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Friday, July 09, 2010

Level Playing Field

The government has announced that it will switch the index linking of private sector final salary pension schemes from the Retail Price Index (RPI) to the consumer price index (CPI).

This is in line with the similar measure announced in last month's emergency Budget relating to public sector pensions.

CPI excludes house prices and mortgage payments, is consistently lower than RPI. It is estimated that private pension incomes will fall between 10%-25% in retirement.

The CBI is pressing for legislation to allow those schemes who are specifically required to use RPI to be able to use CPI.

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