The High Court Chancery Division has upheld a decision giving pension schemes the right to use the consumer prices index as an inflation measure for pensions in payment and deferred pensions.

The judgment, stemming from the Arcadia Group Limited v Arcadia Group Pension Trust Limited case, allows the employer and trustees of the pension schemes to make the change from RPI to CPI.

The court said CPI is a “similar index satisfactory for the purposes of the Inland Revenue/HMRC within the meanings of the definitions of Retail Prices Index used for the schemes”.

Further, the court said Section 67 of the 1995 Act “does not preclude the selection of CPI for use in connection with benefits derived from past service”.

“Members have a subsisting right to increases and revaluation at rates consistent with the definitions of RPI, but not to increases and revaluation specifically by reference to RPI.”

The switch to CPI potentially reduces scheme liabilities by enabling employers to factor in lower inflation increases.

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