The High Court has granted permission for a judicial review to be heard on the government's decision to replace Retail Prices Index (RPI) with the housing cost-based version of the Consumer Prices Index, known as CPIH, from 2030.
The application for a review was brought by the trustees of the BT Pension Scheme, Ford Pension Schemes and Marks and Spencer Pension Scheme - which together represent £83bn of assets and some 448,768 members - because the change reduces payments to their members as well as reducing the value of RPI-linked assets held to meet schemes' pension promises.
The hearing is expected to take place in the Summer of 2022, when the trustees 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 government is expected to produce its defence early in February.
The legal challenge comes after the government confirmed RPI would be reformed in its comprehensive spending review last November.
The government has refused to offer compensation to index-linked gilt holders, noting that there would be no change to the contractual terms with RPI still being used to determine the index ratio.
Insight Investment calculated the move to align RPI with CPIH would result in an unintended transfer of wealth from index-linked gilt holders to the UK government of around £100bn and reduce pension transfer values and lifetime incomes by 10-15% or more.