UK - UK pensions minister Steve Webb has come under fire from scheme trustees at the TUC Pension Trustee conference for switching the inflation index for public and private sector pensions from the retail price index (RPI) to the consumer price index (CPI).

One trustee accused Webb of playing a "terrible trick" on pensioners and said the indexation change was designed to save the government £45bn-100bn, while TUC general secretary Brendan Barber accused the minister of breaching people's accrued rights.

Webb had previously told delegates that he had chosen CPI over RPI because the former was a "more appropriate" index for pensioners, as RPI reflected mortgage costs, which he said affect few pensioners.

But a member-nominated trustee berated the minister, saying the housing index also included insurance, council tax and repairs, which did affect many pensioners.

Another trustee reminded the minister of his pre-election promise that accrued index-linked pension rights were sacrosanct and asked how this squared with his decision to switch to CPI.

Webb said he had chosen CPI because the RPI did not reflect pensioners' lifestyles and that he wanted a measure that was "stable and not erratic".

He reminded delegates that RPI had gone negative in 2008-09 and that there was no "perfect measure", adding that lower earners would do better from the change, whereas higher earners might suffer.

In his speech to delegates, the minister said he had been under huge pressure to exclude small businesses from auto-enrolment, but stood by his decision to have an earnings threshold of £7,500.

"Otherwise, at the lower earnings threshold of around £5,000, people would have been taxed on 1% of £200 and paid 4p a week," he said.

He said the waiting period for auto-enrolment had been set at 13 weeks to avoid messy situations whereby employers had to refund tiny contributions to workers who left shortly after joining.

The certification regime for company schemes had also been made more flexible because he did not want to see schemes levelling down.
 

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