Police and civil servants plan legal challenge against Coalition pension cuts.

18th April 2011

The signatories seeking a judicial review include the Civil Service Pensioners' Alliance, Prospect, the Police Federation, the National Association of Retired Police Officers and the GMB.

Here is the detail of the challenge outlined on the CSPA and the view of Police Review

The five groups are arguing that the Government has not acted within its legal authority when making the change and says it means the value of pensions will fall substantially.

Until recently upgrades to public sector pensions, i.e. those pensions already being paid out, were at the Retail Price Index an inflation linked measure that includes housing costs but these upgrades will use the CPI which is generally lower.

The campaigners say the change could cost pensioners £60 this year but it is over the longer term that the impact could be huge. The teaching union the NASUWT's calculates that a teacher with an annual pension of £10,000 could lose £74,000 over 25 years.

The challenge will also cite the fact that some public sector workers made more contributions to ‘buy' extra years of pensions in the belief the pension would be upgraded by RPI.

There is certainly opposition in Parliament – this early day motion criticising the change has attracted 125 MPs, the majority Labour or nationalist parties, but with a smattering of Lib Dems.

The arguments around the EDM have been raging for some time here on Moneysavingexpert

On the Guardian melrosechick feels the Government has acted in bad faith.

"People who have paid into pensions for years should receive them on the terms offered at the time they started paying in. It's like buying something on installments, you can't change the end product just because you realise that the terms you originally set aren't very profitable anymore.

RClayton however feels they are likely to lose.

"The legal case will be decided on the narrow basis of whether CPI is as valid as RPI in terms of the Government's legal obligation to adjust pensions for inflation; and on legitimate expectation (either of consultation or of outcome).

"This is very different from the policy issue of fairness – to civil servants or to the taxpayer of the cost of public sector pensions.

"I understand why the Unions are taking the case; but they are likely to lose even if they win: keeping RPI will increase the actuarial cost of future liabilities which the Government will seek to recoup by increasing contributions to pension schemes. So the benefit of keeping RPI for current and future pensioners would likely largely fall on current employees."

Meanwhile on the Telegraph message board,

Checkmate says that his wife's pension will suffer under the change, but he supports the Government against the unions though we don't know hear what his wife makes of this.

checkmate writes: "My wife who is coming to the end of her career with the NHS will be affected by this. Hence, my position should be to hope that they win, as if they lose so do we.

2 thoughts on “Police and civil servants plan legal challenge against Coalition pension cuts.”

  1. Anonymous says:

    OK so where does one go if you are a pensioner living on fixed income.    I’m not sure I read your article correctly; I can’t glean where one would even begin looking.    For my own part I left the UK completely to look elsewhere for investment.

    1. Anonymous says:

      Comment on behalf of Nick Kirrage:
      Hi mcgrathr20,
      Thanks for your comment, glad that it got you thinking.
       
      In the piece I was reviewing the opportunities for income, or rather dividend yield, in the UK stockmarket as I see it today. I’m one third of The Value Perspective Team, who is dedicated to looking for companies in the UK stockmarket that are valued at less than their true worth and waiting for a correction (and therefore a good return over the long-term). So our expertise is very much in this particular area of the UK stockmarket and whilst I’m not an expert on all asset classes or your particular situation, from your comment it sounds like you live outside the UK. Perhaps it’s a good time to review your overall investment strategy with your financial advisor. And if you don’t have one and live in the UK http://www.unbiased.co.uk is a good resource to find one near where you live.
      Thanks,
       
      Nick

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