BROADSTONE warns pension scheme trustees inflation index issue
Tel: 020 7893 3456 Fax: 020 7487 3686 www.broadstoneltd.co.uk @Broadstone_Ltd
55 Baker Street London W1U 7EU
PRESS RELEASE 6 August 2014 BROADSTONE warns pension scheme trustees to stop brushing inflation index issue under the carpet Research published earlier today reveals that adoption of the new RPIJ index for calculating inflationary pension increases could reduce the costs of defined benefit pensions by £20bn in the UK.1 Commenting on the issue, John Broome Saunders, Actuarial Director at consulting firm BROADSTONE said “Scheme trustees need to stop brushing this issue under the carpet. The old RPI index is officially regarded as statistical bunkum, and yet many trustees persist in using it to calculate pension increases. If trustees cannot convince themselves that they have a very good reason to continue to use this old index, they should adopt the new RPIJ index as soon as possible. Failure to do this leaves trustees wide open to future claims of negligence from employers, who will be able to argue that trustees paid out pension increases to which members were not reasonably entitled. Since the defunct index is almost always higher than the new index, employers will be able to argue that such overpayments have resulted in additional funding costs, which they may then claim directly from trustees. With liabilities of £20bn at stake, and potential unlimited personal liability for negligent trustees, this is an issue that cannot be ignored.”
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LCP’s analysis of the impact of adopting RPIJ for calculating pension increases can be found at: http://www.lcp.uk.com/news--publications/news/2014/pa/afp-2014/ For press information contact: Jenette Greenwood, Redleaf Polhill 020 7832 4760 / [email protected] Notes to editors: Broadstone Group [BROADSTONE] offers independent pensions advice and investment solutions to private clients and companies through highly qualified advisers in eight offices across the UK. All its advisors are professionally qualified and its relationship with clients is fees based. Broadstone Corporate Benefits Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register number 587699) and uses the trading name BROADSTONE™. Registered in England, number 07978187. Registered office 55 Baker Street, London W1U 7EU.
Tel: 020 7893 3456 Fax: 020 7487 3686
55 Baker Street London
www.broadstoneltd.co.uk
W1U 7EU
For companies, BROADSTONE designs and implements tailored, cost effective pension schemes, auto-enrolment solutions and employee benefit packages that help businesses attract and retain talent. For individuals, BROADSTONE provides personal financial planning and investment solutions that help clients and their families achieve their goals. BROADSTONE has been awarded the prestigious Chartered Financial Planner status for the fifth year in succession. The designation is awarded by the Chartered Insurance Institute to firms demonstrating highest quality advice and ethical good practice. Broadstone Corporate Benefits Limited, Broadstone Pensions & Investments Limited and Broadstone Wealth Management Limited are part of the Broadstone Group. Each company is authorised and regulated by the Financial Conduct Authority and uses the trading name BROADSTONE™.
55 Baker Street London W1U 7EU
PRESS RELEASE 6 August 2014 BROADSTONE warns pension scheme trustees to stop brushing inflation index issue under the carpet Research published earlier today reveals that adoption of the new RPIJ index for calculating inflationary pension increases could reduce the costs of defined benefit pensions by £20bn in the UK.1 Commenting on the issue, John Broome Saunders, Actuarial Director at consulting firm BROADSTONE said “Scheme trustees need to stop brushing this issue under the carpet. The old RPI index is officially regarded as statistical bunkum, and yet many trustees persist in using it to calculate pension increases. If trustees cannot convince themselves that they have a very good reason to continue to use this old index, they should adopt the new RPIJ index as soon as possible. Failure to do this leaves trustees wide open to future claims of negligence from employers, who will be able to argue that trustees paid out pension increases to which members were not reasonably entitled. Since the defunct index is almost always higher than the new index, employers will be able to argue that such overpayments have resulted in additional funding costs, which they may then claim directly from trustees. With liabilities of £20bn at stake, and potential unlimited personal liability for negligent trustees, this is an issue that cannot be ignored.”
Ends 1
LCP’s analysis of the impact of adopting RPIJ for calculating pension increases can be found at: http://www.lcp.uk.com/news--publications/news/2014/pa/afp-2014/ For press information contact: Jenette Greenwood, Redleaf Polhill 020 7832 4760 / [email protected] Notes to editors: Broadstone Group [BROADSTONE] offers independent pensions advice and investment solutions to private clients and companies through highly qualified advisers in eight offices across the UK. All its advisors are professionally qualified and its relationship with clients is fees based. Broadstone Corporate Benefits Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register number 587699) and uses the trading name BROADSTONE™. Registered in England, number 07978187. Registered office 55 Baker Street, London W1U 7EU.
Tel: 020 7893 3456 Fax: 020 7487 3686
55 Baker Street London
www.broadstoneltd.co.uk
W1U 7EU
For companies, BROADSTONE designs and implements tailored, cost effective pension schemes, auto-enrolment solutions and employee benefit packages that help businesses attract and retain talent. For individuals, BROADSTONE provides personal financial planning and investment solutions that help clients and their families achieve their goals. BROADSTONE has been awarded the prestigious Chartered Financial Planner status for the fifth year in succession. The designation is awarded by the Chartered Insurance Institute to firms demonstrating highest quality advice and ethical good practice. Broadstone Corporate Benefits Limited, Broadstone Pensions & Investments Limited and Broadstone Wealth Management Limited are part of the Broadstone Group. Each company is authorised and regulated by the Financial Conduct Authority and uses the trading name BROADSTONE™.
