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Can UK telco giant BT move its pension scheme increases off the RPI inflation measure and onto CPI? Earlier this year the High Court said no, but now the telco and 300,000 of its pensioners are awaiting the Court of Appeal’s verdict on this thorny question.
In January, the UK High Court ruled that BT was not entitled to move pension indexation from retail price index (RPI) to the lower consumer price index (CPI) rate. BT is keen to cut its huge £14bn pension deficit – and one way of doing that is moving indexation (which determines the annual pension payrise) to the lower rate.
Arguments - BT - Pension - Scheme - Rules
Legal arguments focused on whether the BT Pension Scheme Rules allowed BT to make the change for members of Section C of the scheme, as we reported in January, when Mr Justice Zacaroli took 235 paragraphs over 56 pages to say “no” in great legal detail.
In that judgment, the difference between the two rates was said to be upwards of a full percentage point.
Days - BT - Judge - Rule - Scheme
Over the past three days, BT has been arguing that the judge was wrong to find that rule 10.2 of the scheme’s 2016 rules stopped it from switching the rate, with nominee pension beneficiary Linda Bruce-Watt’s legal team arguing in favour of keeping the RPI status quo.
Part of BT’s argument is that when RPI was deprecated by the Office of National Statistics (ONS), that was a sign that it was inappropriate to keep using it. Barrister Andrew Spink, for BT, told the court in his summing up on 11 October:
People - Rule - RPI - Conclusion - Rule
Regardless of what people ‘actually knew’, what the rule means is that RPI has to be demonstrated to have become inappropriate since 2002. And we say that conclusion on [the rule’s wording] justifies, which we say is right, of itself justifies the judge’s approach to...
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