UNISON, the UK’s largest union, will today join a group of unions in an appeal to the High Court over which measure of inflation is used to calculate annual pension increases.
In his June 2010 budget, George Osborne announced, without consultation, that the government would use the consumer price index (CPI) instead of the retail price index (RPI).
When the change comes into effect in April 2012 the value of public sector pensions will fall by around 15% because CPI is around 1.2% lower on average than RPI.
This is the latest stage in the unions’ legal challenge, launched in October 2011. The unions case is that the switch is not allowed under social security legislation and that it goes back on assurances given by successive governments that the RPI inflation would be used when determining pension increases.
Dave Prentis, UNISON general secretary, said:
“The decision to switch to using the CPI instead is a cynical move to pay down the deficit. This move could cost pensioners thousands. They deserve better. RPI is a much fairer reflection of the costs that retired people face – because, unlike CPI, it includes housing costs.
“Pensioners now, and in the future are being unfairly targeted to pay down a deficit they did nothing to cause. Meanwhile, it’s still bonuses for the bankers. This government may try to claim that we are all in this together – but pensioners will not be fooled.”