The Office for National Statistics (ONS) has launched a consultation on changing a key inflation formula to which private pensions are linked, in a move that could see savers getting lower annual increases in their retirement money, the Telegraph reports.
The ONS is seeking feedback on changing the retail price index (RPI) with the aim to bring it more in line with the consumer price index (CPI), which has moved slower than the RPI, with a 0.9% average annual gap, since 1996 when it was first used.
The potential alignment of the RPI to CPI, or a slowdown in the RPI, would result in smaller future rises in private pensions. The consultation is open until 30 November and any resulting proposals will be announced in January 2013. This follows the uprating of public-sector pensions from RPI to CPI earlier in 2012.
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