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Unions lose CPI pensions appeal Unions lose CPI pensions appeal
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Unions representing millions of workers are considering their next move after losing their appeal against a government decision to change the way public sector pension increases are calculated.Unions representing millions of workers are considering their next move after losing their appeal against a government decision to change the way public sector pension increases are calculated.
Until April 2011, payouts from public sector pensions had increased each year in line with RPI, but in a move announced in June 2010 the government will use the CPI for uprating.Until April 2011, payouts from public sector pensions had increased each year in line with RPI, but in a move announced in June 2010 the government will use the CPI for uprating.
CPI has risen by a smaller amount over the past two years than RPI, and doesn't contain certain costs included in the latter, such as council tax, mortgage interest, house depreciation, TV and road fund licences. Government lawyers said the switch would save £6bn, but unions said it was illegal and a breach of contract with workers.CPI has risen by a smaller amount over the past two years than RPI, and doesn't contain certain costs included in the latter, such as council tax, mortgage interest, house depreciation, TV and road fund licences. Government lawyers said the switch would save £6bn, but unions said it was illegal and a breach of contract with workers.
The unions say the CPI route will see the value of pensions cut by up to 20% over a normal retirement, costing every affected worker thousands of pounds.The unions say the CPI route will see the value of pensions cut by up to 20% over a normal retirement, costing every affected worker thousands of pounds.
A group made up of Unison, Unite, the Fire Brigades Union, teachers' union NASUWT, the Prison Officers' Association and the Public and Commercial Services Union lost their high court case in December, and had taken the case to appeal. Two groups including the unions Unison, Unite, the Fire Brigades Union, teachers' unions NASUWT and NUT, the Prison Officers' Association, the Public and Commercial Services Union and Prospect lost their high court case in December, and had taken the case to appeal.
But three appeal judges refused to overturn the high court's 2-1 majority ruling.But three appeal judges refused to overturn the high court's 2-1 majority ruling.
A government spokesperson said: "The government welcomes the court of appeal's judgement upholding its decision to use CPI for inflation-proofing certain pensions and benefits."A government spokesperson said: "The government welcomes the court of appeal's judgement upholding its decision to use CPI for inflation-proofing certain pensions and benefits."
In a statement released by Thompsons Solicitors, the unions said they were "considering their next steps". In a statement released by Thompsons Solicitors, unions including Unison and Unite said they were "considering their next steps".
The statement said: "The unions argued that the imposed move was not permitted under social security legislation, and that it reneged on assurances given by successive governments that RPI would apply.The statement said: "The unions argued that the imposed move was not permitted under social security legislation, and that it reneged on assurances given by successive governments that RPI would apply.
"While all three high court judges agreed with the unions that deficit reduction was the motivation for the switch, two of them said the secretary of state for work and pensions was within his rights to take into account public finances."While all three high court judges agreed with the unions that deficit reduction was the motivation for the switch, two of them said the secretary of state for work and pensions was within his rights to take into account public finances.
"Now the court of appeal has ruled that the government was entitled to take into account the national economic situation when deciding to adopt CPI from this year. The court also ruled that, even if the national economic situation had been discounted, the government would still have the adopted CPI on the basis of the advice it had received.""Now the court of appeal has ruled that the government was entitled to take into account the national economic situation when deciding to adopt CPI from this year. The court also ruled that, even if the national economic situation had been discounted, the government would still have the adopted CPI on the basis of the advice it had received."
Prospect, which was part of the second group challenging the government, expressed extreme disappointment at the decision.
Its deputy general secretary Dai Hudd said: "The implications of this decision go beyond our members in the civil service and public sector, reaching out to members in the private sector in areas like BT and British Aerospace.
"Our campaign to see a review of the CPI is shared by other bodies such as the Royal Statistical Society, and will be given further impetus by this decision."
Hudd added: "This is just one of many injustices inflicted on public and private sector pensioners by this government. Members in the civil service are about to face three years of pension contribution increases that will go straight back into the coffers of the Treasury."