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Treasury criticised for pension index switch

Pensioners and benefit claimants will be unfairly harmed by Government moves to link annual rises to a lower measure of inflation, according to reports.

The Government announced in the Budget that it will switch its inflation benchmark from the retail price index to the consumer price index for public sector pensions in April 2011. It has since extended the change to include all pensions.

The Royal Statistical Society says the consumer prices index fails to reflect the spending patterns of pensioners and people on benefits and the rising costs they face.

Over the last 10 years, on average, the CPI has been 0.75 per cent lower than the RPI.

The Government has already introduced a “triple lock” on pensions which means they will rise by whichever is highest of 2.5 per cent, the rate of earnings or the rate of the RPI, changing to CPI from April next April.

The UK Statistics Authority, which oversees official data, recently proposed changes to the CPI to bring it closer to RPI after the Society complained about the switch last month.

An RSS spokeswoman says: “It has agreed to included housing costs but that only goes part of the way to meeting our concerns.”

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