Pension trustees for two FTSE 100 companies and a US multinational have launched a legal challenge to the Treasury’s move to recalculate retail prices.
Lawyers for trustees of schemes at BT, Ford and Marks & Spencer issued legal proceedings yesterday as they claimed the measure would lead to millions of final salary pensioners receiving lower payouts than they had anticipated. The action also claimed female workers would be worse affected by the move than their male counterparts.
Last November the Treasury and the government’s statistics authority announced the replacement of the retail price index (RPI) with the consumer prices index including housing costs (CPIH). The shift was set to take effect from 2025, but the chancellor, Rishi Sunak, agreed to extend implementation by five years.
In launching the legal challenge through an application for a judicial review, the trustees of the three defined benefit schemes — which represent nearly 450,000 members and £83 billion in assets — accused ministers of failing fully to consider the “far-reaching implications” of the change.
The consortium said in a statement: “It is estimated that over ten million pensioners . . . will be poorer in retirement either from lower payments or lower transfer values as a result of the effective replacement of RPI with CPIH”. The CPIH has historically been about 0.8 percentage points lower than the retail price index.
