Webb not going ahead with RPI override plan

The government will not introduce an override that would allow schemes with RPI hard-wired into their terms and conditions to replace the indexation measure with CPI.

Pensions minister Steve Webb told the House of Commons he would not be going ahead with the change, despite indications such a change could be introduced made at an NAPF conference this week.

A report out by the NAPF today has shown that 61 per cent of schemes cannot currently make a switch from RPI to CPI because they have RPI indexation hard-wired into their pension scheme rules. It also shows three out of ten managers of DB scheme think employers should be allowed to remove RPI indexation without trustees consent, new research shows.

Rachel Reeves MP, Labour’s Shadow Pensions Minister says: “Steve Webb has conceded that CPI will rise more slowly than RPI, but says that the question is not which index is higher or lower.
“That might be the question for him, but for millions of pensioners and low-income families up and down the country that most certainly is the question. And they will be asking today how they are going to make ends meet following these changes.”

TUC General Secretary Brendan Barber says: “This small piece of good news should not obscure the big losses that millions will suffer from the switch to CPI indexation. George Osborne’s decision to index-link public sector pensions and many benefits to CPI has already hit millions of people – both those who have already retired and those who have yet to retire.
“There has already been a big impact on private sector pensions through the changes to minimum indexation. Six million people who have left a pension scheme but have yet to retire are already seeing a little sliced off their future pension most years.
“Many schemes are now following George Osborne’s lead and trying to impose this change on their current pensioners. We therefore welcome Steve Webb’s announcement that he does not intend to change the law to make it easy for scheme to end RPI indexation where their rules require it, and that schemes should have to consult members about changes to indexation.”