New inflation measure may affect wealth management

Wealth management may change in the face of government plans to alter the inflation measure used to calculate retirement payments.

Pensions minister Steve Webb recently outlined plans to link disbursements for final salary schemes to the consumer prices index (CPI) rather than the retail prices index (RPI).

Director of Churchouse Financial Planning Keith Churchouse noted while small amounts may seem insignificant in the short term, over a longer period, a few percentage points per annum can add up to significant differences in private pensions and may require individuals to rethink their wealth management strategy.

The CPI is generally lower than the RPI and the private wealth adviser argued the revised calculation will reduce the purchasing power of pensions.

Individuals may wish to adjust investment and asset management in the face of lower retirement payments, as an ageing population means people could be living on their pension for twenty years or more after ceasing work. ADNFCR-2318-ID-19884522-ADNFCR