Julie Stothard: RPI decision means savings are lost

The government’s decision to leave the retail prices index (RPI) unchanged will disappoint pensioners and investors, and employers struggling with pension deficits.

The cost of benefits fully linked to RPI could have fallen by one-fifth had RPI been fully realigned with the consumer prices index (CPI).

For many schemes, the anomaly still exists that benefits could be linked to RPI or CPI, depending on the rules their deeds were written under.

The failure of these potential savings to materialise will be a catalyst for employers to reopen negotiations with trustees.

Julie Stothard is director at Capita Employee Benefits