Some personal pensions in payment will apparently be cut if the annual rate of inflation falls this year. The government is predicting RPI will show a year-on-year drop of more than 2% by the Autumn.
If that happens, some pension providers have said they will reduce payments on index-linked pension annuities. However, the government has promised that the basic state pension will rise by at least 2.5% even if prices fall year-on-year.
Some providers (including Axa, LV, Partnership, some Standard Life annuities, some Prudential annuities) have said that if RPI becomes negative payments will go down. Other providers have said they will not make cuts (Norwich Union, MGM, and Legal & General) but that payments will remain flat until RPI increases to a higher level than it was before.
Many company pensions may also be frozen if prices fall.
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