Goodbye RPI?

The Government has announced that from 2011 (by reference to 30 September 2010) it plans to use the consumer prices index (CPI) rather than the retail prices index (RPI) for statutory revaluation of deferred pensions and statutory pension increases on pensions in payment. Usually, CPI produces lower increases than RPI and so in theory would make pension scheme increases cheaper to provide for deferreds and pensioners. But there are legal reasons why CPI may not become as widely used as suggested. Unless primary legislation is amended so as to override existing pension scheme rules, what applies to each member will depend (among other issues) on whether the scheme rules expressly refer to RPI or whether they simply cross refer to the relevant piece of legislation. The potential for confusion is significant. Without a bold and clean set of changes, many schemes may find themselves saying "see you later", rather than "goodbye" to RPI.

Wragge & Co's pensions experts provide further information.