Bad News For Pensioners And People who Are Recipients Of State Benefits.
The UK's main statistics body, the Office for National Statistics, has agreed to investigate using alternate measures of inflation to apply to the calculation of benefits and pensions, after critics labelled the Government's preferred index as flawed.
Pressure from the Royal Statistical Society (RSS), the professional body representing statisticians, has forced a climbdown after months of resistance. Ministers plan to save billions following a shift from the retail prices index (RPI), which includes rent and mortgage payments, to the consumer prices index (CPI), which has averaged 0.7% lower over the last decade. Accountant KPMG has estimated that private-sector and public-sector pension savers will lose up to £250bn over the next 40 years in lost inflation-linked rises.
Benefits claimants are also expected to lose out as their payments track inflation pegged to the lower CPI.
Unions Calculate that workers in final salary pension schemes could lose 15% of their retirement income following the move to CPI. Brendan Barber, the TUC General Secretary, said: "The RSS is an establishment body that rarely likes to rock the boat, but it rightly feels strongly about this issue. It is absolutely right to say that the CPI is not a measure of any one's cost of living".
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