View more on these topics

‘Switch from DB before CPI move’

Pension experts are recommending people who plan to transfer out of final-salary schemes to make the move while valuations are still being calculated using the retail price index, which is generally more generous.

Last month, the Government announced that private sector pension schemes could link increases to the consumer prices index rather than RPI in a move consumer groups claimed was a “stealth cut on the pensions of Middle Britain”.

Pensions minister Steve Webb said: “CPI provides a more appropriate measure of pension recipients’ inflation experiences and is also consistent with the measure of inflation used by the Bank of England.”

The move is expected to help plug the hole in company pension schemes as CPI has historically risen by around 0.5 per cent less than RPI, meaning pensions, and employers’ liabilities, rise more slowly.

Money Marketing revealed last week that the public sector has frozen transfers until it can calculate values using CPI but the Association of Consulting Actuaries says the majority of private sector schemes are still providing transfer values based on the RPI.

Hargreaves Lansdown pensions analyst Laith Khalaf says: “For the vast majority of people, it does not make sense to transfer out of a final-salary scheme, even if it is switching to CPI uprating. However, for those who want to transfer out, there is a window of opportunity while schemes are still using RPI to calculate transfer values. Once they switch to CPI, you can expect transfer values to go down.”
:

Recommended

Is America ready to fight deflation?

While recent surprise growth figures from the Office of National Statistics may have warmed sentiment on this side of the Atlantic, worries on the other side are only growing. Stubbornly high unemployment figures of 9.6 per cent coupled with worse than predicted growth figures of 2.4 per cent GDP have led more US experts to […]

Pensions Regulator hires NAPF director of policy

The Pensions Regulator has appointed National Association of Pension Funds director of policy Nigel Peaple as head of corporate and international affairs. Peaple and his team will be responsible for TPR’s media, external stakeholder and EU relations. Prior to his role at the NAPF, Peaple held policy and public affairs roles across a range of […]

Prudential set to lift dividend

Prudential is expected to lift its dividend by 5 per cent in a bid to make peace with investors after its failed £22bn aquisition of AIA. According to The Sunday Times, the increase to 6.7p a share is set to be announced when the firm reveals its interim results in two weeks time. Analysts expect […]

ABI appoints Alain Dromer as investment committee chairman

The Association of British Insurers has appointed Aviva Investors chief executive Alain Dromer as investment committee chairman. Dromer replaces Standard Life chief executive Keith Skeoch, who is stepping down from the chairman role after completing three years in office. Dromer takes on the role from September 15, 2010. Dromer will join the Board of the […]

Martin Foden discusses how convenience is affecting the construction of fixed income portfolios

In this short video, Martin Foden, head of credit research at Royal London Asset Management, discusses how convenience is affecting the construction of fixed income portfolios. Watch the video in full The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com