Retirees to be hit by inflation change in Rishi Sunak spending review
Rishi Sunak is set to cost investors £100bn by announcing a change to how pensions are calculated in tomorrow’s comprehensive spending review.
The Telegraph reports that Sunak is considering linking pension rises to CPI instead of the retail price index, which would mean smaller yearly increases.
The change would mean that 10m retirees will receive smaller pensions than they had previously planned.
The move would decrease government spending at a time where the chancellor is looking to claw back some of the £200bn spent during the Covid crisis.
However, industry experts warn it will cost investors in index-linked gilts – bonds tied to inflation – around £100bn.
Partner at consultancy firm LCF Sir Steve Webb told the Telegraph: “This is potentially a real loss for millions of present and future company pensioners, there is no getting away from that.
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“They will get smaller increases.”
The Daily Mail also reports that Sunak will tomorrow announce the formation of a new counter-terrorism operations centre.
Tens of millions of pounds will be spent on the centre, which will bring together top intelligence officers and police officers.
Media reports over the weekend speculated that the chancellor will also create a new government-backed investment bank to fund infrastructure projects.
Additionally, Sunak will reaffirm commitments to public service spending increases to hire more nurses and police officers.
The reforms are being positioned as part of the government’s “levelling up” agenda for post-Brexit Britain.
The overhaul will also include major changes to the government’s cost-benefit analysis process for big projects, which it acknowledged has favoured investments in the south of England.
Part of this relates to the Treasury’s so-called green book — a framework used to determine the value for money of government projects.