RPI to CPI Pension Indexation – Debate in The House of Commo

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Letter to Branches





No 152/12
Ref: GS: 13.0
Date: 2nd March 2012


To: All Branches



Dear Colleagues

RPI to CPI Pension Indexation – Debate in The House of Commons Thursday 1st March 2012


Further to LTB 129/12 issued on 23rd February 2012, MPs debated the issue of Pension indexation changes from RPI to CPI in the House of Commons on Thursday 1st March 2012.

John McDonnell – Labour MP for Hayes and Harlington moved the following motion:-

That this House notes that the e-petition entitled Public and Private Pension Increases change from RPI to CPI attracted over 100,000 signatures very quickly, revealing a high level of concern about the Government’s decision to change the indexation for occupational pensions from the Retail Prices Index to the Consumer Price Index, which will mean that many people, both those retired and those yet to retire, will receive less in their pension payments than they were led to expect; and calls on the Government to reintroduce the RPI measure immediately.

33 MPs voted in favour of the motion with 232 against. The full debate can be accessed via the following link:-

http://www.publications.parliament.uk/p ... 0147000001" onclick="window.open(this.href);return false;

Any enquiries to this LTB should be directed to me in the General Secretary’s Office.

Yours sincerely




W HAYES
General Secretary

[POSTMAN]

http://www.bbc.co.uk/news/business-17444656" onclick="window.open(this.href);return false;

Pension switch challenge is lost by unions

Trade unions have lost an appeal against a change in the way public sector pensions are protected against inflation.

The High Court ruled in December that the government's switch in calculations was lawful.

Trade unions had complained about how the Consumer Prices Index (CPI) was replacing the faster-rising Retail Prices Index (RPI) to uprate pensions.

Now they have lost the latest stage of their challenge at the Court of Appeal.

This confirms a reduction in the value of future annual pension increases for millions of public sector pensioners.

The policy also saves the government billions of pounds in the coming years and is a major area of disagreement within the public sector pensions dispute.

Calculations

CPI and RPI are measures of inflation - or the cost of living - based on the prices of baskets of goods and services. The RPI basket includes mortgage interest payments and some other housing costs, and is generally higher owing to the formula used to calculate it.

The use of CPI for inflation-proofing pensions was first applied in April last year.

It saw pensioners in schemes covering civil servants, teachers, NHS employees, local government and others, receiving an increase of 3.1% instead of 4.6%.

At the original court challenge in December, the trade unions' lawyers had argued that, in making the change, the government had acted beyond its powers granted by the Social Security Administration Act.

Judges found unanimously in favour of the government in three of four counts, and by a majority of 2-1 on a fourth. The Court of Appeal has now upheld this decision.

Two groups, mainly consisting of unions, launched the legal action. The Fire Brigades Union, NASUWT, Prison Officers Association, Public and Commercial Services union, Unison and Unite make up one group, while the other consists of Prospect, the FDA, GMB, Police Federation, National Association of Retired Police Officers and the Civil Service Pensioners' Alliance.

The judges agreed to allow the National Union of Teachers, Association of Principal Fire Officers and National Federation of Occupational Pensioners to join the challenge