'Unfair' pensions switch challenged
Published 25/10/2011 | 07:22
The Government has been accused of changing the way annual public sector pension increases are calculated in an unlawful bid to cut the deficit.
The High Court challenge stems from a decision to use the consumer price index (CPI), instead of the normally faster-rising retail price index (RPI), to measure price increases influencing pension upgrades.
Two QCs acting for a variety of trade unions and individual workers argued that the switch is not only unlawful but unfair to millions of public sector workers and goes back on past promises to keep the RPI.
They say the cumulative impact of the change could be to reduce the value of benefits to pension scheme members by around 15% on average and also substantially reduce lump sum payments on retirement.
Around 100 trade union members were at the Royal Courts of Justice in London to protest over the changes at the start of an application by the unions for a judicial review.
The switch to the CPI, which came into effect in April, was announced by Conservative Chancellor George Osborne in the June 2010 emergency budget.
Government lawyers are arguing that ministers are entitled to consider the CPI to be "a more appropriate measure of changes in the general level of prices".
They contend the change is legally permissible and will in due course save some £6 billion a year and help to return the UK to a secure financial footing.
Michael Beloff QC, appearing for the unions with Nigel Giffin QC, argued that using the CPI to make budget savings was contrary to the objects of pensions legislation.
Two groups, mainly of unions, launched the legal action - the Fire Brigades Union, teachers' union NASUWT, Prison Officers Association, Public and Commercial Services Union, Unison and Unite make up one group, while the other consists of Prospect, the FDA, GMB, Police Federation, National Association of Retired Police Officers and the Civil Service Pensioners' Alliance.