Pension funds face huge bill from UK indexing change, analysts warn
Using CPI instead of RPI was intended to save money - but could end up costing UK pension funds billions
If the UK government goes ahead with plans to use consumer price index (CPI) inflation in pension fund regulation, rather than the currently used retail price index (RPI), it could mean billions in unexpected costs for the pension industry.
The UK minister for state pensions, Steve Webb, announced last week that public-sector pensions would be indexed to CPI rather than RPI. CPI, which excludes mortgage payments, tends to be much lower than RPI (3.2% compared with 5% in June, and typically a
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