Written statement by Pensions Minister on 8 July 2010. DWP issued statement 12 July 2010
Pension Bill issued January 2011
Consultation issued 8 December 2010.
Consultation ended on 2 March 2011
The Occupational Pensions (Revaluation) Order 2010/2861, in force on 1 January 2011
The Consumer Prices Index (CPI) will replace the Retail Prices Index (RPI) when calculating the minimum statutory requirements for indexation of pensions in payment and revaluation of deferred pensions. The CPI will also be used in relation to payments from the Pension Protection Fund and the Financial Assistance Scheme.
The consultation paper confirms that, from 1 January 2011, occupational pension schemes will use the 2010 Revaluation Order (based on the consumer prices index (CPI) to 30 September 2010) to determine minimum amounts for revaluation and indexation. According to the consultation paper:
- No further legislation is proposed in respect of guaranteed minimum pensions (GMPs) as a result of the decision to use CPI as the measure of inflation.
- There will not be a modification power allowing employers or trustees to modify scheme rules by resolution to replace CPI as the measure of inflation in the scheme rules.
- There will be no statutory override to enable schemes to use CPI as the measure of inflation where this would be contrary to scheme rules.
- The Government does not intend to interfere with existing contracts for buyouts or buy-ins or existing annuity contracts.
- An exemption from the requirement to index pensions in payment by reference to CPI is proposed where scheme rules provide for increases in pensions by at least the retail prices index (RPI).
- The consultation regulations will be amended so that consultation of members will be required where scheme rules are amended to change the rate at which pensions in payment are increased or deferred benefits are revalued, where the change would be less generous to members.