High Court challenge on pension indexation fails

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06 December 2011

As you will be aware a number of trade unions and public sector pension bodies sought to challenge via a Judicial Review in the High Court, in London, the Government’s decision to switch pension increase indexation from RPI to CPI.

  1. The challenge was made on four counts;

  2. CPI is not a proper measure of price inflation;

  3. the Government acted outside it’s legal authority;

  4. the change to CPI infringed the legal expectations of public servants, including pensioners, and

  5. the decision was outside equality regulations.

The Judges ruled in favour of the Government on all four counts, however on count (ii) the decision was not unanimous. The Unions have been given leave to appeal to the Court of Appeal and Papers are being prepared in respect of an appeal.

It became clear in Court that the impact of the switch from RPI to CPI would result in serious detriment of circa 15% of the total value of a public service pension. For someone on a pension of £10,000 the loss over 20 years would be £39,423.

The Judges accepted that the Government was driven by the economic deficit but considered the actions to be lawful. As Counsel for the Unions put it.

“The Secretary of State has put the economic Cart before the statutory Horse”

It is unlikely the Appeal will be dealt with before the New Year. A further Bulletin will be issued as soon as possible.

Bumper Graham

Assistant General Secretary

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