On the go: An IT company has seen the High Court dismiss a request to change the indexation used to uprate benefits in its final salary scheme to the consumer price index.
In a decision on January 27, Mr Justice Nugee rejected claims from Atos that changes in the retail price index over the years meant that the definition used in the Atos UK 2011 pension scheme deed rules was outdated.
The documentation of the pension fund stated that pensions must be raised in line with RPI, which “means the general index of retail prices (all items) published by the Office for National Statistics, or, where that index is not published, any substituted index published by that Office (or its successor) as the principal employer and the trustees may agree”.
The IT company lawyers argued that since 2011 the changes to RPI “were so profound and extraordinary, and so unthinkable and unforeseeable” that the draftsman can be assumed to have initially selected RPI as an accurate measure of price inflation, but in the current changed circumstances the rules must be regarded as referring to some other index.
Mr Justice Nugee rejected such argument, stating that the words meant the same today as back in 2011 and that the RPI is still published.
RPI generally runs at about 1 percentage point higher than CPI and is currently 2.2 per cent, compared with 1.5 per cent for CPI. Compounded over the years, the choice of the less generous index can result in pensioners losing thousands of pounds, despite CPI being considered a more accurate index.
Commenting on this case, David Everett, partner at LCP, said: “Sometimes one finds indexation wording in trust deeds which is ambiguous and could be construed either way. It is hard to see much ambiguity here.
“As such, the rationale for the High Court’s decision seems unimpeachable despite the use of an innovative argument by counsel for the employer.”
