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October date for BT appeal over High Court ruling on pensions indexation

The High Court ruled in January that BT is not allowed to change the index used to increase pensions in retirement for tens of thousands of members in its defined benefit pension scheme. BT confirmed in February that it will appeal this ruling and a date for that has now been set for this autumn.

29 Mar 2018

The appeal hearing is due to take place from 9 October 2018, and is expected to last for three days, BT said.

The retail prices index (RPI) is the inflation measure currently used to calculate future increases in benefits already built up by members of Section C of the BT Pension Scheme. BT wants to switch this to the consumer prices index (CPI).

At the hearing in January, Prospect was able to feed in its views via a representative beneficiary appointed by BT to argue the case for scheme members.

Pensions officer Neil Walsh said: “CPI is generally lower than RPI, so any change would reduce the liabilities of the BT Pension Scheme, and therefore the income of pensioners, by hundreds of millions of pounds.

“This was worrying to members and we welcome the ruling. In the light of BT’s decision to appeal we will strive to ensure members’ views continue to be represented.”

CPI is already used to calculate increases for members in Sections A and B of the BTPS, who joined the scheme up to 1986. Section C covers joiners from 1 April 1986 until the scheme closed to new entrants on 31 March 2001.

In the High Court, the judge summarised the two relevant issues as:

Is RPI inappropriate for the purposes of calculating increases in pensions to reflect inflation experienced by members?
Does this constitute a change since 2002, when the relevant scheme rule was written?

The court heard expert testimony reflecting both sides of the argument.

For BT, Paul Johnson, director of the Institute of Fiscal Studies, argued that in general terms RPI was a flawed measure that overstated inflation by up to 1% per year.

Simon Briscoe, former Financial Times statistics editor and a council member of the Royal Statistical Society, argued that the significance of RPI’s reported flaws was overstated and it was the best index available to measure inflation as experienced by pensioners of occupational pension schemes.

The judge concluded that RPI has not, at this time, “become inappropriate” for the purposes of uprating pensions.

An earlier version of this article was first published in the Spring edition of Stage Screen and Radio magazine, which members can read here.