08.10.12
Pensioners could suffer from RPI changes
Changes to the calculation of the retail prices index (RPI) could cut pensioner’s incomes, campaigners have warned.
The ONS has launched a consultation on whether it is necessary to change RPI, to bring it more in line with the consumer prices index (CPI).
The gap between the two is currently 0.9 percentage points on average, but the Office for Budget Responsibility (OBR) has forecast this will widen to 1.4 for the rest of the decade.
The options the ONS is going to look at are: no change at all; partial changes to the RPI's formula, which would reduce the gap with CPI slightly; or changing the construction of RPI to remove the formula effect altogether, which would shrink the overall gap considerably.
Darren Philp of the National Association of Pension Funds (NAPF) said: “Pension funds are major investors in government debt and changes to index-linked bonds could have far-reaching impacts on those investments. It could also alter the amount by which pensions being paid to former workers are increased each year.”
The consultation closes on November 30.
Tell us what you think – have your say below, or email us directly at [email protected]