BT section must stick to RPI, Court of Appeal says

The Court of Appeal on Tuesday maintained that the telecoms giant does not have the right to change the indexation used for Section C of its scheme from the retail price index to the consumer price index, which is typically lower.

BT had argued that RPI, which continues to be published by but has equally repeatedly been criticised by the Office for National Statistics, was no longer appropriate as a measure of inflation.

BT was seeking to cut the future incomes of BT pensioners and current employees by tens of thousands of pounds

Noel McClean, Prospect union

The scheme section’s 2016 rules state: “The cost of living will be measured by the Government’s published General (All Items) Index of Retail Prices or if this ceases to be published or becomes inappropriate, such other measure as the Principal Company, in consultation with the Trustees, decides.”

Judges unconvinced by appeal

However, the previous High Court ruling had consulted experts on statistics and concluded that the de-designation of RPI as a national statistic was insufficient to render it inappropriate for its legacy uses.

The Court of Appeal upheld this view, with Lady Justice Asplin writing: “The Judge relied upon the expert evidence to assist him in the way which he explained... and ultimately weighed the evidence in a way which was consonant with... expert evidence.”

A spokesperson for BT said: “We are disappointed with the outcome and will now consider the judgment in detail in order to decide next steps.

The relevant index for pension increases for members in Sections A and B of the BTPS remains unchanged as the Consumer Prices Index.”

BT's Section C has about 83,000 members.

The decision was welcomed by trade union Prospect, which cited the impact on pensioner incomes.

“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 £2bn to shareholders, and Prospect does not believe this was acceptable,” said national secretary Noel McClean.

The decision came after the Supreme Court denied children’s charity Barnardo’s the right to make the same switch in November.

Katharine Swire, senior associate at law firm Sackers, said: “In rejecting BT’s appeal, Lady Justice Asplin, taking guidance from the recent Barnardo’s case, has reiterated that the precise wording of a scheme’s rules remains the crucial factor. As the interpretation of such rules can only be taken on a case-by-case basis, the judgment is of quite specific application."

She added: "The Court also confirmed that whether RPI has become inappropriate is 'an objective state of affairs'. The suitability of the index is, however, likely to remain a hot topic for schemes for some time to come.”