Pensioners and savers to have £122billion swiped from payouts by Rishi Sunak's small print

A small change announced by the Treasury alongside the spending review will take £122billion out of the pockets of pensioners and other savers.

The good news is that the change won't come into force until 2030.

The bad news is that there will be no compensation available to people who miss out.

Tom Selby, senior analyst at AJ Bell, said: "The message is unequivocal: if you are negatively impacted by this, tough.

"The Government is clear it will not provide any kind of compensation to those who lose out as a result."

And it's all to do with how price rises are calculated.

The change wasn't mentioned in Rishi Sunak's speech to MPs (REUTERS)

Millions of people currently have pensions payouts increased each year in line with the Retail Prices Index.

There are also savers who have payouts linked to prices this way.

But, from 2030, that measure of inflation will be scrapped - and replaced with something similar to the Consumer Price Index.

The problem? CPI is generally about 0.8% lower.

That might not sound a lot, but has the ABI estimates that the move could cost investors and pensioners £122 billion - with pensioners hit particularly hard.

Steven Cameron, Aegon pensions director, worked out just how much it could cost you.

"With people living longer, a pension can last for 30 years and while 0.8% might not seem like much, over 30 years it can make a big difference," he said.

"Someone whose initial pension is £10,000 would with a 3% compound increase each year be receiving £24,273 in 30 years time, but with 2.2% increases, that would be £19,209 or a fifth less."

Price rises at the shops mean bigger payouts from pension pots (Getty)

And it's not just today’s pensioners who will lose out, but workers in final salary schemes too.

“This looks set to include millions of defined benefit scheme members whose pensions are linked to RPI," Selby said.

"In addition, those who have bought annuities from insurance companies promising annual RPI inflation rises will also bit hit.

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “This is a horrible blow for pensioners, who will pay the lion’s share of the eye-watering cost of this move."

Some things will be cheaper as a result (PA)

But not quite everyone will lose out.

“Ditching RPI could be good news for some young people and commuters, however," Selby said.

That's because the Government links things like rail fare increases and student loan repayments to RPI.

Increases to a string of taxes are also linked to the old measure - including car tax, air passenger duty and fuel duty - potentially seeing savings there.

Many contracts for mobile phones also allow "inflation linked" rises each year - meaning people could also save money that way too.

What's currently linked to RPI    

• Final salary pension payments.

• Income from index-linked annuities.

• Income from some index-linked bonds.

• Regulated rail fare rises (and wage negotiations for rail workers).

• Mobile phone tariff price rises (the maximum rise allowed without triggering your right to leave the contract early).

• Vehicle excise duty (better known as car tax).

• Air passenger duty rises.

• Tobacco and alcohol duty rises.

• Interest on student loans.