RPI To CPI: Court Allows Switch For Both Past And Future Service

Over recent years, many employers with DB schemes have considered changing the index used for revaluing deferred benefits and increasing pensions in payment. In 2011 the statutory index for revaluation and indexation was changed from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI). It is generally considered that CPI is likely to show lower increases than RPI and so schemes switching from RPI to CPI will be able to record a decrease in liabilities.

The index which should be applied will depend on the detail of the scheme rules. Some rules feed into the statutory provisions and, in which case, will already be using CPI. Others contain rules, or definitions, which give the employer or trustees the power to select an alternative index (sometimes only in specific circumstances). Many schemes will have an entrenched index which can...