Unions have launched a judicial review against the Treasury’s decision to change the way public sector pensions are calculated.
Unite, which represents many local government workers, has launched the legal challenge in conjunction with unions representing civil servants, teachers, members of the fire brigade and prison officers.
They argue that the Consumer Price Index (CPI), which the government said would be used instead of the Retail Price Index (RPI) to calculate pension benefits, is an inappropriate index.
“This confounds unreasonably members’ legitimate expectations for pension increases based on RPI,” a Unite spokesman said.
Public sector workers are set to lose out from the change because CPI is generally lower than RPI due to the way it is calculated. Local government pension fund valuations, currently being published, have shown that expected growth in fund deficits was dampened because the change in indexation benefited them.
Projections by the Independent Public Service Pensions Commission are that the CPI switch will cut the value of pension entitlement for existing pensioners by around 15%, and by a larger amount for pension fund members who are still in employment or who have a deferred pension.
Unite assistant general secretary Gail Cartmail added: “The switch to CPI is, in our view, morally wrong and we hope to demonstrate through this action that it is also legally wrong.
“It is not acceptable for such a hugely significant change to have been forced through without any significant consultation.”
Unite and colleagues’ judicial review follows a separate judicial review launched last month by GMB, Prospect, FDA, the Civil Service Pensioners’ Alliance and the National Association of Retired Police Officers.
Their claim argued CPI was not a fair indicator of inflation since it excludes housing costs and uses a different formula to RPI to aggregate price increases.
Their claims are likely to be joined together and a decision on whether they can proceed is expected later this month.