Court challenge over public sector pensions

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A coalition of groups representing past and present public sector workers will today seek a judicial review of the government's plans for their pensions.

They are challenging a decision by the work and pensions secretary and the Treasury to change the way that public sector pensions are uprated.

The challenge is being brought by the Civil Service Pensioners' Alliance, the Police Federation, the National Association of Retired Police Officers, the FDA, the GMB and Prospect.

Until April 4, pensions were uprated every year according to the Retail Price Index (RPI).

The government has switched the uprating to be based on the Consumer Price Index (CPI).

The groups said the CPI is expected to be around 0.8 to 1.5 per cent lower than the RPI in each of the next five years.

Speaking for the police parties involved, the Police Federation's Paul McKeever, chairman of the staff side of the Police Negotiating Board, said:

"When the government wants to increase taxes, it uses RPI, but when it has to pay pensions it uses CPI; what is sauce for the goose is sauce for the gander.

"In the space of a few weeks this government has published reports that seek to take money and allowances from police officers as well as the prospect of increased contributions and having to work longer to qualify for a police pension.

"On top of that they are effectively picking the pockets of police officers through this change.

"We will challenge this robustly and through application for judicial review will seek to expose the government's underhand approach and right this wrong."

John Amos, deputy general secretary of the CSPA, said:

"This is daylight robbery from hard-pressed pensioners who are having to bear the brunt of increased prices for in food, fuel, heating, lighting and other necessities of life.

"On the basis of OBR forecasts, the change will rob existing pensioners of 8.5 per cent of the expected pensions by 2017 and, according to Lord Hutton, up to 25 per cent over a lifetime.

"The government claims that CPI is a proper measure of inflation for pensioners but they do not apply principle to investments, wherein they continue to issue RPI-linked gilts."

In its impact assessment of the change, the DWP said:

"Using CPI for this and future revaluation orders is intended to ensure that the underlying purpose of the legislation, to track increases in the general level of prices, will be better met.

"The average rate of increase in CPI is expected to be lower than the increase in RPI, due to methodological differences in the way it is calculated.

"The percentages contained in the revaluation order are also used for the purposes of the statutory indexation of pensions in payment.

"Taking into account that the CPI is calculated in accordance with a common EU methodology to measure price levels and is the index used by the government to set to Bank of England's inflation target, the government has concluded that CPI should be used consistently for uprating purposes for state benefits, public service pensions and the statutory minimum revaluation and indexation of private pensions.

"The objective is to adopt the most appropriate measure of inflation.

"Additionally, the use of CPI for uprating purposes will assist some defined benefit occupational pension schemes to maintain adequate funding levels to meet future liabilities."

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