Pensions indexation: the change from RPI to CPI

Pensions indexation: the change from RPI to CPI

We have previously written to you about the government's decision to use CPI rather than RPI as the basis for annual increases to public sector pensions.

The reason is that CPI has always been lower than RPI so its use would reduce the cost of providing pensions. For the individual this change will entail a dramatic loss - estimated at over 15% - in the value of their pension over their lifetime.

This is not just an issue for the public sector. Very many private sector schemes - including those to which most Connect Sector members belong - have rules which stipulate that pensions will be increased in line with the government's chosen index.

Prospect has been actively campaigning against this change. We do not believe CPI to be an effective measure of the cost of living for pensioners. Nor do we believe that such major change should be made without consultation, negotiation or agreement. In place of genuine negotiations, the government uses the need to reduce the deficit in public finances as a blanket cover for making changes which will permanently and significantly reduce the value of pensions. Meanwhile the Hutton Commission - set up by the government - has concluded amongst other things that even if RPI were to remain the index, the cost of public sector pensions as a percentage of national income is set to fall over the next 50 years.

The government rushed through the necessary parliamentary orders in February. As you may know however, the government has introduced an initiative whereby if an on-line petition receives more than 100,000 signatories, its subject will be debated in the House of Commons.

There is such a petition on the change from RPI to CPI which I would strongly encourage you to sign. It provides an opportunity to re-open the debate in parliament and to impress upon the government how strongly people feel about this issue. A well supported petition will in turn support Prospect's campaign.

The e-petition can be accessed at