Arcadia Group Ltd v Arcadia Group Pension Trust Ltd & Anor
2014
CHANCERY DIVISION
United Kingdom
CORAM
- MR JUSTICE NEWEY
Areas of Law
- Employment Law
- Contract Law
2014
CHANCERY DIVISION
United Kingdom
CORAM
AI Generated Summary
This case involves the Arcadia Group Limited and the trustees of the Arcadia Group Pension Scheme (AGPS) and the Arcadia Group Senior Executives Pension Scheme (AGSEPS). The key issue was whether the Consumer Prices Index (CPI) could be adopted in place of the Retail Prices Index (RPI) for calculating pension increases and revaluations. The court determined that the 'Retail Prices Index' definitions allow for selecting an index other than RPI, that such a selection must be made jointly by Arcadia and the trustees, that CPI qualifies as a 'similar index satisfactory for the purposes of' HMRC, and that Section 67 of the Pensions Act 1995 does not prevent using CPI for past service benefits.
Judgment
Mr Justice Newey :
This case concerns two pension schemes, the Arcadia Group Pension Scheme (“the AGPS”) and the Arcadia Group Senior Executives Pension Scheme (“the AGSEPS”), where the claimant, Arcadia Group Limited (“Arcadia”), is the principal employer. The defendants are the trustees of the schemes.
The issues raised by the proceedings relate to the extent, if any, to which the Consumer Prices Index (“CPI”) published by the Office for National Statistics (“the ONS”) can be adopted in place of its Retail Prices Index (“RPI”) for the purposes of calculating increases in pensions in payment and (in the case of the AGPS) revaluation of deferred pensions.
The trustees of the AGSEPS and AGPS are to be appointed to represent all members of the schemes (and persons claiming under them) in whose interests it is to argue for answers to the issues different from those contended for by Arcadia.
The context
Indices
RPI and CPI are both, of course, measures of inflation. RPI is the older of the two, dating back to the 1950s, and was in the past the dominant index in the United Kingdom. In more recent times, however, CPI, which was first published in the 1990s, has become the most commonly-used index. Early last year, the National Statistician concluded that RPI does not meet international standards, and a variant of RPI referred to as “RPIJ” (which uses the “Jevons”, as opposed to the “Carli”, method) began to be published. The present position is that the ONS provides figures for CPI, RPI and RPIJ.
Approval and registration of pension schemes
In the past, an occupational pension scheme had to be approved by the Inland Revenue if it was to enjoy the tax advantages available in relation to such schemes. The Inland Revenue published practice notes known as “IR12” that explained when such approval would be given. IR12 first appeared in 1979, and revised versions were issued in October 1991, July 1997 and March 2001.
The position changed in 2006 as a result of changes introduced by the Finance Act 2004. Pension schemes are now registered with HM Revenue & Customs (“HMRC”), not approved by them. It is no longer necessary for HMRC to subject a pension scheme’s provisions to detailed scrutiny.
Revaluation
Statutory provision for the revaluation of deferred pensions was first introduced in the Social Security Act 1985. From 1991, initially under the Social Security Act 1990 and subsequently under the Pension Schemes Act 1993, the benefits payable to a