Press Comment
12 May 2016
All companies should be given the option to link to CPI – not just Tata Steel
Reports suggest that the Government is considering permitting changes to pensions in the British Steel pension fund in order to make Tata Steel more attractive to a potential buyer.Under the proposals, pension increases could be linked to the Consumer Prices Index (CPI), rather than the Retail Prices Index (RPI). Simon Taylor, Partner atBarnett Waddingham, comments on how this would be a positive change across the industry.
"The Government changed the legal minimum pension increase from RPI to CPI in 2011, but many employers could not take advantage of this due simply to the drafting of their scheme’s rules. If companies could be given the chance to change RPI to CPI regardless of their scheme’s rules, this could help make their pension schemes more sustainable and provide more security for scheme members who would still receive inflationary increases of some kind.
"The RPI calculation methodology is old-fashioned – so much so that it is no longer designated an 'Official Statistic' by the Office for National Statistics. It seems perverse that some companies and trustees cannot move to the more modern and widely accepted CPI simply because their rules were drafted many years ago and do not give them the flexibility.
"Public sector schemes were able to move to CPI increases on accrued pensions. The rules lottery for private sector schemes is unfair. All companies should be given the option to control costs in the same way that the public sector has."
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For further information please contact:
Steph Reynolds
PR Manager
01494 788122 / 07590 176736
About Barnett Waddingham
Barnett Waddingham LLP is the UK’s largest independent provider of actuarial, administration and consultancy services.The firm works with corporates, trustees and individuals in both the private and public sector, offering clear advice and a full range of professional advice including trustee consulting, employer pensions advice, pension scheme management and administration, investment strategy, public sector pensions, risk benefits, life and general insurance consulting as well as the provision of SIPPs, SSASs and specialist executive pension plans’.
The firm has grown steadily since its inception in 1989. There are currently 64 partners and 777 staff, based in 7 locations around the UK (Amersham, Bromsgrove, Cheltenham, Glasgow, Leeds, Liverpool and London). Barnett Waddingham is also the UK representative of NORACS (North American Actuarial and Consulting Services) and EURACS (European Actuarial Consulting Services).