Workplace Report (May 2021)

Bargaining news

RPI challenge gets green light

A judicial review of the government’s decision to align the Retail Prices Index (RPI) measure of inflation with the usually-lower CPIH measure from 2030 is to go ahead, following a challenge by trustees of the BT Pension Scheme, Ford Pension Schemes and Marks and Spencer Pension Scheme (see Workplace Report, March, page 4). Trade unions, who have condemned plans to undermine the RPI in this way, will be heartened by the decision.

The trustees, who represent nearly 450,000 members, and involve £83bn of assets, believe the far-reaching implications of this government decision have not been fully considered. They say an estimated 10 million pensioners, “through no fault of their own” will be poorer in retirement if the change goes ahead, either from lower payments or lower transfer values. Women will suffer the most, as they typically live longer.

The reform also significantly reduces the value of RPI-linked assets held to meet pension promises to members, weakening schemes’ funding positions and, in turn, adding pressure on sponsoring employers. The trustees have concluded that a judicial review is necessary to protect scheme members and scheme assets from the detrimental effects of this decision.


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