Six public sector unions have begun a High Court challenge of the Government’s decision to link pension payments to the consumer price index rather than the retail price index.
The six unions in the judicial review, which began on Tuesday, are the Fire Brigades Union, the teachers union NASUWT, the Prison Officers Association, the Public and Commercial Services union, Unison and Unite.
In the June 2010 Budget, Chancellor George Osborne announced the decision to switch the measure for pension inflation to the consumer price index, which, on average, tends to be lower than the RPI.
The move, which took effect from April this year, has also been applied to some private sector schemes which do not have RPI-linked pension increases hard-wired into their rules.
The unions argue that the change was not permitted under social security legislation and “reneges on assurances given by successive Governments that RPI would apply”.
PCS general secretary Mark Serwotka says: “For new entrants to the civil service, the switch from RPI to CPI will mean an immediate cut in their pensions, ripping up an agreement we reached just a few years ago.”
Unite general secretary Len McCluskey says: “Our legal challenge against the coalition Government is hugely significant for workers in both the public and private sectors.”
Policymakers are also facing calls to provide concessions to private sector employees affected by the switch to CPI.
An early-day motion urging the Government to postpone the shift to CPI until the Royal Statistical Society and the UK Statistics Authority have carried out a review of whether the measure is appropriate for pensions has so far been signed by 135 MPs.
Hargreaves Lansdown head of pensions research Tom McPhail says: “Lord Hutton’s recommendations are only sustainable if CPI remains in place, so even if the unions are successful, the Government would still need to find those savings from somewhere.”