Legislating to drop RPI indexation the day before voting for increases in student fees would mean pension minister Steve Webb had two pre-election pledges in a week says Labour shadow Rachel Reeves.
The attack comes on the day Webb is set to launch a consultation on indexation of final salary schemes. Webb has been widely reported as planning to allow private sector schemes with RPI hard-wired into their trust documents to change indexation for accrued benefits from RPI to CPI. He is also believed to be set to publish a pension revaluation order replacing RPI with CPI for public sector schemes and for those private sector schemes that refer to indexation to the statutory minimum.
Pensioner groups are furious at the move, saying it breaches pre-election pledges by both Webb and conservative transport secretary Philip Hammond.
Corporate Adviser has seen a letter from Webb dated April 12 to a pensioner group leader that says: “We would not make any changes to pensions rights that have already been built up. I have confirmed that I regard accrued index-linked rights as protected.”
Pension experts say while those schemes that refer to the statutory minimum may have little comeback against the change, schemes with RPI written into their terms could face legal challenges.
The NAPF estimates around six out of 10 schemes have RPI hard-wired into their trust deeds.
Reeves says; “I have seen the letters that Steve Webb and Conservative transport secretary Philip Hammond sent to pensioners pledging not to interfere with indexation of accrued rights, and now the government is doing just that. With the student fee vote tomorrow, Steve Webb looks like breaching two of his written pre-election pledges in a week.
“This statutory override is a an attack on the accrued rights of people who have paid into these schemes on the basis they were going to get a certain return. This is not going to save the government any money – these changes will affect private sector schemes – so I do not see why they are getting involved.
“I have written to Steve Webb pointing out that there is no way he can claim CPI is a better measure of pensioner inflation. By introducing a statutory override, the government is riding roughshod over people’s legitimate rights.”
With the student fee vote coming on