Our submission to the RPI Consultation

We have now sent in our response to the consultation on aligning RPI with CPI/CPIH and when it should take place between 2025 and 2030.   This has been done via email as we found that the online response questionnaire was seemingly designed to elicit specific responses of the “when did you stop beating your wife” nature. The APS & NAPS Trustees followed the same approach, in order to get over the message that aligning RPI with CPI/CPIH will cause financial damage to many pension schemes and their members. Below is our response.

ABAP – submission to consultation on RPI _alt_

The consultation closes at 11:59pm on 21st August.

We have had some feedback that the information we have provided on our other pages is rather technical and some members have found it somewhat hard to understand.  Our aim is to give members sufficient information to formulate their own responses and emails as templated ones are easy to spot and discount. However, here is a simplified response that can be sent to the consultation email address RPIConsultation@hmtreasury.gov.uk  before the consultation closes.  It can also be sent to your MP at any time because this is an important issue of which they need to be aware.

The key points are:

1 – Aligning RPI with CPI will reduce the lifetime income of all those with a pension that uses RPI for annual increases, affecting not
just 21,000 BA APS members but around ten million other UK pensioners. If RPI were to be aligned with CPIH in 2025, a £10,000 p.a. RPI-indexed pension would reduce in real terms by 1% a year. The cumulative loss by 2039 would roughly equal an entire year’s pension of £10,000. By 2046, the loss would have compounded to £20,000. Shifting the date to 2030 simply delays those losses.

2 – Pension funds will be reduced, as schemes need RPI-linked investments as a hedge against CPI inflation – as advised to do by the
Pension Regulator. Schemes in deficit, like BA’s NAPS with 63,000 members, will see their shortfalls increase.

3 – The effect of a reduction in the RPI inflation index will result in more funding for the Government and less for pension schemes and their members. There would be an unfair transfer of wealth away from pensioners, hard-earned money which they have set aside during their working lives so they are not dependent on the state in their retirement.

4 – The best solution is to retain RPI as it is now. If it must change, it should be replaced by an equivalent index to protect pension schemes and their members, as detailed in the  responses to the consultation from the APS & NAPS Trustees.

You can find your MP’s details from here:
https://www.theyworkforyou.com/mps/
which will also lead you to a link where you can send a message to them. Your MP may counter that the triple-lock on state pensions helps compensate but the potential loss is much greater than any gain from that source.