The High Court will tomorrow begin hearing a legal challenge from six unions over the government’s decision to change the inflation index used to increase public sector workers’ pensions.
The Chancellor of the Exchequer, George Osborne, announced in the June 2010 budget that the government would switch from the retail price index (RPI) to the consumer price index (CPI) in April this year.
The six unions involved in the challenge – the Public and Commercial Services union, Unison, Unite, the Fire Brigades' Union, teachers' union NASUWT, and the Prison Officers Association – said the change was made without any consultation or negotiation.
They also argue that the switch was a deficit reduction measure, rejecting Osborne’s claim that the CPI was a more appropriate index than the traditionally higher RPI. September's inflation figures put CPI at 5.2% and RPI at 5.6%.
The claimants argued that the Chancellor’s move was not permitted under social security legislation, and went back on assurances given by successive governments that RPI would apply.
“Because CPI is around 1.2% lower on average than RPI, the loss to existing public sector pensioners will be around 15%,” the unions said in a statement.
“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.
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. We are looking to the court to make sure that millions of ordinary workers will not be left facing a bleak and uncertain future at a time when cost of living is soaring."
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. Public sector workers face an opportunistic attack on their pensions by this government, but many workers in the private sector have also been affected.
"Vested interests are trying to create a wedge between public and private sector workers, when in reality they have common cause on this. We know that some private sector employers are already attempting to move to the lower inflation index citing the government's example. In reality this government wants us all to work for longer and for less."