Royal Mail takes 'immediate steps' to fix RPI/CPI error

The document, which was issued in August for members of the scheme's Section C – those who joined the defined benefit scheme after April 1987 – referred to the retail price index rather than the consumer price index as the basis for certain pension increases.

The scheme highlighted the error in its November pensions newsletter, with a link to where members can download a corrected booklet.

"The error is regrettable and the trustee [board] has taken immediate steps to correct it so that there is no misunderstanding for members," the scheme said in a statement.

"The error certainly does not create any right to higher increases in deferment than those provided for under the plan's rules, which are overriding."

Schemes that make communication errors can take comfort that their rules should overrule such mistakes, but they need to make sure members are notified as quickly as possible to avoid them relying on bad information, legal experts have argued.

Managing communication mistakes

The increases referred to by the Royal Mail scheme are revalued on the inflation index chosen by the chancellor, which was switched from RPI to the historically lower CPI in June 2010's emergency Budget.

The change triggered a backlash against the government from unions, but was welcomed by some schemes as it reduced the value of their liabilities.

The impact was not uniform, as many private sector schemes had RPI written into their rules. There was also concern that references to RPI in scheme communications could scupper a scheme's ability to switch.

But recent legal rulings and ombudsman findings have established that references in scheme literature do not overrule scheme rules, legal experts have said.

Lesley Browning, partner at law firm Norton Rose, said: "[The rules] will as a matter of interpretation override anything to the contrary in the explanatory literature sent to members.

"It is a bit odd that this mistake slipped through all the proofreading… but I don't think any long-term damage will have been done."

However, it is important for schemes to correct such statements as quickly as possible, as the situation is more difficult if a member relies on an erroneous statement to their detriment.

Mark Howard, partner at law firm Clyde & Co, said: "Once the member is aware of the true position they cannot then change their position and become entitled to the mis-stated benefit."