The Government has confirmed it will not introduce a legislative override to allow pension schemes with RPI-linked inflationary increases written into their rules to switch to the CPI.
In its official response to a consultation on the impact of using the consumer prices index rather than the retail prices index to measure price increases in occupational pensions schemes, the Government says members’ trust could be “severely damaged” if it gave schemes the power to change their rules.
Pensions minister Steve Webb (pictured) says the Government wants people to have “confidence and trust” in pensions.
He says: “We want people to have confidence and trust in their pensions. We have set CPI as the statutory minimum, but many schemes can will pay more, and we will not give schemes power to change their rules.
“We also know that many schemes now find that their funding position is more secure as a result of the change to CPI and this move in the long-term will help make defined benefit schemes more sustainable.”