Rising inflation will blow £7,000 into pensions

Millions of last salary pensioners face a £7,000 hit due to the inability to prove their benefits against inflation.

Britons who worked in the private sector are set to suffer due to a cap on increases which means they will not keep pace with price rises.

The loophole will cost pensioners an average of £400 this year and £7,000 over their lifetime, while saving companies sponsoring the schemes around £30billion. Almost all defined-benefit (DB) plans, which pay a fixed amount each year based on seniority, increased benefits by a maximum of 5 percent per year, even when inflation was higher. The ceiling was reduced to 2.5% in 2005. Prior to 1997, there was no obligation to

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