When to retire - CPI v RPI

Posted by grandelle

I want to retire after the Christmas holidays and so I sought advice from the GTCS. Because the Government is changing the way pensions are increased from RPI to CPI, the adviser thought it might be in my interest to wait until after April 6, 2011. He told me that if I leave in January, the increase would be 0 per cent as the 2010 RPI figure was minus 1.4 per cent. Calculations need to be done as to what the CPI figure will be if, for instance, I stay until the end of the Easter holidays. CPI is traditionally less than RPI but in 2010 it was actually positive.

Posted by bigjimmy

Go to several people for advice - pensions are complicated. Remember, do whatever gives you the most cash! There will probably be a trade-off between the pension amount and when to retire.

Posted by grandelle

I did what you suggested and contacted an IFA. He thinks the difference might be about pound;100 a year + pound;300 on the lump sum. Not to be sniffed at, of course! Still feel I want to go at Christmas.

Posted by jubilada

I know that pension increases in April are based on figures for September of previous year. The RPI increase in September 09 was -1.4, CPI was 1.1. The figures for Sept 2010 (have just come out: RPI is 4.6 per cent, CPI 3.1 per cent, Ed). If you do a search you can find past figures and comparisons - RPI has almost always been higher than CPI, hence the change. The EIS offers free financial advice and I found them very helpful.

Posted by carol75

Remember to check with your authority. We were told on Friday that in our area it will be a better package if people retire (or take voluntary redundancy if not a primary teacher), than if they wait until next year.

Posted by Dominie

I suggest you contact the SPPA in Galashiels, www.sspa.gov.uk. It will give you a pension statement based on your exact proposed date of retirement. It should also clarify the RPI v CPI position. As far as I know, the UK government has passed no legislation re this and therefore the status quo remains = RPI. By all means check with the EIS if you’re a member, but you might also want to cross-check with another independent financial adviser.

www.tes.co.ukscotland then go to Forums and click on Opinion.