Univar scheme wins High Court case to change index used in pension increases

The Univar Company Pension Scheme (UCPS) has won its case at the High Court and has been granted permission to change the index it uses to calculate its pension payment increases.

The court ruled that the trustees had not intended the pension increase indexation cited in its scheme rules, the Retail Prices Index (RPI), to have the legal effect that it did.

It has now been given court permission to switch its indexation method to the Consumer Prices Index (CPI).

The scheme argued that the inclusion of RPI as its method of increase calculation was written into its 2008 definitive deed and rules by mistake, as that was the statutory basis at the time.

However, the statutory regime was changed to CPI, which generally provides a lower level of increase, in 2010.

The court found that the UCPS and its sponsoring employer had not intended the pension increases stated in its rules to have the legal effect that it did, as the scheme remained using RPI after the statutory basis changed.

Justice Trower therefore granted the scheme permission to rectify its definitive deed and rules to use CPI as its method of calculating pension increases.

Commenting on the ruling, Gowling WLG pensions partner, Ian Gordon, said: "The Univar judgment will be welcomed by the pensions industry.

"It concerned a not uncommon problem, the inadvertent hardwiring of RPI into a scheme's pension increase rules.

"The court reached a clear conclusion that the rules should be rectified because they were not intended to have the legal effect they did, even if the parties may have intended the actual wording of the 'offending' provision.

"In so doing, the judge also usefully confirmed that any negligence by those who drafted the rules not only did not prevent rectification but rather was a ground for it."

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