Labour Party pension scheme switches to CPI

The Labour Party has switched to using the Consumer Prices Index for uprating its own pension scheme despite repeatedly attacking the government for making the change possible.

The party's financial statement for 2010 revealed £4.2m had been cut from the Labour Superannuation Society's deficit by the decision to use CPI instead of the Retail Prices Index which is generally lower.

This was effective from 31 December 2010, shortly after Labour pensions spokesperson Rachel Reeves slammed the government's move to use CPI as the statutory inflation measure as "changing the rules of the game" (PP Online, 8 December, 2010).

Labour lords were also extremely critical of the legislation and tried to revisit the issue during debates on the Pensions Bill three months later (PP Online, 16 March).

But the party's financial report states: "Following the government's announcement in summer 2010, the inflation index to be used to derive statutory pensions increases has been changed from RPI to CPI.

"Due to a number of differences between the indices... CPI is expected to be less than RPI over the long-term which means that the defined benefit obligation has been reduced."

The £4.2m this shaved off the scheme's liabilities nudged it into the black, giving it a £19,000 surplus on an FRS17 basis.

The legislation is currently being challenged in court by a group of trade unions, led by the Public Commercial Services union - which is not Labour affiliated (PP Online, 9 May).

The unions claim "an inappropriate index has been chosen for an invalid reason" and have labelled the switch as "morally wrong".

The issue has been controversial for individual schemes too - with British Airways' decision to inflation measures leading to the resignation of three trustees and threats of legal action. (PP Online, 14 July).

The Labour Party did not return calls for comment.