The government’s decision to attach pensions to consumer price index (CPI) rather than retail price index (RPI) inflation could cut £20,000 off a public sector worker’s pension, it has been claimed.
A number of homeowners could now be encouraged to use an equity release calculator to see how the value of their property could provide them with a financial boost for their retirement.
Trade union Prospect has said that CPI is historically lower than RPI and is forecast to be lower than RPI in the future.
Neil Walsh, Prospect pension officer, commented: “The potential impact of this announcement is staggering. The government’s target for CPI is lower than the inflation target when it was measured by RPI due to differences in the way the indices are composed and calculated.
“CPI is expected to be lower than RPI and hence future pension increases will almost certainly be lower if this proposal is implemented.”
The expert said that over a long period of time this could leave public sector workers losing “many thousands of pounds” for their retirement.
Homeowners aged over 55 that are concerned about the future of public sector pensions can find out how the value of their property could boost their income by contacting Key Retirement Solutions.
Posted by Alison Stephenson
