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CPI ruling will hurt millions

CPI ruling will hurt millions of pensioners – Prospect

Prospect has expressed extreme disappointment at the decision by the Court of Appeal to uphold an earlier High Court ruling allowing the government to switch the uprating index for pensions and many social security benefits.



Prospect deputy general secretary Dai Hudd said after the ruling: “The implications of this decision go beyond our members in the civil service and public sector, reaching out to members in the private sector in areas like BT and British Aerospace.

“Our campaign to see a review of the Consumer Prices Index is shared by other bodies such as the Royal Statistical Society and will be given further impetus by this decision.”

Four unions and a retired members' organisation, with a combined membership of 1.1 million, took out the joint appeal at the Royal Courts of Justice against the Chancellor’s decision to use the Consumer Prices Index instead of the Retail Prices Index to uprate social security, state and public sector pension benefits.

The appellants were Prospect, the FDA, GMB, National Union of Teachers and the Civil Service Pensioners’ Alliance. The case was conjoined with a similar appeal taken by seven other unions whose case was also lost at the High Court in December.

Hudd added: “This is just one of many injustices inflicted on public and private sector pensioners by this government. Members in the civil service are about to face three years of pension contribution increases that will go straight back into the coffers of the Treasury.

“At the same time they have endured a two-year pay freeze followed immediately by a two-year 1 per cent pay cap, and plans to introduce regional pay. There seems to be no let-up from this government in its attacks on ordinary people's standard of living.” Hudd said Prospect would consider the judgement very carefully before deciding what further steps to take.

Hudd was interviewed at lunchtime on 20 March on Radio 5 Live about the union’s concerns 

The CPI switch was announced in the June 2010 Budget without consultation and took effect from April 2011. Over time CPI is 1.4% lower than RPI, according to the Office for Budget Responsibility. Compounded over years of retirement, that will result in average losses of 15% to 25% in the value of members' pensions.

The government also gave private sector schemes the green light to make the same change except where the rules of a scheme specifically state a link to RPI. The Department for Work and Pensions last year calculated this will reduce the value of pensions accrued in the private sector by over £70bn. The impact on state benefits and public service pensions will be even higher.

Members can see a circular containing more information on the judgement in the Prospect library.