The use of the retail price index (RPI): Written evidence submitted by Resolution to the Economic Affairs Committee

Impact of abolishing the retail price index
  1. Thousands of divorcees in England and Wales will already have maintenance orders (or Periodical payment orders) under S.23 (1) of the Matrimonial Causes Act 1973, awarded or approved by the family courts on divorce, where there is a provision for the payment to increase by RPI each year. The vast majority of spousal periodical payments cases involve children of the family of some age and most involve at least one minor child of the family at the date of the order.
  2. Periodical payment orders, whether made by consent or otherwise, are based on a standard precedent that has been in use by family lawyers for many years. The relevant part of the standard financial remedy order (which the senior family judiciary strongly encourage the use of) currently reads:
    The periodical payments set out in paragraph [para number] [and paragraph [para number] above] shall be varied automatically on the “variation date”, which shall be on the date of the payment due in [month] and at yearly intervals afterwards. The change in payments shall be the [greater] / [lesser] of:
    the percentage [change] / [increase], if any, between the [retail prices index] / [consumer prices index] for the month 15 months before the variation date (i.e. [month] in the first instance) and the [retail prices index] / [consumer prices index] for the month 3 months before the variation date (i.e. [month] in the first instance);
  3. The view of Resolution’s Pensions, Tax and Financial Remedies Committee is that it is likely to create potential difficulties for the recipients of such orders to enforce those increases if the RPI were simply to be abolished, at least without a reasonably lengthy run off period.