Pensions

Introduction

As a retired Civil Servant I am suffering from the change to CPI for my pension. Wondering how much it affected me I prepared a spreadsheet. As I thought this could be of interest to many whose pension is or will be based on CPI, I produced this web site. The purpose of this web page is to introduce the spreadsheet which can be used to analyse the various effects of the Government’s changes to the index used for calculating pensions. Links are provided to allow the downloading of two versions so that visitors will be able to use the spreadsheet in the program of their choice.

The Government has decided that the CPI is a better index for calculating pensions than RPI which had been the standard for many years before CPI was invented. CPI and RPI values published by the Office for National Statistics (ONS) are usually lowest in the month of September, the value which is used as the base for increases in many pensions. The definitions used by ONS can be seen here. The only reasoning I have heard from politicians is that CPI does not include mortgages and was chosen as most retired people do not have them. The Government index RPIX was not chosen. From the ONS publication:- “The RPIX is the same as the all items RPI except for mortgage interest payments, which is excluded from RPIX.” RPIX and RPI have little difference in value but are higher than CPI so it seems clear to me that the real reason for choosing CPI was to cut pensions. I wrote to my MP, Dominic Raab asking how this change could be justified. No attempt was made at justification. His reply can be summed up in four words --- The government prefers CPI.

The actual effect of inflation on the purchasing power of pensioners has been assessed using the Government’s own statistics. You will note that the Government definition of RPI specifically excludes many pensioners. It should also be noted that the pattern of pensioner’s spending would make the index higher. Due to the different pattern of purchases, inflation in foodstuffs and fuel hit pensioners more. The Government has produced an index for pensioner inflation in the past but the only document I can find on the ONS site covers the period up to 2010. It does not seem to have been updated since this government came to power. I have seen values of 6.2% for single pensioner’s households and 6.3% for two person households when RPI was 4.6% but these have not been verified. AgeUK provide what they term the SilverRPI which shows their assessment of these effects for three age groups of pensioners.

Silver RPI

AgeUK has calculated that three levels of inflation best represent that experienced by pensioners depending on age. They call this Silver RPI

1   Age 65-69              RPI plus 3.3%
2   Age 70-74              RPI plus 3.8%
3   Age 75 and over    RPI plus 4.1%

Spreadsheets

There are two spreadsheets that can be downloaded from this site. One is for use by those who have Microsoft Excel. For those who do not have MS Office the other is in Open Document Format (ODF), a format which is now an International standard but is not used by our government. ODF can be displayed by Libre Office (which I prefer), Open Office and other standard compliant office suites. Libre Office and Open Office are both free so those who wish to use them can download either program using the link below and install it at no cost. Take care if downloading Open Office to choose the right version.

Download Program

Download Spreadsheets

How to use the Spreadsheets