The Lemon Fool

Dod101 wrote:

tjh290633 wrote:Interesting to note that the Average Total Pay Index (K54U) has fallen by -1.77% between March and April, from 196.2 to 192.7. See earn01jun2022.xls, downloadable from the ONS web site at https://www.ons.gov.uk/employmentandlab ... ingsearn01 - and note that there are some changes to earlier months if you look at previous versions.

April is, of course, the yardstick for the Triple Lock, and this reduced the annual increase from 8.32% in March to 5.54%. Is this a coincidence?

TJH

The Times this morning has an item on this. The month for measuring the rise is actually September and the indexed part of the measure is the CPI for that month. September 2022 is likely to see a CPI of at least 10%, and thus it is likely that State Pensions will rise by at least this amount in April 2023.
Depends of course on what happens to wages in the meantime, but the assumption seems to be that the CPI will be the highest of the three measures used.

It seems therefore that your conspiracy theory does not hold water.

Dod

Still, it will be interesting to see if there is another September blip in the trend this year.

Monthly CPI figures for 2021:

Jul 2.0%
Aug 3.2% (+ 1.2)
Sep 3.1% (- 0.1)
Oct 4.2% (+ 1.1)
Nov 5.1% (+ 0.9)

(Obviously not suggesting this was anything other than a convenient random anomaly... )

Lootman wrote:

Dod101 wrote:The month for measuring the rise is actually September and the indexed part of the measure is the CPI for that month. September 2022 is likely to see a CPI of at least 10%, and thus it is likely that State Pensions will rise by at least this amount in April 2023.
Depends of course on what happens to wages in the meantime, but the assumption seems to be that the CPI will be the highest of the three measures used.

That would be nice but of course the government could again pull the plug on the triple lock, if it is expensive.

So we have a guarantee that pensions will rise with inflation but only if inflation is low. When we actually need that protection, it vanishes!

I am inclined to think that there has been so much reassurance about restoring the triple lock that it is unlikely to be pulled again. We'll see.

Dod

Lootman wrote:

Dod101 wrote:The month for measuring the rise is actually September and the indexed part of the measure is the CPI for that month. September 2022 is likely to see a CPI of at least 10%, and thus it is likely that State Pensions will rise by at least this amount in April 2023.
Depends of course on what happens to wages in the meantime, but the assumption seems to be that the CPI will be the highest of the three measures used.

That would be nice but of course the government could again pull the plug on the triple lock, if it is expensive.

So we have a guarantee that pensions will rise with inflation but only if inflation is low. When we actually need that protection, it vanishes!

I can sort of understand the previous suspension of the triple lock because at the time of that suspension, the pay figure was something of an anomaly.

This time round, the forecasted ten or eleven percent CPI figure for this September is anything but an anomaly, so there can be no justification for not honouring it.

And isn't it ironic that with hindsight, had that that anomalous wages figure been used, it would still have produced a pension rise which was lower than inflation?

Dod101 wrote:

tjh290633 wrote:Interesting to note that the Average Total Pay Index (K54U) has fallen by -1.77% between March and April, from 196.2 to 192.7. See earn01jun2022.xls, downloadable from the ONS web site at https://www.ons.gov.uk/employmentandlab ... ingsearn01 - and note that there are some changes to earlier months if you look at previous versions.

April is, of course, the yardstick for the Triple Lock, and this reduced the annual increase from 8.32% in March to 5.54%. Is this a coincidence?

TJH

The Times this morning has an item on this. The month for measuring the rise is actually September and the indexed part of the measure is the CPI for that month. September 2022 is likely to see a CPI of at least 10%, and thus it is likely that State Pensions will rise by at least this amount in April 2023.
Depends of course on what happens to wages in the meantime, but the assumption seems to be that the CPI will be the highest of the three measures used.

It seems therefore that your conspiracy theory does not hold water.

Dod

Yes, September is the month for CPI, but not for the Average Wages Index. If you recall, they abandoned the triple lock last year because of an abnormal situation in April the previous year. I thought that they used the September data for both, but was corrected. One reason my be the number of adjustments made to the index in successive months. Also the figures are published a month later than the CPI data, which is not revised in later months. I suspect that April is used because the data has by then been set in concrete.

TJH

Perhaps the title should have been 17%+ ☹️

https://www.theguardian.com/business/20 ... tank-warns

Best wishes


Mark

ADrunkenMarcus wrote:Perhaps the title should have been 17%+ ☹️


Mark

Thats a 17% pay rise for the civil service, that's not sustainable.

Are they linked to RPI automatically? I know local government pay settlements aren’t.

Best wishes


Mark

scotview wrote:Thats a 17% pay rise for the civil service, that's not sustainable.

My wife is classed as Civil Service. She hasn't had much in the way of pay rises for years and will be lucky to get even a few percent rise this year. Her pay is not in any way linked to inflation.

