International law firm and pensions specialists Pinsent Masons
comments on yesterday/Thursday’s announcement by Pensions Minister
Steve Webb that private sector pension increases will now be linked
to the consumer price index instead of the retail price index.
Simon Tyler, Legal Director at Pinsent Masons, says: "In
recent years, the cost to employers of funding defined benefit
pension schemes has risen dramatically. Over time, this
proposed measure should save some money for employers and help to
reduce deficits. The measure may prove less popular with
employees.
“The extent of the saving for employers will depend on how the
consumer prices index performs in future. It will also depend
on exactly how this legislation is introduced. The wording
used in some pension schemes may prevent employers receiving the
full benefit of this change."
The change will bring private sector pension schemes in line
with the increases announced for public sector schemes in the
Emergency Budget on 22 June 2010. The text of Steve Webb’s
statement can be found at the following link:
http://www.publications.parliament.uk/pa/cm/cmtoday/cmwms/archive/100708.htm#d2e123
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