Q. I know that there is going to be a review of all public sector pensions, including the NHS scheme that I am a member of, but have I heard it right that the government have already announced that any pension inflation increases are going to be linked to a different index than the Retail Price Index?
A. You are quite correct.
From next April, RPI will be replaced for the indexation of pensions. From then, the consumer price index (CPI)will be used, and this index does not include housing and heating costs, which has caused some concern.
This is because if we look at the year to May, while the CPI rose by 3.4%, RPI increased by 5.1%. If thisoccurs over many years, it will have a serious impact on the buying power of a typical pension.
We will be taking a keen interest in the whole public sector pension review, and will report back here when matters become clear.
