UK - Two pensioner groups will challenge the government in the High Court today over its decision to switch to the Consumer Prices Index for up-rating public sector pensions.
The Civil Service Pensioners' Alliance and six trade unions led by the Public Commercial Services Union will argue that the government has a duty to maintain the purchasing power of pensions, and that CPI indexation fails to do this.
They will say the move from the Retail Prices Index will result in an annual cut in benefits of more than £800 ($1280) by 2016 for a pensioner currently receiving £10,000 a year.
CSPA general secretary Mike Duggan said: "The switch from RPI to CPI will have a devastating effect on the retirement incomes of millions of pensioners across the UK. Moreover, we believe that the secretary of state has gone beyond his legal authority in selecting CPI as the indexation for pensions up-rating."
PCS general secretary Mark Serwotka said the indexation change ripped up an agreement on pensions reached three years ago and would result in an immediate cut for new employees.
"As well as challenging this in court, the unions are mounting the widest, most co-ordinated industrial action we have seen in our lifetimes, to force the government to think again and show how out of touch millionaire ministers are with the lives and concerns of the rest of us," he said.
Duggan argues the the move is unlawful as the 1992 Social Security Superannuation Act commits the secretary of state to use an index for up-rating that ensures benefit increases meet general price rises.
He says CPI - which factors in consumer behaviour by assuming shoppers react to price rises by switching to cheaper products - fails to do this.
"The act doesn't say the secretary of state will increase prices in line with consumer behaviour, but with prices in general," he said.
Duggan added that politicians from the Liberal Democrat and Conservative parties had given "copper-bottomed promises" on pensions and that both parties had broken pledges to consult before implementing changes.
He said the CSPA had been left with no option but to take the government to court and added that if the three-day hearing did not go in its favour it would continue to lobby for a return to RPI.
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