07 Jun Rosalind Connor comments in Pensions Expert on the pensions impact of British Steel
Rosalind Connor comments in Pensions Expert around the changes being proposed to the British Steel Pension Scheme, specifically the transition from RPI to CPI, and how this will impact salary-related pensions more broadly.
Rosalind cautioned that there is legal ambiguity around making the transition from RPI to CPI.
She said that schemes have to use their discretion when making rule changes, “but there is a legal issue if the rules don’t allow for that discretion.”
“The government seems to be saying that it is unfair that only some schemes are allowed to make changes to their rules,” Connor added.
Past legislation mandated that “you have to index-link people’s pensions, which can be very costly for businesses… the move to CPI would mean a scheme would cost [the employer] less”.
But these assumptions about CPI are being based on past behaviour, which will not necessarily continue into the future, Connor warned.
“There is a risk that this will be done, but that it won’t make a difference; that the scheme will end up in the PPF anyway”.
Read the full article in Pensions Expert here.