A controversial proposal to water down final salary pensions could save large British firms £30bn from their retirement bills, according to new research.
Eroding the amount paid to pension savers by tying them to a lower rate of inflation could act as a “safety valve” for companies struggling to meet their commitments, said consultancy LCP.
The idea of switching pension payments to the Consumer Prices Index measure of inflation, rather than the higher Retail Prices Index rate, was floated during the Tata Steel rescue talks earlier this year following a change in the law in 2011.
The state pension has been switched between targets several times. When income growth was higher than inflation inflation was the annual raise. When income growth was lower than inflation then income growth was the annual raise. And so on.
Goose and gander applies, no?