GMB Appeal CPI Pension Ruling
Friday 13th January 2012
GMB TO APPEAL HIGH COURT RULING
REGARDING REPLACEMENT OF RPI WITH CPI WHICH WILL LEAD TO CUTS OF UP
TO 25% IN PENSIONS IN PAYMENT
The OBR estimates that because of the
difference between RPI and CPI a public sector worker would lose
about a quarter of the value of their pension over a normal
retirement – amounting to many thousands of pounds
GMB with 10 other trade unions is appealing
the ruling of the High Court regarding the government’s decision to
use the CPI for uprating pensions rather than RPI. (See Notes
to Editors below). In November 2011 the High Court ruled that
the government was in order in changing the method of uprating
pensions in payment which will lead to a decline in real terms of
up to 25%.
The challenge is based on the fact that one of
the three High Court judges supported the unions’ position that the
government should not have used economic necessity (i.e. to cut the
future cost of public sector pensions) as the main reason for its
decision.
Brian Strutton, GMB National Secretary said,
“Prior to Lord Hutton’s report on public sector pensions
and prior to any negotiations the government had changed the way
public sector pensions would increase, switching indexation from
RPI to the lower CPI. This was a cynical move to save money and
affects existing pensioners as well as future
pensions.
The Office for Budget Responsibility
(OBR) estimates that because of the difference between RPI and CPI
a public sector worker would lose about a quarter of the value of
their pension over a normal retirement – amounting to many
thousands of pounds. That’s why GMB are challenging the decision
through the courts. GMB is encouraged that one of the three judges
agreed that the government had effectively put the economic cart
before the statutory horse.
GMB hope the Court of Appeal will look
favourably on our Appeal and restore justice for pensioners because
it just cannot be right for government to change pension contracts
so detrimentally without agreement or even consultation just to
fund the bankers deficit.”
End
Contact: Brian
Strutton, GMB National Secretary on 07860 606 137 or Naomi
Cooke National Pensions Officer on 07739 919 633. GMB Press
Office 07921 289880.
Notes to Editors:
In the 2010 Budget the Chancellor announced
that in future the Pension Increases Act that is the basis for the
indexation of occupational pensions in the public sector and much
of the private sector will reflect the CPI measure of inflation
rather than the RPI measure as previously.
CPI is generally around 1% lower than RPI
although the OBR say the difference is higher.
The ‘triple lock’ that the DWP use for the
indexation of the Basic State Pension is the higher of CPI, average
earnings and 2.5%.