Judges have thrown out a bid by telecoms giant BT to change the way pension payments are worked out.
The company wanted to adopt the consumer price index (CPI) as the official measure of inflation to calculate annual increases for staff pensions.
The move would have impacted pension payments for around 80,000 current employees and retired pension scheme members with the aim of saving the company around £2 billion.
The change could have cost the average retirement saver in the scheme £24,000 in future benefits.
But judges at the Court of appeal threw out the BT case for a second time – the arguments had already seen a lower court reject the bid.
Union protests
BT wanted to change pension cost of living increases away from the retail prices index (RPI) to the CPI.
Many company pension schemes revise their index-linked payments each year according to the RPI increase in inflation.
But the CPI increase is lower because the two indices rely on different figures to arrive at the cost of inflation.
However, BT could not do so if the scheme members objected.
BT believed the wording of the pension scheme allowed the change, but the union Prospect, representing the company’s pension scheme members disagreed.
Prospect said 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”.
Disappointing outcome
BT said: “We are disappointed with the outcome and will now consider the judgment in detail in order to decide the next steps.”
If a further appeal is granted, the case will go to the Supreme Court.
The government uses the CPI as the official measure of inflation and increases civil service and public sector pensions and benefits in line with any annual rise. The state pension triple lock also includes CPI inflation as one element of assessing any annual increase.
In October, the government announced that from May 2019, returns for savers from National Savings & Investments index-linked savings certificates would link to CPI rather than RPI. NS&I is backed by the Treasury and claims the move would save taxpayers £610 million over five years.
