Public-sector unions will today open up a new front in their battle with the Government over pension reform with a legal challenge to recently introduced rules over the way annual increases are calculated.
Six unions are taking action in the High Court to challenge using the consumer price index (CPI) instead of the traditionally higher retail price index (RPI) to calculate the annual increase in public-sector pensions.
The move, which came into effect in April, was announced by the Chancellor, George Osborne, in the June 2010 Budget, with unions arguing it was done without any consultation or negotiation.
Unions claim that, because the CPI is around 1.2 per cent lower on average than the RPI, the loss to existing public-sector pensioners will be around 15 per cent, with the change already affecting staff currently paying into career-average schemes.
The unions’ case is that the move was not permitted under social security legislation, and that it reneged on assurances given by successive governments that the RPI would apply. Unions involved in the action are the Fire Brigades Union, the teachers’ union, the NASUWT, the Prison Officers Association, the Public and Commercial Services Union (PCS), Unison and Unite.
The NASUWT’s general secretary, Chris Keates, said she hoped the courts would rule the move was illegal. “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.
“We are looking to the court to make sure that millions of workers will not be left facing a bleak and uncertain future at a time when the cost of living is soaring.”
The general secretary of the PCS, Mark Serwotka, added: “The switch from the RPI to the 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.”