The pensions industry needs to give “clear direction” to the Government in the consultation over proposals to change the indexation of benefits from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI) in order to ensure a stable environment for occupational schemes, scheme members and the buy-out market, MetLife Assurance Limited believes.
The group warns that as the consultation period, when launched, is likely to be short the industry should be taking time now to consider the best outcomes for scheme members, trustees and employers.
The Department of Work and Pensions is expected to publish the consultation imminently and has already assured the industry that it will not overrule schemes that wish to continue using RPI and will allow trustees to make their own decisions.
MetLife Assurance believes the decision to switch to CPI indexation should be made by employers but still be subject to trustee approval and that RPI should be seen as an acceptable alternative if defined by scheme rules
Dan DeKeizer, Chief Executive at MetLife Assurance Limited, comments:
“It is worth the industry taking time now to think about what options will be the best choice for scheme members, trustees and employers.
“Much of the impact of the RPI/CPI changes on schemes will depend on what the individual scheme rules provide for, how much scope the Government gives for this change to be retrospective and whether or not this will form a statutory override. It is my view the industry must give clear direction to Government on these important points in order to ensure a stable environment for occupational schemes, scheme members and the buy-out market going forward.”