Your article (Pension changes could cost 11m Britons thousands of pounds, 21 February) says 75% of pension schemes use the retail price index (RPI). But all the public-sector schemes, which must be more than 25%, as well as many in the private sector – eg BT, BA – have used the consumer price index (CPI) for years. The article says RPI is usually greater than CPI; in fact it is virtually always greater because of the different way they are calculated – it’s called the formula effect. To cut a long and complicated story short, RPI may overstate inflation by about 0.2% on average but CPI understates it by about 0.8%.
Over time that’s a big difference and will of course affect future pensioners (today’s young) more than it will current pensioners – this is not a baby boomer issue. Basically CPI was never meant to be a real measure of inflation; rather it was a way of comparing inflation in EU states. Its adoption by the government as the measure of inflation rises – on benefits as well as pensions – since 2010 is basically a mendacious scam.
David Quinn
London
• Could the Steve Webb who is arguing against “relaxing standards on inflation protection [that could] lead to millions of retired people being at risk of cuts in their real living standards”, if increases are calculated using CPI rather than RPI, possibly be the same one who, as pensions minister in the coalition government in 2010, did just that for civil and public servants? That led to no increase for 2016-17, and I am waiting with bated breath for the 2017-18 news, as the CPI last year, at the point at which these things are calculated, was just below 1%, which seems to entitle the government pensions agencies to say no increase will be paid.
Dr Sally Cheseldine
Edinburgh
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