If you’re about to retire, do you rely on RPI, CPI, or the best UK pension annuity rates. The Government last week announced it would link private sector pension increases to the consumer prices index (CPI). This move, which could slash £100bn from pension scheme liabilities, has been criticised by many as a stealth cut. Pension increases for private sector pension schemes are currently indexed in line with the Retail Prices Index (RPI). Linking instead to the CPI means lower pension increases in furure.
These increases, CPI or RPI, only effect those fortunate individuals in final salary arrangements. However, over time, it is probaby fair to say that many will complain about the cumulative loss of income. Naturally, if you’re not in one of these schemes and you’ve got a private pension plan, then you’ll have to rely on getting the best pension annuity rates at retirement. You could buy a RPI linked annuity, but the starting income will be very low.
