Workplace Report March 2021

Bargaining news

New challenge to RPI change that ‘could cost billions’

Government plans to change the Retail Prices Index (RPI) measure so that it aligns with the usually lower Consumer Prices Index including owner-occupier housing costs (CPIH) have been challenged in the High Court. Trade unions have long campaigned to have RPI maintained as the most accurate measure of inflation.

Now, following a court case brought by trustees at three big pension schemes (BT, Ford and M&S) there will be more time to consider a potential judicial review, to assess whether the change means lower retirement incomes (particularly for women) or might affect the value of index-linked pension scheme assets.

It has been calculated that if the change from RPI to CPIH were to go ahead in 2030 the value of the BT Pension Scheme’s assets (alone) could be £3.7 billion lower, future payments to pensioners could be £2.8 billion lower and the scheme’s deficit could be £1 billion higher.