The High Court has ruled in favour of the Coalition Government’s decision to link public sector pensions to a lower inflation measure than used to be the case up until April.
Trade unions had brought a judicial review into the legality of the Government’s switch from using the Consumer Prices Index rather than the faster-growing Retail Price Index in order to inflation-proof pensions.
But, in a move that will affect the value of pension increases for millions of public sector workers, the High Court today ruled that the Government’s move was lawful.
Lord Justice Elias said that three of the four grounds on which the challenge was made were dismissed unanimously, while the remaining one was rejected by a two to one majority.
The unions were given leave to appeal to the Court of Appeal on some of the issues raised and the National Association of Schoolmasters and the Union of Women Teachers union, for one, said it would do.
Lord Hutton’s independent report on public sector pensions, which was published earlier this year, calculated that a move to CPI would save the Government £1.8 billion per annum in cash payments by 2015/16 for unfunded public pension schemes, which includes all of them apart from the local government one.
The saving is likely to be much greater, however, if projections by the Office for Budget Responsibility prove true. It forecast at the time of the Chancellor’s Autumn Statement that the gap between CPI and RPI could be as high as 1.8% by 2016, with CPI standing at about 2% and RPI at 3.8%.
