Pension schemes granted RPI/CPIH judicial review

The application for a judicial review of the decision to effectively replace the Retail Prices Index (RPI) with the Consumer Prices Index including owner occupiers’ housing costs (CPIH) from 2030 has been approved by the High Court.

The application was made by the trustees of the BT Pension Scheme, Ford Pension Schemes, and Marks and Spencer Pension Scheme after the government confirmed that it would align inflation measures as of February 2030, following an industry consultation.

The trustees were previously granted more time to apply for the judicial review, after the government requested that they apply for a six-week extension before bringing any claim due to the complex nature of the case and to give government time to prepare a defence.

The hearing is now expected to take place in the summer of 2022, when the trustees will contest the government’s case and look to defend scheme members and RPI-linked assets from the “detrimental effects" of a decision that they do not believe have been fully considered.

Previous estimates from Insight Investment suggested that over 10 million pensioners could be made poorer in retirement as a result of the effective replacement of RPI with CPIH.

In addition to this, the trustees warned that the reforms could "significantly reduce" the value of RPI-linked assets held by pension schemes to meet pension promises, weakening schemes' funding positions and adding pressure on sponsoring employers.

Industry experts have also previously raised concerns that the RPI reforms could prove a "major blow" to both savers and the industry, with industry research suggesting that the reforms could cost savers and investors up to £122bn.

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