The Retail Prices Index (RPI) measure of annual inflation is to be replaced by the Consumer Prices Index plus housing costs (CPIH) measure from 2030.

The Office for National Statistics (ONS) has welcomed the change, stating that CPIH offers the ‘most comprehensive’ picture of inflation. However, it could also have an impact on your pension.

CPIH and your pension

The reform is set to most significantly affect defined benefit (DB) pension schemes, which often invest heavily in index-linked gilts, a type of government bond that pays out in line with inflation. Given that RPI inflation has historically been higher than CPIH – by 0.8% on average6 – the move is expected to leave DB schemes £60bn worse off7 .

Don’t panic

We can help you plan ahead and keep on track for a comfortable retirement. 6 GO .UK, 2020, 7 Pensions Policy Institute, 2020

It is important to take professional advice before making any decision relating to your personal finances. Information within this page is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.

Tax and Estate planning are not regulated by the Financial Conduct Authority

The value of pensions and investments can fall as well as rise. You may get back less than you invested.

Will writing is not regulated by the Financial Conduct Authority. 

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