I've never understood why a compromise is never suggested i.e. the average of RPI and CPI.
Can UK telco giant BT move its pension scheme increases off the RPI inflation measure and onto CPI? Earlier this year the High Court said no, but now the telco and 300,000 of its pensioners are awaiting the Court of Appeal’s verdict on this thorny question. BT Tower photo via Shutterstock Court throws out BT's plans to reduce …
Rock and a hard place...
Fundamentally, the problem is that the then government called the new index CPI, rather than change the way RPI was calculated. Subsequent governments have for various reasons not bothered to fix the problems that have arisen.
Given the HoL Equitable Life judgement, I expect the Court of Appeal will tell BT that they can't alter the pension terms. Forcing BT to pay more into the pension fund leaving less money to invest in service improvement eg. FTTP. Naturally, Ofcom et al will complain that BT isn't investing enough into FTTP...
Holland (I think) have made future pensions better off in one stoke. They band the 1% a year and made it max £x a year.
Thus over 50 years....they made people 1% a year better off.....which adds up to a lot of money!
Yeah, but they split the cost.
breach of contract
on one level this is just a straight breach of contract.
employees make pension contributions over the years with a promise of RPI linked retirement benefits. the size of the contributions made are pre-calculated to be the correct level for delivering RPI linked benefits ( I worked as a trainee actuary for a while).
if CPI benefits had been promised, the pension contributions would have been smaller.
and when the employees comes to retire, the pension fund is now trying to break the original promise of the RPI link. this is what BT is trying to accomplish, although the pension trustees are fighting this. they have to fight this because pension trustees are personally liable
and RPI is definitely still a thing - examples are landfill tax and renewable energy certificates which both index at RPI for the next 20 years.
New definition required
RPI == Receivables Price Index i.e. Government Income
CPI == Costs Price Index i.e. Government Expenditure
At this rate the national debt should be cleared in no time.
If RPI is appropriate for the pensions of the directors of the Bank of England then I'd take this to indicate that it is the rate to use for everyone.
Not to mention (still) upcoming Brexit
The pre-Brexit effect/drop in the value of Sterling confuses everything, and makes all calculations a bit suspect.
Just wait until REAL Brexit happens. I hope you all have boats.
Re: Not to mention (still) upcoming Brexit
'I hope you all have boats'
Sorry, no boats allowed under Brexit.
Can't have the unwashed foreigners landing on our shores.
Can't have our clearly superior in every way nationals leaving.
BT shat on it's employees when they worked for them
So continuing this fine tradition is no problem at all, especially now they can't fight back.
A sad Paris, because it's poo you answer to.