MANY of the 12 million private sector workers who see themselves as lucky to belong to final salary pension schemes probably shrugged their shoulders when the Government changed the rules that determine their pension payout.

From January 2011, says pensions minister Steve Webb, final salary pensions will have to rise each year in line with the consumer price index (CPI) rather than the retail price index (RPI).

The Government had little alternative: there is an estimated £239bn shortfall in final salary pension schemes, the gap between what is in the funds and what might eventually be due to members.

BT, a £10bn company, has pension commitments to its staff of £40bn.

The new guideline is only a minimum requirement – if their scheme is sufficiently well-funded, pension trustees can continue to allow annual rises in line with RPI.

But weaker pension funds are likely to adopt the Government guidance as soon as possible – and there is little doubt among independent experts that pensioners will soon feel the pain.

Laith Khalaf, a pensions analyst at financial advisor Hargreaves Lansdown, said: “Millions will have to fill holes in their retirement income by making additional private savings of their own.

“Based on the historic rates of RPI and CPI, a pensioner retiring now on a £5,000 final salary pension could expect an income of £9,737 in 20 years’ time if it was uprated in line with RPI. It would be worth £8,497 (13 per cent less) if it is uprated in line with CPI.

“Over that 20-year period, the pensioner would have missed out on £10,367 in income, in total. The longer the pensioner lives, the worse the effects will be.”

Mr Khalaf said that since 1988, RPI has averaged 3.6 per cent, against CPI at 2.8 per cent.

The gap has big implications for pensioners. Because CPI does not take council tax into account, for example, pensioners on the lower pension could be badly exposed to massive annual bills from the town hall.

Older people, in any case, are more vulnerable to inflation. New Alliance Trust Research Centre figures indicate that 50 to 64-year-olds face the highest rate of inflation, at 4.5 per cent, which is 41 per cent higher than the official headline rate of 3.2 per cent.

The centre said that last month, over-75s were the hardest hit as their inflation rate climbed from 3.3 per cent to 3.6 per cent.

At financial advisor AWD Chase de Vere, technical pensions director Param Basi is equally critical: “It is grossly unfair to those who contributed in good faith toward their retirement to now change the measure by which their income in retirement will increase.

“The argument that CPI is a more appropriate measure does not stand up when you consider that pensioner inflation is recognised as being higher than RPI anyway.

This change will have a double whammy impact on pensioners’ real incomes.

“This is yet another in a long line of messages which have gone out to the public over the years, effectively telling them not to trust pensions.

“It is, therefore, little wonder that, as a nation, we are not saving enough for retirement.”