High Court rules pension inflation switch legal

2 Dec 11
Trade unions are set to appeal after the High Court today ruled that the government’s change of inflation index for public sector pensions was legal.

By Richard Johnstone | 2 December 2011

Trade unions are set to appeal after the High Court today ruled that the government’s change of inflation index for public sector pensions was legal.

Royal Courts of Justice

In October, ten trade unions challenged the decision to switch from the Retail Prices Index to the narrower Consumer Prices Index for up-rating pension payments.

Unions claimed that the change, which took effect in April, was a deficit-reduction measure and therefore illegal as changes are not permitted for reasons other than to meet rising prices.

While all three High Court judges agreed that deficit reduction was the motivation for the switch, two said the government had the right to take the impact of the inflation link on the public finances into account.

Responding to the decision, a spokeswoman for Thompsons solicitors, which acted for the unions, said the split ruling was ‘disappointing’.

However, she added: ‘The unions are pleased that their main argument, that the chancellor was motivated by deficit reduction when he made the switch, was accepted.’

The solicitors confirmed that the unions would not let the matter rest. ‘It is encouraging that one judge agreed that this was illegal. We have instructions to lodge an appeal urgently on behalf of the unions,’ the Thompsons spokeswoman said.

The decision follows one of the largest daysof strike action in decades over the government’s proposed package of pension reforms. Up to 2 million workers across 30 unions took action against the government’s plans on November 30, according to the Trades Union Congress.

Public sector union Unison had previously warned that, as the CPI is around 1.2% lower on average than RPI, the measure could cost public service workers up to 15% of the value of their pension.

TUC general secretary Brendan Barbersaid that it was ‘a disappointing judgment for pensioners and scheme members’.

But he added: ‘We take great heart that the court accepted the argument that the government did this to cut the deficit rather than carry out a proper consideration of the best way of measuring the cost of living for pensioners, even if only one judge said that it was unlawful.’

A government spokeswoman said: ‘The government welcomes the High Court’s acceptance of its decision to use the Consumer Prices Index for inflation-proofing certain pensions and benefits.’

Spacer

CIPFA logo

PF Jobsite logo

Did you enjoy this article?

AddToAny

Top