Barnardo's loses appeal over pension rate

The Supreme Court upheld an earlier ruling that the charity must adhere to the Retail Prices Index

The Supreme Court
The Supreme Court

The Supreme Court has rejected an appeal from Barnardo's to allow it to use a lower rate of inflation to calculate rises in its pension scheme.

According to a ruling published by the court this week, Barnardo’s has a pension scheme that uses the Retail Price Index to determine the amount its pensions increase by annually.

But the scheme includes wording saying the charity could use any replacement of the RPI "adopted by the trustees without prejudicing approval".

Barnardo’s argued that, instead of the RPI, it should be allowed to calculate increases in payments using the Consumer Prices Index, which is generally a lower rate of inflation.  

Using CPI would enable Barnardo’s to reduce its pension deficit – which, according to the charity’s 2017 accounts, stands at about £137.7m.

But members of the pension scheme feared this change would lead to a reduction in their payments.

The CPI is used by government, which dropped the RPI in favour of it in 2013.

A previous ruling on the Barnardo’s case by the High Court found that the definition used by the charity in its pension scheme did not allow the RPI to be replaced by the CPI if RPI figures were still published by the government, which is the case.

The Supreme Court agreed with the High Court’s ruling and rejected the appeal.

A spokesman for Barnardo’s said the charity respected the court’s findings.

"It was extremely important for there to be clarity on the options available to both Barnardo’s and the trustees of the pension scheme on the inflation index that could be used for future pension increases," the spokesman said, adding that the verdict had delivered the certainty the charity sought.

He added: "We remain committed to managing effectively and prudently the pension scheme deficit, a challenge facing many across all business sectors, and we have robust plans in place.

"Our plans are designed to ensure that we reduce the deficit effectively while protecting our ability to deliver outstanding services for vulnerable children and young people."

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