The NAPF has responded to the ONS’ consultation on the future of consumer price indices.

RPI has clearly been shown to be based on an inferior methodology to CPI and we agree with the approach to abandon the measure. However, this cannot occur in isolation from other areas of Government policy as the RPI legacy has a number of consequences for pension schemes. We believe that DWP would need to legislate for a statutory override that enables Defined Benefit (DB) pension schemes to transition benefit indexation to CPI. In addition, the Debt Management Office (DMO) would need to manage the transition away from the issuance of RPI linked gilts; moving instead to CPI linked gilts.  We also recommend that a governance structure similar to that of the Financial Reporting Council and its’ SORP-making bodies is set up to maintain and update consumer indices. We do not think that existing legislation provides a sufficiently flexible tool to respond to evolving demands on consumer indices.