THE Government will launch a consultation today on legal changes that could reduce pension payouts by billions of pounds.
Ministers are considering giving businesses more scope to use the Consumer Prices Index (CPI) measure of inflation when upgrading benefits rather than the Retail Prices Index (RPI), which tends to be higher.
The switch to CPI for public-sector pensions was announced in Chancellor George Osborne's first Budget in June, with experts saying it could help reduce companies' deficits as well as saving money for the Government. The measure takes effect next April.
But industry figures have warned that firms with schemes that explicitly link payments to RPI will not be able to take advantage of the new rules unless the law is changed.
Pensions minister Steve Webb is due to publish the consultation document.