As part of the review, administrators of the BT, Ford and M&S programmes challenged the decision to align the retail price index (RPI) with the housing cost-based version of the consumer price index from 2030 via the RPI in three key areas: Below is a summary of the main reasons for the challenge and the prospects for the case. 1 PI UK government wins pension fund`s legal challenge to RPI change. 01 September 2022. The latest decision follows a challenge to an initial 2019 proposal by the UKSA and the Chancellor of the Exchequer to align the retail price index (RPI) with the CPIH. This has led administrators of all three schemes to take legal action over the legality of the changes, fearing they could affect pension system benefits and potentially leave millions of retirees in a worse situation. Reason 3 – Failure to properly consult: The pension trustees complain that the clerk did not properly consult the impact of the decision on the affected shareholders. They also identify gaps in the 2020 joint consultation, which focused on the technical implementation of the RPI amendment rather than the benefits or impact of the proposed change. This reason is defended by the limitation period – the consultation closed in August 2020 and any challenge must be filed immediately. The challenge raises delicate questions of legal interpretation that may have wider implications for how the UKSA should balance different competing interests in other statistical decisions, and possibly for other public bodies making decisions that require a balance between complex political and economic factors. All three directors` grounds of appeal were dismissed by the court: the High Court dismissed a challenge to the reform of the retail price index (RPI) by the administrators of three major pension plans. The government confirmed in November 2022 its intention to align the RPI with the Consumer Price Index including Housing (CPIH) from 2030. The decision ends the challenge for pension funds BT, Ford, Marks and Spencer to reform the calculation of inflation.
With regard to the applicants` second point – which the Registrar did not consult – the Court held that they could not provide any legal basis for their allegation that the Registrar was legally obliged to discuss whether compensation should be paid to former users. (ii) the statements made to trade unions and their members did not constitute a legitimate legally binding expectation; A third objection – that the UKSA did not consult the public on its decision on the IPD and did not take account of its views when that proposal was in an `educational phase`2, in particular as regards compensation – was also rejected. Dear brother/sister You know that the FBU challenged the change imposed by the government in the way pensions are increased to account for inflation; from a practice that uses the retail price index (RPI) to a practice that uses the Consumer Price Index (CPI). The challenge was subject to judicial review and the hearing took place from 25 to 27 October in the High Court in London. There were two groups of claimants with different legal representation and different but complementary legal arguments. The FBU trial also involved five other unions; PCS, POA, NASUWT, Unite and Unison. The other lawsuit was filed by Police Bargaining Board staff, the Police Federation, the National Association of Retired Police Officers, the FDA, Prospect, the Civil Service Pensioners Alliance, GMB and some individual plaintiffs. The Minister for Labour and Pensions is required each year under social security legislation to examine the various social security benefits in order to determine whether they have kept pace with the general rate of price increases in the Member States. As he sees fit. It must then increase these benefits by at least the same percentage as the general price increases. The relevant pension laws require the Ministry of Finance to increase public sector pensions by the same percentage as the annual increases in the benefits of the Secretary of State for Work and Pensions.
In June 2010, the Chancellor announced in his budget report that the long-standing practice of measuring general price increases using the RPI would be changed and that the CPI would be used from April 2011. The reason for this change was that the CPI was a statistically more appropriate index that would also save money. The FBU said it was a deficit reduction measure. Savings for government and private sector employers The Chancellor estimated that savings from public sector pensions would amount to £6 billion during the legislature. The CPI is generally about 1.2% lower than the RPI per year. It is estimated that the loss for members of the utility system will be about 15% over time. Now that the transition to the CPI has also been applied to private sector pensions, the Department for Work and Pensions estimates that £73 billion has also been deducted from the value of private sector pensions, a significant windfall for their sponsoring employers and a corresponding loss for private sector workers. The FBU lawsuit covered four areas: The UK`s High Court has dismissed a lawsuit brought by BT, Ford and pension funds Marks and Spencer to overturn government plans to change the retail price index, which measures inflation. In the most recent decision, the High Court dismissed the schemes` challenges on three counts – including concerns that the modification of the UKSA`s RPI was unlawful and that it had failed to take into account the impact of its RPI decision on holders of RPI-indexed gilts and bonds and those entitled to indexed pensions and the interests of « former users ». The court`s decision will have a significant impact on indexed gilt investors and other traditional RPI users.
It may also clarify the scope of the UKSA`s tasks in relation to other statistics within its competence, as well as more general principles for public decision-making affecting economic policy issues. However, the bar for a successful challenge is high and the Court will not consider the merits of the decision or issue it again. « It is not surprising that three UK defined benefit pension funds felt they had no choice but to challenge the government`s decision, which will result in a transfer of wealth of around £100 billion from holders of indexed gilts (mainly pension funds) to the government. This will reduce the value of pension transfers and lifetime income by 10% to 15% or more. Faced with rising inflation, many retirees are already struggling, and the IPR reform represents an additional and totally unnecessary blow. The result The High Court`s judgment was delivered on 2 December 2011. The plaintiffs simply claimed that one of the four challenges had been successful in order to have the government`s action declared illegal. The court was divided on (i) challenging the « building argument, » with two judges ruling in favor of the government, and one finding that the decision was illegal and should be overturned. The courts ruled unanimously against both groups of plaintiffs on the remaining 3 points of contention. The court`s reasoning for the decision was as follows: The pension administrators presented both grounds for public law challenge and a contractual claim in relation to the decision: In September, administrators of three leading UK pension schemes learned that the government had won a case they had brought before the Supreme Court. paving the way for the UK Statistics Authority (UKSA). Reformulate the Retail Price Index measure.
It will be replaced from 2030 by the CPIH, a version of the Consumer Price Index (CPI) that includes housing costs.1 However, the Court also stated that one of the three legal bases relied on by the plaintiffs, which UKSA was legally required to consult on this issue, could not succeed under any circumstances. The High Court gave the following reasons for dismissing the challenge to the IPR reform: « The application for judicial review is dismissed, » the High Court of Justice in London said in its decision. In addition to these key arguments, the plaintiffs also filed a private law action in case the court decided that the IPR`s decision is legal – on the grounds that implementing the IPR`s decision in 2030 would result in the non-publication of the IPDs, thus triggering a termination clause for gilts issued from 2005 onwards. On that basis, the Registrar would be required to select an alternative index for the RPI. The CPIH is expected to be about 1% lower per year than the current RPI, meaning plan members whose RPI-related increases can expect lower pensions than they would otherwise have received starting in 2030 or possibly earlier, according to Lane Clark & Peacock. According to pension funds, the expected 1% reduction in IPD, which will affect future interest payments to holders of UK government bonds, has led to a decline in the value of the UK government bonds in question from around £90 billion to £100 billion. The verdict on judicial review was published yesterday. The UKSA`s decision follows a general acceptance among statisticians that the RPI is no longer an accurate measure of inflation. However, the decision to replace it with CPIH (which is typically 1 percentage point lower than last year) is expected to result in a 13% decline in the value of UK government bonds held by defined benefit pension schemes, and a similar impact is expected on the value of around £250 billion of RPI swaps held by pension funds.