The UK government will have more time to prepare for a potential legal challenge of its decision to modify the Retail Prices Index (RPI) methodology after a court approved a deadline extension requested by three major corporate pension schemes.
In November, the government announced it would align RPI with CPIH – the Consumer Price Index including housing costs – from 2030. For defined benefit pension funds, the overall effect of the change is seen as likely to be an increase in scheme deficits, with RPI typically 1% higher than CPIH.
The government said there would be no compensation for holders of index-linked Gilts.
The trustees of the BT Pension Scheme (BTPS), Ford Pension Schemes and Marks and Spencer Pension are considering whether to seek a judicial review of the government’s decision.
In its response to the government consultation, BTPS had said that if RPI was aligned with CPIH from 2030 without any mitigating steps – the plan confirmed by the government – its funding deficit would be £1bn higher.
The window for filing a claim for a judicial review would have closed today, but the government is said to have asked the schemes to request a six-week extension to give it more time to prepare its defence given the complex nature of the case.
This morning the trustees of the three schemes announced that, following their joint application, the court had granted an extension. The new deadline is 7 April.
HM Treasury did not respond to a request for comment from IPE.
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