The recent announcement that pension increases will be linked to CPI rather than RPI could leave future pensioners out of pocket. Helen Morrissey looks at whether this will be the case, and asks how the change needs to be managed
Linking pension payouts to the CPI instead of the RPI will force pensioners to raid their savings and investments, Schroders Investment Management claims.
Government is contemplating legislative action to loosen strict rules preventing more than half of schemes switching from RPI to CPI inflation increases, PP can reveal.
The advent of the coalition government has certainly ushered in frantic times for the pensions industry.
Member benefits will be compromised if the Consumer Prices Index is used instead of Retail Prices Index to measure price inflation, MetLife Assurance says.
The Department for Work and Pensions has issued a formal consultation on proposals to shift the inflation link for increases in PPF and FAS payments from the retail prices index (RPI) to the consumer prices index (CPI).
Employees who leave a company prior to retirement could be worst hit by the indexation switch from RPI to CPI, a pensions expert warns.
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Pension schemes with RPI hard-coded into their trust deed could fail to benefit from reductions in liabilities, pension experts say.
The possible move from Retail Prices Indexation to Consumer Prices Indexation to index private sector pension increases will force schemes to amend de-risking contracts, industry figures say.