Pensions - Articles - Leaving inflation measure intact is best option

 The National Association of Pension Funds (NAPF) commented on the announcement by the Office for National Statistics (ONS) that the calculation of the Retail Price Index (RPI) should remain unchanged.

 NAPF Chief Executive Joanne Segars said:

 “Pension funds are relieved that RPI has been left intact because rewiring this crucial measure would have created upheaval for both inflation-linked pension fund investments, and the income of current and future pensioners.

 “Reworking RPI would have given many pension funds some much-needed breathing space by reducing their liabilities, but it would also have cut the growth in pensions paid to former workers. A pensioner with an average RPI-linked final salary pension of £7,600 could have seen a £20,000 fall in their income over a 20 year retirement.

 “The ONS is still doing work on overhauling CPI, so this was the wrong time to be revisiting RPI, and investors do not welcome the uncertainty and market disruption this announcement has created. Leaving RPI alone was the best option.

 “The Government should be alive to the real-world impacts and the danger of eroding of investor confidence when considering any future changes to this key economic indicator.”