UK - The switch from RPI to CPI for pension indexation moved one step further in the legislative process yesterday after it was approved in the House of Lords.
The Social Security Benefits (Up-rating) Order was agreed in the Lords, in advance of tomorrow's Pensions Bill debate.
The order, passed by the House of Commons in February, concerns the switch from RPI to CPI index linking for state pensions and state second pensions.
It was confirmed the order would not override scheme rules where RPI was ‘hard-wired' and Labour peer Lord McKenzie stressed the need to maintain the index for accrued benefits.
"It is also very important that pensioners with accrued benefits under RPI should have those benefits maintained and that, if the choice is made to change, CPI should occur only after the CPI regulation hits the deck," he said.
The Bill's sponsor, Conservative Lord Freud did not address Liberal Democrat Lord German's request for more information on whether the switch would reduce the pressure on occupational schemes.
An impact assessment by the Department for Work and Pensions on the effects of a switch to CPI for occupational schemes produced in February however, stated that some schemes could become more sustainable as a result and liabilities could be reduced by £60.9bn ($97bn).
Lord German also called on the government to respond the Hutton Report, published last week.
"People will want to understand the government's direction of travel, both on the basic pension and on public service pensions, which I imagine are a cause of concern to many people at present," he said.
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