Trustees of BT Pension Scheme, Ford Pension Schemes and Marks & Spencer Pension Scheme won approval Wednesday for their challenge to the U.K. government's decision to replace the Retail Prices Index.
In a joint statement, the trustees said their application for a judicial review of the change scheduled to start in 2030 was granted by the High Court. Collectively, the three trustees represent £83 billion ($110.5 billion) of assets and 448,768 members.
A hearing on the challenge is expected in summer 2022.
The trustees said in their statement that they "will contest the government's case and defend scheme members and scheme assets from the detrimental effects of a decision which they do not believe have been fully considered."
The trustees are challenging the government's November 2020 decision to replace the RPI with the housing cost-based version of the Consumer Prices Index. The CPIH typically runs one percentage point lower annually and could have the hardest impact on pension funds with a large proportion of assets in index-linked gilts.
When the government proposed the change in April 2020, Insight Investment analysts calculated that it "would have significant and immediate financial consequences" for people with RPI-linked pension benefits and investors in RPI-linked assets like index-linked gilts, and the index-linked gilt market would lose around £90 billion in value.
The trustees in April announced their intention to legally challenge the change. "It is estimated that over 10 million pensioners, through no fault of their own, will be poorer in retirement either from lower payments or lower transfer values as a result of the effective replacement of RPI with CPIH. Women will suffer the most from this change as they typically live longer. The reform also significantly reduces the value of RPI-linked assets held to meet pension promises to members, weakening schemes' funding positions and, in turn, adding pressure on sponsoring employers," they said in their April statement.
The court will review the government's process for reaching the decision, but it is unclear how much authority it has to change it.