Pensions - Articles - No change but postive things to take from RPI decision


 Glyn Bradley, Associate at Mercer, commented

 “The headline is ‘no change to RPI’ but in fact today’s decision is actually a positive decision to keep the significant changes accidentally introduced in 2010, although we expect the ONS to continue to investigate whether it can improve the index.”
 
 “Back then, an apparently minor technical decision was made to improve the way clothing and footwear prices were collected. However, for various statistical reasons, those changes seem to have widened the gap between CPI and RPI by around an extra half a percent per year. That sounds small but it could increase RPI-based benefits by about 10% over the course of 20 years. Although this will be a relief to pensioners receiving RPI - linked benefits, the flip side is that employers' costs are higher than they might reasonably have expected. The ONS has an ongoing task of ensuring its inflation calculations are robust and we expect it will continue to investigate whether the difference between RPI and CPI can be defended.”
  

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