Pension schemes denied power to change rules on RPI/CPI

The government has reiterated it will not introduce legislation to override pension scheme indexation rules.

Pensions minister Steve Webb again confirmed the policy in response to a consultation on the impact of using the Consumer Prices Index (CPI) for private sector occupational schemes.

He said: "We want people to have confidence and trust in their pensions.

"We have set CPI as the statutory minimum, but many schemes can and will pay more, and we will not give schemes power to change their rules."

He said the government many schemes now find their funding position is more secure as a result of the change to CPI.

"This move in the long term will help make defined benefit schemes more sustainable," he added.

Department for Work and Pensions (DWP) research revealed of those pension schemes which have rules referencing Retail Price Index (RPI), but could move to CPI, the majority say they would not.

Elsewhere in today's paper the government confirmed it will seek to legislate to ensure CPI does not act as an underpin for schemes using RPI to calculate revaluation of deferred pensions, as well as increases to pensions in payment.

Webb said: "We do not want to disincentivise schemes who wish to continue with RPI increases.

"We will be looking to remove the CPI underpin for revaluation of deferred pensions, keeping things simple for business."