The government has issued a consultation paper putting forward proposals designed to help the British Steel Pension Scheme (BSPS) and its principal employer, Tata Steel UK (TSUK).
The consultation explains that TSUK and the trustees of BSPS believe that a switch from RPI to CPI for increasing pensions in payment would result in an improved funding position for the BSPS. CPI is the index used by public sector pension plans and other private plans that use a statutory basis for increasing and revaluing pensions or do not have RPI hard-coded into their rules. It appears that RPI currently applies in the BSPS rules, meaning that member consent would ordinarily be required to any retrospective change to the index used.
The government’s proposals explore whether there should be a change in legislation. Proposals being considered include enabling a switch from RPI to CPI to be made without member consent. The legislation might apply only to named pension plans, such as the BSPS, or it might take a wider form and apply to all large pension plans with over 100,000 members.
In our latest publication we comment on the proposals and explore whether this is a case of good intentions making for bad law.