Barnardo’s loses legal battle to cut pension payments to retired staff

08 Nov 2018 News

The Supreme Court has refused a plan from Barnardo’s to cut £75m from its pension deficit by reducing annual increases in payments to retired staff.

Yesterday, the court’s judges unanimously ruled that the charity - which has a closed defined benefit pension scheme with a deficit of £137.7m - could not change how it calculates the rate of inflation for its pension payments from the retail price index to the consumer price index, which is usually a lower measure.

The charity’s trustees had argued they were able to switch from the RPI to “any replacement adopted by the trustees without prejudicing approval” as set out in their pension rules.

However, judges dismissed the charity’s appeal and said the correct interpretation of pension rules was that a different inflation calculation should only be used if the RPI itself is replaced.

The charity said allowing its trustees to adopt CPI for pension payment increases would have reduced their funding shortfall by “£65m to £75m”.

A spokesperson for Barnardo’s said the charity was grateful for the “clarity” on pension rules that had been delivered by the ruling.

They 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.

“We recognise our obligations to all our stakeholders, including current employees and former staff who are contractually entitled to a pension.

“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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