Two things I really don\’t understand here:
Pensions minister Steve Webb said there were plans to link pension payments to a lower measure of inflation.
It would be applied to all final salary pensions, as well as payments made by the Pension Protection Fund – a lifeboat fund for workers who have lost their pensions – and the Financial Assistance Scheme, a Government compensation scheme.
The existing system links pension increases to the Retail Prices Index which includes housing costs such as mortgage interest payments.
But the Government plans to link it to the Consumer Prices Index instead, which is typically lower.
The move would reduce the burden on pension schemes and is expected to be introduced next year.
Firstly, is it really within the government\’s power to determine which inflation adjustment is made in a private contract?
Secondly, and I realise that I must be in gross error here, I thought that most/all private sector pensions were not inflation adjusted?