Pensions Regulator makes statement on move to CPI basis for benefit increases
The Pensions Regulator has today issued a statement on the Government’s proposals to change the basis of calculating statutory increases to pensions in payment and revaluation of pensions in deferment from RPI to CPI.
The Regulator says the impact of the change is likely to be scheme specific and will depend on scheme rules and the exact details of any changes to legislation. Therefore, at the moment, trustees should continue to make decisions based on the law as it stands and the Regulator will assess recovery plans on this basis.
Trustees may wish to start reviewing scheme rules and statements made about indexation in member communications and begin talking to employers about what steps might be taken once the changes are finalised. In addition, the statement says that trustees should “give serious consideration to an interim communication, to assist members who may be faced with decisions on transfers or retirement planning, or may be concerned about press coverage”.
Once the detail of the proposed change is known and its impact on individual schemes can be determined, where the move to CPI means that a scheme’s estimated liabilities are lower than previously, “the regulator would expect that this would generally lead to shorter recovery plans resulting in greater security for members and greater certainty for employers”.
Once all the details of any changes to legislation have been finalised, the Regulator is intending to publish further guidance.
