Pension News

The Government recently entertained the concept of forcing companies to use the Consumer Prices Index (CPI) to up rate pension schemes as opposed to the Retail Price Index (RPI). The Government have, however, moved away from this position.

Implementing this move would potentially have slowed growth of pension funds and therefore devalued funds.
This did not stop the change being brought about for the State Pension or for Public Sector pension funds.
Steve Webb, the Pensions Minister, had this to say:

"We do not plan to grant schemes a modification power, to make it easier to use CPI where they do not already have the power to amend scheme rules," Mr Webb told MPs.
"We believe that members' trust in schemes and the scheme rules would be severely damaged if we intervene to give schemes the power to change their rules if the scheme does not already have such a power."

The proposed changes in were originally mooted in July, following the enforcement on state and public sector pensions.

Pension law prohibits trustees and employers altering schemes in order to decrease value of already accrued amounts held in schemes. The Government are not making any direct move to overturn this but they are in talks about using the CPI as a minimum mandate for up rating private schemes but it is not proposed to make this compulsory to private schemes.