22nd June 2016 Rosalind Connor comments in Professional Pensions on changing RPI to CPI
Rosalind Connor comments in Professional Pensions on whether schemes should be able to change statutory pension increases from RPI to CPI continues with calls for a statutory override to be put in place.
Rosalind says schemes with any funding challenges including weaker employer sponsors are often keen to move to CPI. However, this depends on what wording the rules of the scheme use regarding whether the RPI to CPI conversion can happen.
Connor questions whether such legislative change should take into account increases to pensions in payment under the Pensions Act 1995 legislation. She also queries whether changes should allow a scheme providing increases for all pensions in payment to reduce to the statutory minimum.
“There are lots of legal cases because scheme rules are worded so many different ways,” Connor says. “We are now at a stage where there are some schemes who can definitely make the change, some that can’t, and some where no one is entirely sure because there hasn’t been a case on their wording yet. This seems unfair and certainly means schemes are spending a lot of time and effort getting advice, and sometimes not an answer, without the considerable expense of going to court.
“It makes sense for there to be a level playing field on this point. In one sense I think the change to legislation would be quite straightforward – it is perfectly possible for the current legislation to say that it overrides any other provision on increases and revaluation in the rules.”
Read the full article in Professional Pensions here.
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