Pay and Pensions
The question
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential impact of the proposed alignment of the Retail Prices Index methodology with the Consumer Prices Index, including owner occupier housing costs from February 2030 on (a) wage-setting and (b) private sector pension benefit uprating.
Answered by Tulip Siddiq
The alignment of the methods and data sources of the Consumer Prices Index including owner occupiers’ housing costs into the Retail Price Index (RPI) reflects the flaws in RPI which can either overstate or understates price changes. The Bank of England will assess if these changes significantly impact certain index-linked gilt holders.
The Government recognises the widespread use of RPI and that there are potential impacts from the reform. Whilst there is legislation around the minimum indexation requirements for defined benefit schemes, scheme rules will determine how any pensioners' benefits are increased each year.
The independent Office for Budget Responsibility will publish a revised 5-year wage-growth forecast in their next Economic and Fiscal Outlook, considering all relevant factors.
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