Friday, 2 December 2011

RPI to CPI Challenge fails in Court- right to appeal granted

A high court challenge to the Government’s decision to change the way existing and future pension increases are calculated from RPI inflation to the lower CPI calculation has failed at its first stage.

The NUT joined a raft of other unions in mounting the challenge, claiming that the accrued benefits existing pensioners had built up had been on the basis of the RPI calculation that had previously been used. The NUT challenge was alongside Prospect, GMB, First Division Association, Civil Service Pensioners Alliance, Association of Principal Fire Officers, National Federation of Occupational Pensioners, National Association of Retired Police Officers and the Police Federation. A similar action was brought by the Fire Brigades' Union, NASUWT, Prison Officers Association, Public and Commercial Services union.

Three of the four points of law that were challenged were rejected unanimously by the judges. A fourth was rejected by a 2-1 margin. The Union has been granted the right to appeal.

The BBC reported that: "If someone retired on an annual pension of £10,000 a year - a typical figure for a teacher - then over 20 years the uprating of their pensions by 2% (the Bankof England's CPI target) would see them accrue total pension payments of £245,500.
If a 3.4% RPI figure was used instead - because this would be 1.4 percentage points higher - the pensioner in question would receive £284,923. That's a difference of £39,423 over 20 years.”

NUT General Secretary, Christine Blower commented that: "The NUT took part in this action because the Government’s decision was simply wrong. Cutting pensions to save money at pensioners’ expense is disgraceful and immoral. All three judges agreed that a substantial motivation for the switch to CPI was deficit reduction. It is disappointing that only one judge felt able to say this was wrong. It’s also disappointing that the arguments advanced by the other unions involved were treated so dismissively.
The NUT has obtained permission to appeal to the Court of Appeal. "In the meantime, the Government has deliberately avoided saying whether public sector pensions will be increased even by CPI in 2012. We call on George Osborne to make his position clear immediately and tell pensioners that he is not going to impose even bigger cuts next year.”

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