AWD Chase de Vere argues that changing the revaluation of deferred pensions and increases to pensions in payment for occupational pension schemes from RPI to CPI is grossly unfair.
Param Basi, Technical Pensions Director, AWD Chase de Vere, said:
It is grossly unfair to those who have contributed in good faith toward their retirement to now change the measure by which their income in retirement will increase.
This is yet another in a long line of messages that have gone out to the public over the years, effectively telling them not to trust pensions. It is therefore little wonder that as a nation we are not saving enough for retirement.
The argument that CPI is a more appropriate measure does not stand up when you consider that pensioner inflation is recognised as being higher than RPI anyway. This change will have a double whammy impact on pensioners’ real incomes.
For schemes which apply revaluation and pension increases by reference to legislation the change could be quite straight-forward, although consideration will also need to be given to the wording of employment contracts. However, for other schemes which refer specifically to RPI, the position is more complicated.
It may be that many members will be at the mercy of scheme trustees, who will be able to show their true colours in terms of who they act for, the members or the employer.
Legal advisers will be rubbing their hands at the further work involved in assessing and then amending scheme rules, whilst Scheme Administrators may already be having sleepless nights over the additional complexity that may result. The prospect of legal and administration costs, as well as the process of member consultation, will therefore need to be weighed up against the savings that can be made.