In Reply to: Re: 2006 Annual increases - HOW IT WAS CALCULATED posted by Harvey on 04 April 2006 at 07:15:22:
: If somebody had taken the trouble to phone pensions this would have been easily resolved. They explained very quickly and easily where the 0.9 comes from - I believe they have got it right.
: It is the letter that is missleading:
: Increases are based on RPI for 3 from 3 months before rise (i.e April uses January RPI rates.
: RPI is calculated on the increase in an index no (originally 100) over a given period.
: This is how it goes:
: The last increase was Jun 2005 the next is April 2006.
: The index value for March 2005 (June less 3 months) was 190.5.
: The index value for January 2006 (April less 3 months) was 193.4
: The RPI used is therefore (193.4-190.5)/190.5 = 1.5%
: Take 60% of that = 0.9%
: Next year the RPI% will be that which you expected this year i.e. the published Jan RPI - which is a 12 month rate.
measure of inflation over the period between increases - it excludes any anomalies that could result feom taking 10/12ths of the annual RPI.
I have 3 comments re this
1) IBM/The Pensions Trust has ALWAYS used a factor like 10/12 of the RPI%age. It was so last time; so why can they change now?
2) If they had waited until June, there would have been no dispute and the increase would have been about 30% higher!
3) Why did they use 2.7% for other parts of the pension incease? I guess that is because for those parts they HAVE to keep legal.