UK private pensions ‘set to lose £96bn’ from switch from RPI inflation measure

Rishi Sunak’s move in spending review could result in pension holders receiving thousands of pounds less in income

One analyst said UK pension holders could receive thousands of pounds less in income due to the switch away from RPI.

The government will stop using the retail prices index measure of inflation in 2030, the chancellor has announced, in a move that will spell bad news for investors and retirees with payouts linked to it.

The RPI has not been used as an official national statistic since 2013 but it is still the figure used for returns on index-linked gilts issued by the UK government. It is also used when calculating annual increases in rail fares and student loan interest.

However, the rate has been discredited as a measure of price rises as it frequently overstates them. Instead, after a consultation that started in March, the government said it would switch to a measure in line with the current consumer prices index plus housing costs (CPIH). This stands 0.4 percentage points lower than RPI, but the gap is often wider.

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