Defined Benefit  

Drinks maker fights for pension change

Drinks maker fights for pension change

Drinks maker Britvic has asked the courts for permission to change the inflation measure used to increase the pensions of its staff, which would leave them worse off.

The company, responsible for brands such as Robinsons and J2O, has a defined benefit scheme in the UK with more than 6,000 members.

The DB section of the company’s Great Britain plan was closed to new members on 2002 and to future accrual for active members from April 2011, with new employees being invited to join the defined contribution scheme instead.

As first reported by The Times, Britvic is looking to drop the retail prices index as a measure of inflation used by the DB scheme in favour of the consumer prices index.

RPI generally runs at about 1 percentage point higher than CPI and is currently 2.8 per cent, compared to a CPI of 1.9 per cent.

In 2010 the government dropped RPI as an official inflation measure, switching to the CPI.

A Britvic spokesperson said: “We are currently reviewing an aspect of our pension provision.

“In doing so, we are engaging with all key stakeholders, and have remained in close consultation with the funds’ trustees throughout.

"As part of this ongoing process, we are now seeking the court’s consent to move this forward.”

Pension schemes can link increases to their employees' pensions - and therefore the employers' liabilities - to CPI, as long as their own rules don’t specifically mention RPI.

This has been a matter discussed in several recent court cases, such as BT's or Barnardo’s, in which trustees and employers sought approval to change their inflation indexation, which would reduce the benefit payments to members.

In January, a report from a House of Lords committee recommended using a single inflation measure to stamp out the process of "index-shopping" by the government.

Scrapping RPI could leave pensioners of DB schemes £12,000 worse off, according to calculations from Unison.

According to Britvic's 2019 interim results, published in May, its DB scheme has an IAS 19 surplus of £89.9m.

maria.espadinha@ft.com

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