By Marcus Leach
Six unions have mounted a legal challenge on behalf of millions of public sector workers over which inflation index is used to increase their pensions.
A judicial review hearing starts in the High Court on Tuesday (25 October) 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 per cent and RPI at 5.6 per cent.
Because CPI is around 1.2 per cent lower on average than RPI, the loss to existing public sector pensioners will be around 15 per cent. 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.
"The government’s 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," FBU general secretary Matt Wrack said.
"Pensioners are being forced to bear an unfair burden for the financial crisis caused by the banks. Firefighters will be robbed of thousands of pounds while the bankers who caused the problems continue to count up huge bonuses.
"We're being told to work a lot longer, pay a lot more and now get a lot less. Hard hit pensioners don't feel 'we're all in it together' when the chancellor's chums in the City still have their snouts in the trough at our expense."
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