The National Association of Pension Funds (NAPF) today reacted to the announcement by Pensions Minister Steve Webb on inflation indexation for private sector pensions.
Joanne Segars, NAPF Chief Executive, said:
“The pensions industry is surprised that the Government is no longer considering allowing all pension schemes to have the choice of switching their inflation measure.
“Having marched us up to the top of the hill and created confusion in the pensions industry, the Government has now marched us back down again. The Government really underestimated the complexity of this issue.
“While keeping many pensions locked into RPI is good news for current and future pensioners, the effect on the sustainability of final salary pensions is less positive. Pension funds are under great stress, and some really need the breathing space that an option to switch to CPI would have given.
“The Coalition Agreement makes a commitment to reinvigorating occupational pensions. One of the ways it can do so is by making schemes more affordable over the long term, which is something that flexibility on inflation would have offered.”
According to an NAPF survey, six out of ten (61%) pension schemes cannot currently make a switch, mainly because they have RPI indexation hard-wired into their pension scheme rules. However, 23% said that their current rules allow them to switch to CPI, so they do not need extra government legislation to help them do so.
Notes to Editors:
1. Journalists can obtain the full survey results from the NAPF press office.
2. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
NAPF Press Office 020 7601 1717 or email [email protected]