An investment expert has claimed that linking pensions to the consumer prices index (CPI) will have a significant impact upon retired individuals.

The government recently announced that pension payments for final salary schemes will now be linked to the CPI instead of the retail prices index (RPI)

With the CPI traditionally lower than the RPI, Keith Churchouse, director of Churchouse Financial Planning, explained how the shift may impact pensions.

You've got to bear in mind that people are living a lot longer these days, and the reality is that if you retire at 65, for example, the likelihood is that you're going to have 20 years of pension payments coming, he said.

Over time, these little [differences] - one per cent here or half a per cent there - do start to add up, particularly when you add in compounding. So I think it will make a huge effect.

The government has previously announced that it will look at scrapping the default retirement age.