UK: To Switch Or Not To Switch: That Is The Question

Last Updated: 1 December 2015
Article by Justin McGilloway

The High Court's consideration of whether the rules of the Barnardo's Staff Pension Scheme allowed its trustees to adopt CPI in place of RPI, as the measure of inflation-proofing to be applied to members' benefits, provides further clarity on how difficult issues of this nature should be approached by trustees.

In the latest in a line of cases involving the switch from RPI to CPI, the High Court has considered whether the trustees of the Barnardo's Staff Pension Scheme (the "Scheme") had power under the Scheme Rules to replace RPI with CPI for the purpose of calculating revaluation of deferred pensions and increases to pensions in payment. The decision1 turns on its facts but highlights the need to be very aware of the nuances hidden within scheme rules and how these should be interpreted.

RPI to CPI – a refresher

In the 2012 Qinetiq case2 the High Court held that a decision by the trustees of the Qinetiq scheme to switch the basis for calculating pension revaluation and indexation would not be a "detrimental modification" under section 67 of the Pensions Act 1995, as the scheme rules allowed the use of the RPI "or any other suitable cost-of-living index selected by the Trustees".

In the 2014 Arcadia case3 the High Court held that the rules governing an employer's two defined benefit pension schemes did not prevent the schemes switching from RPI to CPI in revaluing deferred pensions and increasing pensions in payment. Broadly, the rules provided that inflation-proofing should be based on the "Retail Prices Index". This term was defined as "the Government's Index of Retail Prices or any similar index satisfactory for the purposes of [HMRC]".

The Barnardo's case – background

The Scheme, a final salary scheme, is closed to both new members and future accrual. Depending upon the date on which members left service, they are subject to different editions of the Scheme's rules.

Barnardo's, the principal employer, proposed that the trustees of the Scheme substitute CPI for both revaluation and indexation. In current economic conditions, increases by reference to CPI are considered to be less costly than RPI increases. A fair enough proposal you might say, but the trustees and the principal employer needed to overcome the hurdle of making sure that such a switch was possible under the Scheme's rules.

Whichever edition of Rules came in to play, the Scheme revaluation and indexation increases were, strictly speaking, calculated by reference to RPI.

In the 1978 Rules, "Index" was defined as meaning "the Government's Index of Retail Prices or any other official cost of living index published by authority in place of or in substitution for that Index".

In the 1988 Rules, "Retail Prices Index" meant "the General Index of Retail Prices published by the Department of Employment or any replacement adopted by the Trustees without prejudicing Approval".

Later versions of the Scheme rules were not materially different from the 1988 Rules.

In light of the principal employer's request, the trustees of the Scheme saw fit to bring a claim under Part 8 of the Civil Procedure Rules concerning the interpretation of the Scheme's rules. The critical words to be construed were, in the 1978 Rules the words "in place of or in substitution for" and, in the 1988 Rules, "any replacement".

The trustees' claim concerned whether they had power to select an index in place of RPI, as the index by reference to which pensions in payment are indexed and deferred pensions revalued; and, if so, what other indices might properly be adopted.

The court's decision

The judge (Mr Justice Warren) rejected the principal employer's argument that the adoption of a new index would result in a replacement for the purposes of the 1988 Rules. Replacement would only occur once RPI had ceased to be published. This would happen outside the Scheme–the fact that the Office of National Statistics had announced in March 2014 that RPI no longer met the standard to be designated as a "national statistic" does not amount to "replacement".

Mr Justice Warren therefore concluded that under both the 1978 Rules and the 1988 Rules, the trustees did not have a power to select a different index for the purpose of revaluation and indexation so long as RPI remains an officially published index.

WB comment

The Barnardo's decision turns on the specific rules of the Scheme. Whether trustees or employers (or both) have a power to switch from RPI to CPI as a suitable measure of inflation is typically a question of construction. Case law in this particular area will undoubtedly develop further and the next case could have a very different outcome. It is also possible that further criticism of RPI as a credible measure of inflation may influence future courts looking at these issues in years to come.

We understand that the case is to be appealed and so the eventual outcome remains unclear. What is certain is that trustees and employers considering a switch from RPI to CPI should approach any proposal with caution and take detailed legal advice – the precise wording and meaning of scheme rules will be critical to this.


1 Buckinghamshire & others v Barnardo's & others [2015] EWHC 2200 (Ch)

2 Danks and others v Qinetiq Holdings Ltd and another [2012] EWHC 570 (Ch)

3 Arcadia Group Ltd v Arcadia Group Pension Trust Ltd and another [2014] EWHC 2683 (Ch)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.