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You say CPI, I say RPI

July 23, 2010

Under the employers’ proposed changes to our USS pension scheme, pension increases (for pensions in payment) will be ‘inflation proofed’ (employers’ term) in line with increases in the Consumer Prices Index (CPI) subject to a 5% inflationary cap.

We’ll return to that 5% cap again later (and have mentioned it already before), but let’s address the CPI/RPI problem…

The use of CPI rather than RPI (the Retail Price Index) is both mean and intellectually dishonest. CPI was introduced not to reflect the lived price experience of citizens, which RPI does, but because it was believed that a price index that excluded housing was a better macro-economic planning tool (see this statement from 2003). To opt to use it as a measure in future pension increases either suggests the decision was taken in ignorance of the function of CPI as an economic tool, or in full awareness of it being not fit for any purpose other than deflating pension value.

The RPI includes mortgage interest payments, council tax and some other housing costs not included in CPI. Though increases in these things don’t count for CPI, they certainly count when you have to pay them.

Remember:

  • Only employers so far have been consulted, not employees. Your union thinks you should be consulted over your future.
  • In a ballot of members in May this year, 96% of voting UCU members voted to reject the employers’ proposed changes, with a similar number backing UCU’s alternative proposals to share costs between employers and staff.
  • £627,000 of taxpayers’ money was used to support the employers in preparing and pushing their proposals.
  • Some could get up to £127,000 less in pre-tax pension income under the new proposals
3 Comments leave one →
  1. In the abscence of Facts permalink
    July 26, 2010 2:29 PM

    Good to see you maintining the same high standards across all of your misinformed commentary on this subject.

    FACT – the employers did not request the change from RPI to CPI

    FACT – it is a requirement of the USS that it tracks to the Index rate applied by government – so when it changes the scheme changes.

    As to the other points; (Edit: the poster then repeats previous posts, go to previous posts’ comments to read them).

  2. October 15, 2010 7:41 AM

    We note that this page receives many hundreds of hits, months after it was posted.

    To address the issue raised by the member of University of Leeds management above (IP address confirmed) – there is no requirement to embed a government requirement in your policy in such a way that makes it difficult to remove if government policy changes.

  3. Rory permalink
    December 8, 2010 5:23 PM

    Four years ago, I accepted a research job overseas that I thought a little more challenging than my humdrum university teaching job, expecting to stay 3-5 years. The changes to USS appear to be filtering through as I have now received TWO offers to stay permanently. Unless I return to the ‘old’ USS scheme by April, I would have to join the new Monkeynuts scheme. One can only imagine the forthcoming exodus abroad of PhD’s in deferred USS positions — British PhD’s are still valued abroad if not at home. Still, Tesco and Asda will have a wider range of potential associates from which they may select the finest shelf-stackers available!

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