A judicial review beginning tomorrow (22 June) will challenge government plans to align the way RPI is calculated with methods used to calculate consumer price inflation including housing costs (CPIH) from 2030 – a move likely to bring the rate of RPI inflation down significantly.

It would mean a fall in the value of around £400bn worth of RPI-linked government debt at a cost to British pensioners over the next eight years.

The appeal has been brought by trustees of the BT, M&S and Ford pension schemes, which collectively represent nearly 450,000 members and £83bn of assets.

They claim aligning RPI methodology with CIPH will wipe billions of pounds off the value of pension schemes, worsening their capital positions and likely resulting in some schemes being unable to pay out pensions promised to their members.

But despite the switch having the potential to wipe billions off the value of RPI inflation-linked bonds, the government has previously said it will not pay compensation.

Challenging the plans, the scheme trustees said in a statement: “We believe the far-reaching implications of this decision have not been fully considered.

“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 statement added that the decision to pursue action was “not taken lightly” but the trustees believe a judicial review is “necessary to protect scheme members and scheme assets from the detrimental effects of this decision”.

The pensions industry has brought several legal challenges opposing the rule change since it was confirmed in 2020, with the Pensions and Lifetime Savings Association estimating in December last year that it would wipe £60bn off the value of UK pension schemes.

The case being heard this week hinges on whether the UK Statistics Authority and Chancellor Rishi Sunak hold the power to make a change of this order.

If judges find in the schemes’ favour, the decision would be reversed and pension savings protected.

Alternatively judges could rule the change can take place but the Treasury would have to pay around £40bn of compensation to bondholders.

Ian Mills, a partner at pensions advisory firm Barnett Waddingham, said the legal challenge was “not expected to succeed”.

In April RPI recorded inflation at 11.1% while CPIH inflation was 7.8%.