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Unions defeated in pensions dispute

Trade unions have lost their battle with the Government over the changes in the way public sector pensions are altered to account for inflation.

Three appeal judges refused to overturn the high court case decision made against the unions in December.

The Government is changing the measure for calculating pension rises from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI), with the aim to save £7.5bn a year by 2014-15 on pensions.

The switch will mean cuts to future annual pension increases, with public sector workers from the civil service, the NHS, teaching, and local government.

The unions told the Financial Times that the switch “reduces the values of benefits to pension scheme members by about 15% on average”. The Government responded that CPI was “an appropriate and permissible measure to be used” and emphasised the financial savings due to be made by using CPI.

In December, the unions’ lawyers initially argued that the Government had acted beyond its rights allowed by the Social Security Administration Act. Judges were collectively in support of the Government in three of four counts, and by a majority of 2-1 on a fourth; moreover, the Court of Appeal ruled that the Government would have made the alteration despite theUK’s economic condition.

A Government spokesman 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.”

The unions are now considering the next steps in their challenge, and the PCS has announced its intention to hold a national strike over pensions. General secretary Mark Serwotka said: “We will be working with other unions to build for co-ordinated national action to successfully fight these cuts to pensions, as well as those to pay and jobs that this brutal government is inflicting on the public sector.”

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