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Using the Spreadsheets

The spreadsheet was developed in Libre Office and saved in both ODF and Excel format as Excel could not do the reverse process. The Excel spreadsheet was saved in Microsoft Office Professional Edition 2003. Since Microsoft does not maintain full compatibility between editions the spreadsheet may go through a conversion process for other editions before it is ready for use. This is usually automatic if the PC is connected to the Internet . The ODF version has no such problem.

The spreadsheets are as up to date as possible at the time of publishing. There are four pages in the spreadsheets marked Notes, Time Series, Detailed and Year Loss. The first contains the notes on how to use the other sheets to tailor the data to suit the user. The second Time Series gives approximation to the losses over a long retirement. The user is able to enter values into the calculations to suit circumstances and views on future inflation. The third Detailed is intended to give a better overall view of the effects over the period for which the Office for Budget Responsibility (OBR) has issued predictions of CPI and RPI. It takes into account the effect of taxation on the values of pension increases. The last Year Loss allows a closer examination of the effect of changes in inflation throughout the year. As September is often the month of minimum inflation the values are usually higher when the pensioner is spending the income. For those who wish to use Year Loss the values of RPI and CPI published each month should be entered to correct the assumed values and get an accurate measure of the additional loss or just possibly a gain.

1. The Time Series sheet gives a long term view of the effect of the change from RPI to CPI. As the future is unknown it provides the user with the ability to insert the values considered likely and see the effect. Trials done so far indicate that the pensioner is likely to have a lost the equivalent of a whole year’s income after about 16 years retirement. Some values of possible inflation are given in the notes.

2. In the Detailed sheet the calculations assume that the pension is greater than the user’s tax allowance. The calculations give a close approximation to the values for the losses in purchasing power resulting from the move to CPI. The accuracy of the values will increase as the actual values for CPI and RPI are entered for future years. The values currently shown for future years are based on data from the OBR as used for Government predictions for the life of the parliament. These have usually proved in the past to be lower than the actual figures when they are confirmed in future years. Two lists for Silver RPI Over 74 show how tax allowance changes loss. For those with pensions over £24000 the last list Over 74** is not applicable. The list ONS Pensioner is based on the data I found which suggests that the government measure of inflation for pensioners is about 1.6% higher than RPI. The user can choose which list is thought to apply.

I cannot give a direct link to the values of CPI and RPI as the address of the link changes monthly.The latest values of CPI and RPI can be obtained from the Office for National Statistics by the following procedure. The link shown leads to a page listing Publications one of which is a link (which changes each month) titled “Consumer Price Indices” with the month of the latest issue. Click on this link to the data which only shows the values for the past month. This change is typical of the “improvements” introduced in the latest update at ONS where it used to be easy to get the data on screen. On the same starting page under the heading Data is a link at the bottom of the list “View all Data for Price Indices and Inflation (181)” The link brings up a page with a long list of further links. At the time of writing this the eighth item on the list is “CPI and RPI Detailed Reference Tables” .This is a link to an Excel spreadsheet with 50 pages which contains the latest version of the full prices data from which pages can be selected to show CPI, RPI and RPIX information. The data most useful can be found on Table 2 of the spreadsheet. This spreadsheet is designed for Excel but can also be viewed in Libre Office and Open Office.

The values of Tax Allowance and Tax Rate are current values to be adjusted if the Government makes changes. If the total gross pension exceeds £24,000 then the individual’s Tax Allowance will be different. The loss over the year is calculated for the various values of RPI compared with the previous September value of CPI and the total losses for the expected duration of this parliament shown. See previous page for explanation of Silver RPI.

3. On the Year Loss sheet the values for Sept. CPI% and Sept. RPI% are only available for 2010 the other values are the (OBR) predicted values. These can be updated in future.

4. Since the pension is spent throughout the year the Year Loss sheet is provided for those users who wish see how the changes in the values of CPI and RPI through the year affect the extra losses or gains in each month. This requires the user to update the values of CPI, RPI and RPIX when each month’s figures become available. The comparison is with the CPI for the previous September on which the year’s pension is based. The figures for April to November are corrected but the remainder of the year is set to values equal to the previous month. As new data becomes available the figures can be inserted in the appropriate place. At the end of the financial year these figures will have to be reset for the following year if the user wishes to continue its use. As can be seen from the present values there can be some losses additional to the annual loss due to the CPI change.