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Lord McFall slams Govt over impact of RPI change on pensions

Former Treasury select committee chair Lord John McFall has attacked the Government over proposed changes to the calculation of the retail prices index and its impact on pensions.

The Office for National Statistics is consulting on whether to calculate RPI in the same way as the consumer prices index, which is usually lower.

The move could see the RPI drop by up to 1 per cent, hitting index-linked pension funds and pensioners. The National Association of Pension Funds warns it could have “huge implications” for pension investments.

McFall said: “The Government knows that pensions funds are major investors in Government debt and any change to index-linked bonds will have far reaching implications.

“How will the growth agenda, which is non-existent right now, prosper without pension funds that the Government wants to get involved in infrastructure?

“And with pensioners taking even less from their pension with the CPI, why are we disproportionately paying for the Government’s deficit reduction programme?”

Speaking for the Government, whip Lord John Gardiner said it is an independent, technical consultation.

He said: “It is a consultation and it is only at a later stage in special circumstances that ministers would become involved.”

Royal London head of corporate affairs Gareth Evans says: “Fiddling around with RPI just gives people another reason not to take out a pension.”

The ONS consultation began on 8 October and closes on 30 November. Any changes will be announced in January and implemented in March.

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