Final salary pension scheme members could see a 4% cut in benefits after the BoE used miscalculated inflation rates for more than a decade, experts say.
The BoE last week admitted it had underestimated clothing prices used to determine inflation by 5.5% between 1997 and 2009, meaning the consumer price index rate should have been 0.3% higher than published. It also admitted the error was "likely to have a larger impact on RPI inflation than on CPI inflation". Investment managers predicted the error in clothing price collection could have shaved 4% off a pensioner's final salary entitlement. BDO Investment Management actuarial director John Broome Saunders says: "Had the inflation calculation been done correctly, many final salary s...
To continue reading this article...
Join Professional Adviser for free
Signup and gain exclusive members-only insights
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes
