Spring Statement

The Chancellor of the Exchequer presented his Spring Statement 2022 to Parliament on Wednesday 23 March 2022 and whilst there weren’t any specific comments in relation to pensions, there was plenty there that would affect schemes. The statement acknowledged the increased rates of inflation.

Consumer Prices Index (CPI) inflation has risen to a 30-year high in recent months. This has primarily been driven by global factors outside the government’s control, including continued
disruption to global supply chains and higher global energy and commodity prices.

The risk here is the effect on pensioner members, with most schemes having caps on increases, the increases are now falling behind inflation.

With regard to scheme liabilities, increasing inflation isn’t helping, but this is mitigated somewhat by the Bank of England interest rate increases.

It is key that trustees ensure that they fully understand the impact on inflation to their scheme, to allow time to adopt sufficient hedging in consideration of their long-term funding objectives

 


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