The general secretaries of Britain’s largest trade unions have issued a joint statement urging the government not to scrap the Retail Price Index (RPI) as a measure of inflation.

The statement highlighted union concerns over the impact of scrapping RPI, warning that this “is not a technical issue” and could affect millions of working people in terms of both pay and pensions.

In particular, it cited research from the Pensions Policy Institute (PPI), which found that the proposed shift to Consumer Price Index including owner occupiers’ housing costs (CPIH) could leave the average male worker with a private sector pension £11,000 worse-off in retirement, and the average woman £14,000 worse-off.

It also warned that the reforms could damage the reputation of inflation management in the UK.

The statement was signed by the representatives of 13 unions, including the Trade Union Congress, Unison, Unite Union, TSSA, GMB, CWU and the National Union of Teachers Wales.

It said: “Nobody is claiming the RPI is perfect. But it remains the best measure for living costs and would be straight forward to modernise.

“As has been shown across Europe it would be perfectly possible to have RPI existing in parallel to CPIH (or CPI) and have the latter measure focus on guiding monetary policy.

“We are disappointed that expert calls to retain the RPI have been repeatedly ignored.

"The Royal Statistical Society and House of Lords Economic Affairs Committee have both presented compelling evidence for keeping it.    

“We urge the government to listen to these bodies and to unions. Scrapping RPI will hit workers in the pay packet and make it harder for them to have dignity in retirement.”

Industry experts have previously warned that the reforms could cost savers and investors up to £122bn, with the shift expected to impact up to 10 million DB savers, whilst also leaving pension schemes around £80bn worse off.

The joint statement follows the government consultation on the proposed reforms, which was extended amid Covid-19, with the government response to this expected on 25 November.

It also comes amid industry research, which found that inflation hedging activity amongst UK pension schemes has been held back by the uncertainty around the reforms.

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