mean whereas RPI in contrast is calculated using an arithmetic mean.


3. In classifying goods and services, CPI follows an international classification system whereas RPI follows its own system.

As a result of these differences, since 1997 (when the 12 month rate of change for CPI was first available), RPI has been on average 0.8% a year higher than CPI. The repercussions for pension scheme members are therefore somewhat obvious, thousands cut from the value of individual public sector pensions at a stroke, without consultation or negotiation.

How much worse off will you be under the pension proposals?

Pay more, work longer, get less.
Many public service workers are being asked to pay more in pension contributions by an average of over 50%.

You're being asked to work longer, as the retirement age for public service workers is set to increase.

And you'll get less. By using the Consumer Price Index (CPI) instead of the Retail Price Index (RPI) anyone getting their pension could be 8.5% worse off by 2017.

And the extra money isn't being used to improve pension schemes for the future, it's going straight to the Treasury to pay for the bankers' crisis.

Find out how you will be affected.

Pensions calculator

Local Government Pension Scheme (LGPS) England & Wales

• > How much more will you pay?

• > How much longer will you work, and how much pension will you lose?

Laughing all the way to the bank...

Public service workers are being asked to pay for the bankers' crisis, by an average increase in their pension contributions of more than 50% if they earn above £15,000 full time. This extra money isn't being used to improve the pension schemes for the future – it's going straight to the Treasury to pay for the bankers' crisis.

But why can't the bankers' pay for the crisis out of their own pockets? Is it because their own pensions aren't big enough? InFocus uncovered the facts about some of the pension pots that bankers have to struggle by on during their retirement and compares them to the 'gold-plated' pensions of some of our public service workers.

After all: 'We're all in this together' – right?

Eric Daniels: aged 59
Group chief executive of Lloyds Banking Group.
Worked there from June 2003, retired 28 February 2011.
Pension pot: valued at £5.03 million last December.
Annual pension: £210,000 a year.

Gill Malik: aged 59
Housekeeper in West Suffolk Hospital.
Worked there for 20 years (contracted out for seven years).
Pension if she retires at 60: £1,782 a year.
Pension if she retires at 65: £2,764 a year.

Fred Goodwin: aged 50 at retirement
Chief executive of the Royal Bank of Scotland.
Worked there from 2001 to 2009.
Annual pension: £342,500.
Poor Mr Goodwin had to reduce his pension following public outcry and negotiations with RBS. However, he was entitled to keep an estimated £2.7m tax-free lump sum as well, which would have helped to soften the blow.

Carole Maleham: aged 59
Driver for museums and arts for Rotherham borough council.Employed by council for 26 years (unable to join the pension scheme for many years as she was a part-time worker).
Expected pension: £3,000 a year.

John Varley: aged 54 at retirement
Chief executive of Barclays PLC until 31 Dec 2010.
Worked at Barclays for 28 years.
Pension pot: £18.256 million.
Annual pension: £619,000 a year.

The Branch Hardship Fund

A message from our Branch Secretary:

This ballot is probably the most important thing you will ever have to vote on in your working life: not just for you, but for every new employee in the future.

What this Coalition government is aiming to do with your pensions is nothing short of theft and is totally unfair. No other pension scheme outside of the Public Sector is being attacked in this way. Why should we have to Work longer and Pay more to Get less?

I cannot stress how important it is to get a really big yes vote if we are to make the government wake up and listen to us.

Of course everyone will suffer some degree of financial loss by striking. We are all going to lose a day’s pay and everyone will feel the pinch, especially given the current economic climate and our ongoing pay freeze.

If any member feels that they will suffer particular hardship as a consequence of taking a day’s action (maybe because they are already on low pay or receiving a means-tested benefit, have nursery fees to pay or large debts) they can make a claim to the hardship fund. There are no hard and fast rules. In the past we have had few applications, and every one has been successful.

There is a form to fill in. I know it looks rather intimidating but your steward will be more than happy to help you fill it in if you find the form particularly difficult. We will need to see wage slips showing the strike deduction and the one for the previous month. We cannot agree hardship fund applications or give out any money until we have seen these two wage slips. The deductions won’t come out until the December pay run, so we will be considering applications as early as possible in January. We will make payments as quickly as we can.

I can assure you that all claims will be dealt with sensitively and in the strictest confidence. Please Vote YES to protect your Pension!!!!

In solidarity,

Caroline Glendinning
Oxford City UNISON Branch Secretary

Pension cuts: what could they mean to you?

For the latest on what the cuts to the LGPS could mean to you, please see UNISON's latest newsletter (click here).

Also, please click here to sign the e-petition against the change from using RPI to CPI to measure pension uprating. This sees a cut in all our pensions, even for those who have already retired.

The latest news on pensions dispute

It has been announced that the ballot for industrial action over pensions will open on 11^th OCTOBER and run through to 3^rd NOVEMBER.

The latest regional news on pensions and other issues can be found in the regional newsletter (click here). You may also be interested in information from Channel 4 that shows Hutton is either an idiot or a big fat liar (click here).

Coventry UNISON pensions video

Here is a video made by UNISON members in Coventry: