There are fears that pension funds could be hit by changes to inflation calculations as the Office for National Statistics launches a consultation on whether to reform the retail prices index.
The ONS is considering calculating RPI using the same methods as the consumer prices index, which is usually lower.
The consultation starts on 8 October and closes on 30 November. Any changes will be announced in January and implemented in March.
A change could see decreases to the RPI of between 0.3 and 0.9 per cent.
The National Association of Pension Funds warns it could have “huge implications”, with a “far-reaching impact” on pension investments.
Policy director Darren Philp told The Times: “A rewiring of RPI could have huge implications. Pension funds are major investors in government debt and changes to index-linked bonds could have far-reaching impacts on those investments. It could also alter the amount by which pensions being paid to former workers are increased each year.”
The Bank of England will be consulted and chancellor George Osborne must give his consent if the Bank feels the changes amount to a “fundamental change” to the basic calculation of RPI and would be “materially detrimental” to the interests of index-linked gilts.
CPI is calculated using all UK private and institutional households and foreign visitors to the UK, whereas RPI excludes those on the highest income and pensioner households that mainly dependent on state benefits. Those excluded from the RPI account for around 13 per cent of all UK household expenditure.
The CPI excludes mortgage interest payments, house depreciation and council tax, which are included in the RPI.
In August, CPI stood at 2.5 per cent, compared to 2.6 per cent in July, while RPI fell to 2.9 per cent from 3.2 per cent in the previous month.