Experts today defended the Government's move to slash private-sector final salary pensions which will see millions of people lose up to 25 per cent of their retirement income.
Pensions minister Steve Webb has called for the schemes to rise each year in line with inflation as measured by the consumer prices index (CPI), rather than the retail prices index (RPI).
The move is likely to cost workers hundreds of pounds a year over the course of their retirement, as CPI is generally lower than RPI.
But experts warned the schemes would have had to be scrapped entirely had ministers not stepped in.
Bob Bullivant, chief executive of retirement advisers Annuity Direct, said: "If you take a scheme members' view then of course they are not going to be very happy. But if you take a global view then it will make things better because it will help the deficits in final salary schemes. They will be more likely to be able to fulfil their liabilities and less likely to fail and fall on the Pension Protection Fund."
Accountants KPMG said the change could reduce UK private sector pension liabilities by 10 per cent, or about £100billion. It is expected to be introduced next year, bringing the inflation measure used for private sector pensions in line with public sector ones.
But shadow work and pensions secretary Yvette Cooper said: "Many pensioners will feel betrayed by the Government. During the election both parties promised to help pensioners. Now, out of the blue, they're cutting the value of private pensions that people have worked hard for and depend on."
The move will come as a relief to private sector employers such as British Airways, which face vast shortfalls. Britain's biggest 200 private company pensions schemes are estimated to have a total deficit of about £100billion.
