ADMINISTRATION
Britvic reaches interim deal on CPI/RPI linking
By Stephanie Hawthorne
The soft drinks manufacturer receives court approval for an interim arrangement for its 2019 defined benefit pension increase that will see it change the basis of the rise from the RPI to the less-generous CPI measure
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oft drinks manufacturer Britvic has reached an interim agreement with the trustees of its defined benefit pension scheme over controversial plans to switch pension increases based on
the retail prices index to the lower consumer prices index. CPI inflation is currently 2 per cent, while RPI is
2.8 per cent, according to July figures from the Office for National Statistics. 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. According to law reporting service Law360, the
High Court of England and Wales gave the go-ahead for the trustees of Britvic’s occupational pension plan to instruct the administrators to pay increases on all pensions that are already being paid out, in line with a provisional rate requested by the company until the final outcome of the case is decided. “The first defendant as trustee of the plan is
sanctioned to implement the terms of the interim agreement and to pay and calculate the 2019 increases accordingly,” Chief Master Matthew Marsh said in an order, filed with the court on August 29. A Britvic spokesperson confirmed: “Britvic
recently received court approval for an interim arrangement for the 2019 pension increase, which will ultimately be subject to the outcome of a further court application on the construction of the rule. This will determine if and to what extent Britvic is able to set an alternative rate of annual increase.” The application was granted without a court hearing. According to Law360, the company is seeking
declarations on six different matters, including whether it can cut the rate of future increases to below 5 per cent for those pensions that paid out up to June 2008, or to below 2.5 per cent for those that started after that date. The soft drink maker also wants clarity on its powers under the pension plan rules,
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particularly on whether it can set varying rates of future increases for different tranches of pensions.
Courts take dim view of index-shopping Commenting on the first steps in what is expected to be a lengthy court case, Stephen Scholefield, partner at Pinsent Masons, said: “Where the court is asked to decide how benefits should be calculated, it can take a couple of years for a case to work its way through the system.” He advised: “It’s important that trustees are
clear how they should pay benefits throughout the court process, conscious of the risk of under or overpaying members depending on what the court eventually decides. Here, the court has sanctioned the trustees paying benefits on an interim basis, which provides reassurance that they can’t subsequently be criticised for having done so.” Doubts remain as to how successful the soft
drinks manufacturer will be. BT and Barnardo’s have both recently lost court battles on this controversial issue. However, Penny Cogher,
Scheme rules lottery can have huge implications for liabilities
Widely criticised RPI inflation usually sits about a percentage point higher than CPI, but many schemes are locked into the measure
CPI
-2 -1 0 1 2 3 4 5
RPI
INFLATION IS CURRENTLY 2 PER CENT, WHILE RPI IS HIGHER AT 2.8 PER CENT
CPI
20002010 2005 Source: Office for National Statistics
2015
2019
% change over 12 months
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