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UK unions lose appeal over use of CPI for indexation

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  • UK unions lose appeal over use of CPI for indexation

UK - Unions have lost their appeal to overturn the use of the consumer prices index (CPI) as a measure of inflation for pension funds, with a UK court ruling the government would have implemented the change regardless of the country's financial situation.

In its ruling, the Court of Appeal said that banning the use of CPI over the traditionally higher retail prices index (RPI) as a measure of inflation would have required "clear exclusionary or limiting words" that were not present in current legislation - with a pensioner group nonetheless pledging to continue its political campaign against the switch.

The Civil Service Pensioners' Alliance (CSPA), which had previously predicted the Treasury would take the case to the UK Supreme Court if it lost the hearing, said it was disappointed by the outcome.

"We will now consult with our lawyers, with our fellow litigants and with the other group of litigants to consider whether there is any scope for further appeal to the Supreme Court," it said.

The six unions involved in the court case, including Unite and Unison, meanwhile said they were considering their next steps.

The court also cited the widespread use of CPI as a comparative measure of inflation as for why he ruled in favour of the government.

"CPI is used for the purpose of comparing inflation rates in different EU member states, as is the fact that the Bank of England has used CPI to assess the level of inflation since the end of 2003," the judgement said.

Referencing the decision by the secretary of state for Work and Pensions, Iain Duncan Smith, to change the level of indexation, the ruling said there were no words "limiting" the use of CPI.

"Indeed, the closing words of section 150(1) seems to me to emphasise the width, rather than the narrowness, of the secretary of state's field of choice," the court said.

Addressing the claim the government switched from RPI as a way of reducing the cost of state pension commitments, the ruling added: "It seems to me that the decision to use CPI as the index by reference to which the 2011 up-rating should be effected would certainly have been made by the secretary of state even if he had put out of his mind any consideration of the benefit to the national economy of that decision."

The CSPA argued that the government hoped to achieve savings of £6bn (€7.2bn) over the course of the parliament by implementing the change, "at the expense of pensioners and benefit claimants".

"Whether or not we decide to appeal to the Supreme Court, we will continue to campaign politically for a return to RPI indexation," the group said.

A spokeswoman for the Treasury said: "The government welcomes the Court of Appeal's judgement upholding its decision to use the Consumer Prices Index for inflation-proofing certain pensions and benefits."

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