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ARTICLE · 24 JANUARY 2018

Pension Increases – High Court Rules That BT Pensions Scheme Cannot Switch To Using CPI

The High Court has had to consider another case about the ability of a pensions scheme to switch from using RPI to CPI as a measure of inflation.

United KingdomEmployment and HR

The BT case focused on the 2016 Rules and 1993 Rules for members in Section C (established after BT's privatisation).  Both sets of rules provided for inflation based increases of up to 5%.  The 2016 Rules contain provisions envisaging a switch in index, which say:

"The cost of living will be measured by the Government's published General (All Items) Index of Retail Prices or if this ceases to be published or becomes inappropriate, such other measure as the Principal Company, in consultation with the Trustees, decides."

The first question was whether this conferred a power on BT, or on BT and the Trustee jointly, to determine whether RPI had become inappropriate.  Mr Justice Zacaroli ruled that whether RPI had ceased to be published or become inappropriate was a question of objective fact, with no power conferred on BT or the Trustee to make that decision.  It was only if one of these "gateways" could be established that BT would have the power to select (in

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