Public pension calculation 'lawful'

Hands off our pensionsGovernment changes in the way annual public sector pension increases are calculated have been declared lawful by the High Court.

A number of trade unions accused the Government of unlawfully attempting to reduce pension costs in the battle to cut the UK's financial deficit. But the accusation was rejected by Lord Justice Elias, sitting with Mr Justice McCombe and Mr Justice Sales.
The legal challenge stemmed 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.

At a recent hearing at the High Court in London, QCs acting for the unions and individual workers argued the switch was unfair to millions and went back on promises to keep the RPI link.

They told the court the cumulative impact 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.

Announcing the decision at the High Court in London, Lord Justice Elias said three of the four grounds of challenge had been dismissed unanimously, while one was rejected by a 2-1 majority.

The unions were given permission to appeal to the Court of Appeal on some of the issues raised.

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 argued that ministers were entitled to consider the CPI to be "a more appropriate measure of changes in the general level of prices". They contended the change was legally permissible and would save £6 billion a year and help to return the UK to a secure financial footing.

Two groups, mainly consisting 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.

© 2011 Press Association
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