In Reply to: Re: Pension Increase posted by Doug Buttimer on 26 March 2005 at 13:22:14:
Scheme members have not been told if/what Armonk has decided about our increases. However, as in previous times, it is possible to predict the increase if it is to follow previous practice. (Past figures are on this website - go to either the News or the Documents section and look for "History of Pension Increases")
The Ombudsman refers to the algorithm used as the "n/12ths rule" (a somewhat misleading label) and it is designed to degrade the value of the relevant part of your pension by 30% of inflation. The trust's description of it can be found by following the link below.
The government figures for inflation up to Feb 2005 are available (www.statistics.gov.uk) so you could calculate for increases delivered in May or before. I make it 2.1% if delivered in April (which over 13 months would be 1.9% as an annual rate) and 2.3% if delivered in May (which over 14 months would be 2.0% as an annual rate).
In general discussion with pensioners I have found a concern about the role of RPI. The government prefers to use CPI, the Consumer Prices Index, as the "headline figure" and it is the target for the Bank of England's management of inflation. Because it is calculated differently and because it ignores some factors like Council Tax, the CPI comes out lower than the RPI.
(Currently RPI is 3.2% annual, CPI 1.6%).
The key point for pensioners is that RPI remains the measurement relevant to pensions. The state pension, and the legislated parts of occupational pensions, are linked to RPI. Experts expect this to continue, or to get better as the result of linking to wages instead; they do not expect a change to linking to the CPI.
(not with trustee hat on)