Savers in Pension schemes where annual increases are currently linked to RPI could lose billions of pounds over the course of their retirement, according to evidence given to the High Court, if changes planned by the Chancellor and the UK Statistics Authority go ahead.

The warning came on the first day of a legal challenge in the High Court brought by the BT, Marks & Spencer and Ford UK pension schemes, which are challenging the decision to redefine RPI as from 2030. Between them, these schemes represent the interests of 450,000 people whose retirement pots currently total £83 billion, but savers in other schemes will also be hit by the proposed changes.

The Government has already stated that it has no plans to compensate anyone adversely affected by the changes.

Those in many pension schemes currently have retirement pots that increase every year in line with the retail prices index (RPI)… and because of the basket of goods and services it is based on, annual RPI is almost always higher than the rival inflation statistic: consumer prices inflation (CPI).

The Government says it wants to change how RPI is worked out, aligning it more closely with CPI. Those challenging the decision say savers will see a four to nine per cent cut to their total pensions over the rest of their lives, with women even more adversely affected because they have a longer life expectancy. Some 82,000 BT pensioners, for example, could see a loss of income over their retirement on an average £34,000.

Last November, the Chancellor and the UK Statistics Authority issued a joint response on aligning the Retail Price Index with the Consumer Price Index ­to include owner-occupiers’ housing costs (CPIH). UKSA have confirmed it will implement the change by February 2030.

Keeping tabs on changes to your retirement income

If you think your retirement income might be affected by these changes, it’s easy to adjust your calculations by changing the inflation figure in your RetireEasy LifePlan that you think your pensions will increase by each year.

That way you can be sure to have a much more accurate picture of the income you can expect to enjoy… and make any necessary changes to your plans in good time.