Today (25th November 2020), the outcome of the long-running UK Statistics Agency (UKSA) consultation on aligning RPI with CPIH was published.
The key headlines from ABAP’s perspective are:
1 – The Chancellor of The Exchequer is unable to offer his consent to the implementation of such a proposal before the maturity of the final specific index-linked gilt in 2030. In practice, this enables the UKSA to implement the change in February 2030.
2 – Holders of index linked gilts will not be compensated as RPI will still exist under the terms on which the gilts were issued – even though it will be lower.
3 – The government is aware of the potential adverse impact on pensioners and commits to keeping occupational pensions “under review”
There were 831 responses to the consultation, more than double the number of responses to the previous consultation on the RPI (406), which was run by the Authority and closed in 2012. 257 of those 831 responses were from individual members of BA Pension Schemes.
For those with APS pensions, this means that true RPI rises are feasible until 2030, subject to the terms of the 2019 settlement.
The full detail of the consultation outcome can be found here:
ABAP has issued the following press release: