They’ve got more than one way of stealing your money you know
SADLY, governments have numerous ways of stealing our money. The most obvious one is simply to take it: and they do that often enough these days. Get found with more than $10,000 in cash on you in the US these days and the police will just take it. You then have to prove that it’s not drug money: yes, you have to prove that it isn’t.
A little more sophisticated is taxation: they tell us all that it’s to pay for the Angels in the NHS when in fact a substantial portion gets diverted to duck houses for MPs and those oh so essential diversity advisers.
More sophisticated again is to piss about with things we don’t understand. One example might be corporation tax. Oh yes, we all think, companies should indeed pay tax. But everyone who understands taxation knows that they don’t, indeed cannot. What looks like money coming from companies actually comes from lower wages for the workers.
Or today’s little outrage:
But the CPI had a magical quality that made it irresistible for governments: invariably it was lower than the RPI. So if index-linked benefits, grants and other payments could be based on the new measure, lots of money could be saved.
For a few years at least, the RPI remained the preferred inflation measure for the indexation of pensions, but that ended for many in 2011 when the Government said these could be based on the CPI as well. Private schemes which specified RPI in their rules retained this measure, while schemes whose rules referred only to the statutory requirements moved to CPI automatically, as did all public sector pensions. This decision was taken principally to reduce the liabilities on pension schemes, which are under massive pressure because people are living much longer than actuaries had assumed just a few years ago. Needless to say, it was bad news for pensioners.
According to the Office for Budget Responsibility, the CPI over the coming decades will be about 1.4 percentage points lower than the RPI. This might not sound a great deal; but the incremental effect will amount to a difference of many thousands of pounds in the pension someone will receive during their retirement. In total, the Department for Work and Pensions estimates that inflation switching could cost private pensioners more than £73 billion.
Even in government money £73 billion is a fair old chunk of change. And none of us will ever understand why that pension we’ve worked and saved hard for for decades leaves us eating cat food. They’ve done is just with a little, a leetle, change of definition.
The wonder is that we don’t rise up and hang them all from Westminster Bridge.