Setback for retention of RPI

The High Court has dismissed a judicial review, sought by pension scheme trustees at BT, Ford and Marks and Spencer, of the decision to align the retail prices index (“RPI”) with the housing cost-based version of the consumer prices index (“CPIH”) from 2030. The case represented an opportunity to push back on a plan (by the government and the UK Statistics Authority, UKSA) that will effectively ditch the RPI as a distinctive measure of inflation favoured by the trade unions and others. The pension schemes are considering whether to seek permission to appeal the judgment.


A spokesperson for the three said: “We are disappointed that the UKSA has been allowed to align the RPI with CPIH from 2030 without proper consultation and consideration of the impact such a decision will have on schemes holding RPI index-linked bonds and the retirement incomes of their members. Many investors, including pension funds, bought index-linked gilts in good faith and now face losses of £90 to £100 billion.


“This decision will leave millions of pensioners in defined benefit schemes with RPI-linked benefits poorer through no fault of their own and facing substantial decreases in their year-on-year income. Women will be particularly impacted since they live longer and retire earlier. The judgment also means that the chancellor is not required to pay compensation as a result of the indexation change”.