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CPI ‘will reduce pensions’ value’

By Editor, HRreview

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Tagging pension increases to the Consumer Prices Index (CPI) rather than the Retail Price Index (RPI) will leave many savings pots going up by less than they did before, it has been suggested.

According to the Trades Union Congress (TUC) general secretary Brendan Barber, over the period of someone’s retirement, the changes will add up to a "significant loss".

He praised the government for its early commitment to connecting the state pension to the highest of earnings and prices, but warned that many workers will see fewer benefits as a result of the decision as CPI is usually less than RPI due to the exclusion of housing and council tax costs.

Mr Barber said: "But even if all other things are equal CPI is on average half a per cent less than RPI because it is calculated in a different way."

The TUC has 58 affiliate trade unions in its organisation, representing seven million workers across all sectors of the UK economy.

By Cameron Thomson

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