23rd January 2018 Rosalind Connor comments in The Times Law Brief on the High Court’s rejection of BT’s pension deficit proposal
BT’s plans to deal with its pension deficit have been dealt a significant blow after the High Court rejected its proposal to switch the way in which it is measured.
Rosalind Connor predicted that the High Court ruling would not be the last:
“This case has shown that, despite several experts and the review of many reports, the fact that the consumer prices index (CPI) was generally considered to be much more appropriate was not enough for the retail prices index (RPI) to be inappropriate and so RPI must stay.
“The range of wording in these types of clauses means that there will continue to be court action as schemes struggle to assess if the move to CPI is possible.”
The roots of the case date from 2010, when the coalition government allowed pension schemes to move from RPI to CPI, which is cheaper and widely considered to be more accurate, for pension cost of living increases. Doing so can save companies and their pension funds significant amounts, although Rosalind says that the BT case shows how much depends on individual scheme rules.
“The BT case illustrates the extent to which options available to manage a pension scheme and its deficit are often dictated by the precise wording in the pension scheme trust deed and rules, often wording that was put in place decades ago,” she said.
Read Rosalind’s comments in The Times Law Brief
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