Hedging costs to soar for UK pension funds
Best of RPI and CPI exposure will cost up to 100 basis points to hedge, as well as increase the size of liabilities, say participants
Pension schemes that want to accurately hedge their liabilities could be hit with a whopping charge if legislation proposed by the UK government is passed.
The UK government announced in early July that it would introduce legislation at the earliest opportunity to ensure the consumer price index (CPI) becomes the statutory minimum for the revaluation and indexing of pension rights for all occupational pension schemes, rather than the retail prices index (RPI).
Most pensions in payment explicitly
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