BT Loses Court Appeal to Link Pension Increases to CPI

Union says ruling prevents 80,000 members from losing average of £24,000 in pension benefits.

BT has lost its appeal against a High Court ruling that had prohibited the telecommunications giant from recalculating pension increases based on the consumer prices index (CPI) rather than the retail prices index (RPI).

The High Court ruling and the company’s appeal was based on the wording of the rules of Section C of the BT Pension Scheme (BTPS), and specifically focused on the requirement for RPI to have “become inappropriate” for the purpose of increasing pensions before it can be replaced by a different index.

Trade union Prospect, which represents the workers in BT’s pension plan, said that because CPI is generally lower than RPI, more than 80,000 members could have lost an estimated £24,000 in pension benefits on average if the company’s appeal had been upheld.

“BT was seeking to cut the future incomes of BT pensioners and current employees by tens of thousands of pounds in order to transfer an estimated £2 billion to shareholders,” Prospect national secretary Noel McClean said in a release. “Only last week, the High Court prevented BT from attempting to cut the benefits of 8,000 people in Section B of the same pension scheme, albeit using a different mechanism.”

BT argued in the Court of Appeal that it was its prerogative, and its alone, to decide whether RPI had become an inappropriate basis for calculating pension contribution increases. The company said the High Court’s main role should only be to assess whether the company’s decision was unreasonable or not.

The company also argued that even if the RPI decision was the High Court’s to make, several developments meant that the only reasonable conclusion was that RPI had become an inappropriate yardstick. For example, it cited the decision by the UK Statistics Authority to de-designate RPI as a national statistic, as well as the decision by the Office for National Statistics not to update the methodology for calculating RPI.

BT said it was disappointed with the ruling, and added that it would consider the judgment closely before deciding next steps. The company noted that members of Sections A and B of the BT Pension Scheme are already subject to annual increases based on CPI.

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