To ask the Chancellor of the Exchequer, with reference to the outcome of the consultation on the Reform to Retail Prices Index (RPI), published on 25 November 2020. what steps the Government plans to take to (a) protect the lifetime value of people’s defined benefit pension savings which are RPI-linked from 2030 and (b) maintain confidence in defined benefit pension schemes.
On 25 November, the Government and UK Statistics Authority (UKSA) published their response to the consultation on the timing of reform to the Retail Prices Index (RPI). Owing to shortcomings in its calculation, UKSA intends to bring the methods and data sources of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) into RPI.
The Government and UKSA are mindful of the widespread use of RPI in the economy, and, as such, sought views in the consultation on the broader impacts of reform. The Government and UKSA received approximately 550 responses from members of defined benefit (DB) pension schemes whose benefits are linked to RPI.
It is apparent that some DB pension schemes members will be affected by UKSA’s reform. The effect of reform on the members of such schemes will depend on whether their benefits are linked to RPI under the trust deed and rules of the scheme.
The announcement in the response by the Chancellor and UKSA Chair means that reform will not be implemented before 2030. The Government keeps the occupational pensions system under review and will continue to do so.
For further information please see the consultation response at: https://www.gov.uk/government/consultations/a-consultation-on-the-reform-to-retail-prices-index-rpi-methodology.