SIX unions have mounted a legal challenge on behalf of millions of public sector workers over what inflation index is used to increase their pensions.
A judicial review hearing starts in the High Court on Tuesday (October 25) to challenge the switch to using the consumer price index (CPI) instead of the traditionally-higher retail price index (RPI) for the annual increase in public sector pensions.
The move – effective from April this year – was announced by chancellor George Osborne in the June 2010 budget, without any consultation or negotiation. The government claims CPI is the more appropriate index, but the unions have always contended the change was a deficit reduction measure.
As part of the ongoing talks over wider cuts to public sector pensions, ministers have since ruled out any negotiations on the issue.
The government must review pensions and benefits each year against increases in prices and uprate them by at least the same percentage. September’s inflation figures put CPI at 5.2% and RPI at 5.6%.
Because CPI is around 1.2% lower on average than RPI, the loss to existing public sector pensioners will be around 15%. It is already affecting staff currently paying into career average schemes whose pension pots are revalued annually and will be smaller when they retire.
The switch has also been applied to many private sector pensions, wiping an estimated £75 billion off their value. Some estimates put the figure even higher.
The unions’ case is that the imposed move was not permitted under social security legislation, and that it reneges on assurances given by successive governments that RPI would apply.
The six unions are the Fire Brigades’ Union, teachers’ union NASUWT, Prison Officers Association, Public and Commercial Services union, UNISON and Unite.
All the unions have either already balloted for industrial action, are balloting, or will be supporting the day of action over pensions on 30 November.
There will be a demonstration in support of the judicial review outside the Royal Courts of Justice, Strand, London WC2A 2LL, from 8.30am to 10am on Tuesday 25 October.
FBU general secretary Matt Wrack said, ‘The government actions are unfair and, we believe, unlawful. This is a vicious attack on existing and future pensioners that could cost them tens of thousands of pounds.’
NASUWT general secretary Chris Keates said: ‘The question the court is being asked to answer is whether it is just and fair to arbitrarily change the basis on which pensions are calculated, reducing their value by thousands of pounds.
‘The government’s actions are a breach of the contract with ordinary working people.’
POA deputy general secretary Mark Freeman said: ‘Once again, the government has shown its willingness to attack the vulnerable in society to protect their friends in the financial institutions.’
PCS general secretary Mark Serwotka said: ‘The switch from RPI to CPI is just another example of how this government wants public servants, pensioners and people entitled to benefits to pay the heaviest price for the recession. For new entrants to the civil service it means an immediate cut in their pensions, ripping up an agreement we reached just a few years ago.
‘As well as challenging this in court, the unions are mounting the widest, most co-ordinated industrial action we have seen in our lifetimes, to force the government to think again and show how out of touch millionaire ministers are with the lives and concerns of the rest of us.’
UNISON general secretary Dave Prentis said: ‘UNISON is backing this judicial review because we cannot allow the coalition to run roughshod over pensioners.’
Unite general secretary Len McCluskey said: ‘Our legal challenge against the coalition government is hugely significant for workers in both the public and private sectors.’
