The Minister of State for Pensions has announced that public pension increases will be linked to the Consumer Prices Index (CPI) rater that the Retail Prices Index (RPI). Private sector will be doing the same. The changes are to take effect in 2011.
Because of how CPI and RPI are calculated, it is anticipated that the savings to pension schemes will make them more affordable to employers. The liability could be reduced by as much as 10 per cent or 1oo billion pounds.
The Minister’s statements have made it clear that the changes will be able to be applied to benefits built from the date of the change but also those accrued. However some may have stipulations that will prohibit changes to any benefits other than those that begin after the change takes effect.