Pension schemes seeking RPI/CPIH judicial review

Trustees of the BT, Ford and Marks and Spencer pension schemes are seeking a judicial review of the government’s recent decision to align the Retail Prices Index (RPI) with the Consumer Prices Index including owner occupiers’ housing costs (CPIH).

The government previously confirmed its plans to align inflation measures as of February 2030 in November 2020, following an industry consultation.

However, the trustees of the three schemes, representing £83bn of assets and nearly 450,000 members, have argued that the “far-reaching implications” of the change have not been “fully considered”.

In particular, the consortium has warned that over 10 million pensioners, “through no fault of their own”, will be poorer in retirement as a result of lower payments of lower transfer values in light of the change, with women suffering the most as a result of the change as they typically live longer.

The trustees have also warned that the reform “significantly reduces” the value of RPI-linked assets held to meet pension promises to members, in turn weakening schemes’ funding positions and placing further pressure on sponsoring employees.

The group emphasised that whilst the decision to pursue action was not taken lightly, the trustees believe that a judicial review is “necessary” to protect scheme members and scheme assets from the “detrimental effects” of the decision.

The trustees had previously been granted more time to apply for a judicial review, having issued a joint application for a six-week deadline earlier this year.

Industry experts have also raised concerns over the change prior to this, with research suggesting it could cost savers and investors up to £122bn, and a number of unions also issuing a joint statement to urge the government not to scrap RPI.

A HM Treasury spokesperson commented: “ As this matter is now before the courts it would not be appropriate to comment.”

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