RPI Reform

There has been much debate regarding the appropriate inflation measure to use for the indexation of pensions in recent years. One of the most common indices used by pension schemes is the Retail Prices Index or RPI.

The standard measures of inflation are the RPI and the Consumer Prices Index (CPI). Both measure the change in the cost of a sample of typical goods and services. They differ in that the RPI includes housing costs (such as mortgage interest costs and council tax) whereas the CPI does not. A third measure, the CPIH, is the same as the CPI but with housing costs included.

The ways of calculating the RPI and CPI differ and there have been calls for the RPI to be brought in line with the CPIH.

On 25 November 2020 the Chancellor confirmed that with effect from February 2030 the UK Statistics Authority (who are responsible for setting RPI from that date) intend for RPI to be aligned with CPIH.

In the Final Salary section of the Clifford Chance Pension Scheme, RPI is used to set increases to pensions once they are in payment, as well as for the revaluation of benefits prior to your retirement date. From 2030, it is therefore likely that any RPI based increases in the Scheme will be aligned to CPIH.