Where my wife works, pay has now fallen so far behind what private companies offer that they can't hold onto staff and have a huge number of vacancies and have to pay ££££££ for locums/agency/temps to fill the posts.

scotview wrote:Thats a 17% pay rise for the civil service, that's not sustainable.

#
It's 17% extra for holders of maturing Index Linked Gilts, so an additional amount the Government needs to borrow. If salaries and wages follow the RPI increase and the tax thresholds don't, some of it will come back in an increase in the effective personal tax rate from 20% to 40% as more and more are sucked into higher rate taxation.

BT63 wrote:Where my wife works, pay has now fallen so far behind what private companies offer that they can't hold onto staff and have a huge number of vacancies and have to pay ££££££ for locums/agency/temps to fill the posts.

...which costs more money to get temps in.

Personally, I'll be glad if I get 4-5% as a rise this year - which would represent a significant loss of purchasing power if RPI hits 17%. In fact, it will cover less than half the projected increase in energy bills once my fixed rate deal expires and reality kicks in for January 2023.

Best wishes


Mark.

RPI 12.3%

CPI 10.1%

https://www.ons.gov.uk/economy/inflationandpriceindices


Steve

They keep overdoing it on the news
Amongst the highest price increases in food items is bread
up by 10%
in most cases that is a whopping 10 pence

pje16 wrote:They keep overdoing it on the news
Amongst the highest price increases in food items is bread
up by 10%
in most cases that is a whopping 10 pence

Yes... if you only eat 1 loaf of bread per year.

People who look at things on this basis probably also consider a portfolio that grows from £100k to £105k to have the same performance as a portfolio that grows from £10k to £15k.

vand wrote:

pje16 wrote:They keep overdoing it on the news
Amongst the highest price increases in food items is bread
up by 10%
in most cases that is a whopping 10 pence

Yes... if you only eat 1 loaf of bread per year.

It was an example
surely I didn't need to explain that
or maybe in some cases I did

pje16 wrote:They keep overdoing it on the news
Amongst the highest price increases in food items is bread
up by 10%
in most cases that is a whopping 10 pence

Oh it's not that bad.

Last night I spent hours and hours driving around our county comparing the price of bread and found places where it's only gone up 8%.

Got myself a few loaves. Saved some money!

Steve

pje16 wrote:

vand wrote:

pje16 wrote:They keep overdoing it on the news
Amongst the highest price increases in food items is bread
up by 10%
in most cases that is a whopping 10 pence

Yes... if you only eat 1 loaf of bread per year.

It was an example
surely I didn't need to explain that
or maybe in some cases I did

Maybe the problem was in your original wording "They keep overdoing it on the news".
That made it seem like you don't believe it, or are in denial. To come back with your comment about bread "whopping" 10 pence with an eye roll, suggests you are underdoing it and downplaying the effect on people. Is this your "let them eat cake" moment?

Arb.

Arborbridge wrote:

pje16 wrote:

vand wrote:

pje16 wrote:They keep overdoing it on the news
Amongst the highest price increases in food items is bread
up by 10%
in most cases that is a whopping 10 pence

Yes... if you only eat 1 loaf of bread per year.

It was an example
surely I didn't need to explain that
or maybe in some cases I did

Maybe the problem was in your original wording "They keep overdoing it on the news".
That made it seem like you don't believe it, or are in denial. To come back with your comment about bread "whopping" 10 pence with an eye roll, suggests you are underdoing it and downplaying the effect on people. Is this your "let them eat cake" moment?

Arb.

My thought was that a 10p increase is hardly newsworthy
a shame when you have to explain it

My DB pension is partly capped at RPI or 5% max & CPI or 3% max, so going astern now.

A lot of you guys seem to be dependent on divis for income.

My question is, is income from an inflation capped DB pension "better" than an income from divis/investments.

I am of course excluding gold plated full CPI/RPI DB pension income which is on an altogether different planet.

scotview wrote:My DB pension has a partly capped at RPI or 5% max & CPI or 3% max, so going astern now.

A lot of you guys seem to be dependent on divis for income.

My question is, is income from an inflation capped DB pension "better" than an income from divis/investments.

I am of course excluding gold plated full CPI/RPI DB pension income which is on an altogether different planet.

I will let you know after the next year or two - only then can I let you know what pension increases I have allowed myself withou eating capital. So far, I've been fortunate in being able to pay a little more than RPI extra each year up until covid. During covid, I didn't need as much income anyway and kepy the pension level.

Arb.

scotview wrote:My question is, is income from an inflation capped DB pension "better" than an income from divis/investments.

Over the very long term, I would expect dividends to grow by roughly the same amount as GDP, so around RPI+2%, therefore slightly better than the capped DB or even gold-plated DB pension.
However, dividend growth will be well above that in the good times and well below that (probably negative) in not so good times, therefore more erratic and benefitting from putting a little aside each year in the good times to build up a cash buffer equal to a couple of years dividends to cover shortfalls when the bad times come.