Saga questions pensions calculator CPI move

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Saga questions pensions calculator CPI move

The reasoning for making pension calculations relate to the consumer prices index (CPI) has been called into question by a senior source at Saga.

Director general at the financial services provider Dr Ros Altmann suggested the government simply want to lower the cost of pensions in the future.

She said: "I know the government thinks that CPI is supposed to be a better measure of pensioner inflation, but we do have an [official] figure for pensioner inflation, so why not use that?"

Dr Altmann explained that CPI tends to be lower than the retail prices index (RPI), which is what such savings tools have been connected to previously.

In her opinion, people must be made aware of the real reasons for the decision, since, as a result of the strategy, they will probably have to work part time for a period instead of retiring completely.

She made her comments after the government announced the launch of a consultation to review the impact of switching from RPI to CPI.

Pensions minister Steve Webb stressed that the report is being put together in order to explore which powers retirement savings schemes should have.

"We need to ensure that people can have confidence in their pensions," he added.

The statement was made at the same time as the state revealed the basic state pension is set to rise by £4.50 in April to reach £102.15.

In addition to this, pension credit recipients are likely to see a £4.75 increase in their income and cold weather payments are also due to go up.

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