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RPI/CPI – decision time

3 March 2011

The Government’s consultation on the move from RPI to CPI as the basis for increasing pension benefits in private sector pension schemes closed yesterday, 2 March 2011. It will be interesting to see the outcome of this consultation, especially in light of the Government’s rethink on the impact of the switch from RPI to CPI as set out in the revised impact assessment. The impact of the switch from RPI to CPI on the benefits paid out from private sector pension schemes is greater than the Government initially envisaged.

In the meantime, as a result of the change in the statutory order from RPI to CPI index linking, pension scheme rules in relation to pension increases and revaluation of deferred members’ benefits should be carefully checked to determine whether these are increased in line with CPI or RPI.

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