One of my learned colleagues at Family Law Partners, a Deputy District Judge, popped his head over the top of my computer screen recently and asked me for my views on linking maintenance payments to the Consumer Prices Index (CPI). This got me to thinking: is there an advantage for my clients to have their payments linked to the CPI instead of my favoured link, the Retail Prices Index (RPI)? See my earlier post on why lawyers link maintenance to inflationary measures in the first place.
After all, the Chancellor in his June 2010 Budget announced the Government’s intention to use the CPI for the price indexation of benefits and tax credits from April 2011. Previously it had used the RPI. So is there a benefit to having one’s maintenance payments linked to the CPI? As usual, the answer is: it depends. The fact that the Government has linked payments it has to make (like benefits) to CPI and the payments it likes to receive (like students’ loans) gives us a clue. Look at the following graph.
(Source: Office for National Statistics licensed under the Open Government Licence v.1.0)
This shows for the last 12 month period that CPI was 4.0 per cent and RPI was higher at 5.3 per cent.
Divorce Finance Toolkit’s conclusion: if you are paying maintenance you might want to follow the Government’s lead and ask your lawyer to link to CPI (lower) and if you are receiving maintenance then you should insist upon it being RPI (higher).