Britvic loses High Court case to switch pension indexation

Drinks company Britvic’s plan to switch its pension scheme inflation index measure has been dealt a blow after the High Court ruled that its interpretation of scheme rules was incorrect.

Its scheme rules state that the rate of increase was to be in line with the Retail Prices Index (RPI), subject to a capped increase each year of either 2.5 per cent or 5 per cent (depending on the date of service) “or any other rate decided by the principal employer”.

Britvic argued that this should allow the company to switch its measure of inflation for the Britvic Pension Plan from the RPI to the Consumer Prices Index (CPI).

The firm began seeking court approval in August 2019.

However, the High Court decided that the phrase “any other rate” meant only a rate of equal or higher value, not a lower one.

This decision follows the principles set out in a Barnardo’s judgement from the Supreme Court in 2018.

The change could have seen the UK defined benefit pension scheme’s 6,000 members receive lower annual increases in pension benefits, as the CPI is typically lower than the RPI.

Britvic’s DB scheme was closed to new members in 2002 and to future accrual for active members in April 2011.

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