Trade unions have vowed to challenge a 2-1 majority High Court ruling that has upheld Government changes to the way annual public sector pension increases are calculated.
A variety of unions and individual workers accused the Government of acting unlawfully while attempting to reduce pension costs to cut the financial deficit.
The legal challenge followed a decision to use the consumer price index (CPI), instead of the normally faster-rising retail price index (RPI), to measure price increases influencing pension upgrades.
Yesterday the High Court in London accepted that the “immediate driving force” behind the change from RPI to CPI – a move expected to save almost £6bn a year by 2014 – was “the need to secure cuts in the welfare budget”.
Two of the judges, Lord Justice Elias and Mr Justice Sales, ruled the Government was entitled to have regard to cost implications when deciding which index to adopt, provided the selected index could properly and reasonably be said to measure price changes.
But the third panel member, Mr Justice McCombe, said he would have quashed the decision because cost “potential savings to the public purse” were an “irrelevant consideration” that had been allowed to dominate the decision-making process.
The judge said the sole statutory requirement was to look for “the best” or “an appropriate” method to estimate whether benefits had retained value against prices. “The Minister is not entitled to have an eye on the likely result of the review before choosing the method of carrying it out.”
Later TUC general secretary Brendan Barber said: “This is a disappointing judgment for pensioners and scheme members whether they draw a private, public or state second pension.”