High Court approves public sector pension reforms

The High Court has ruled that the government's recent switch of the basis on which public sector pension increases are calculated - from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI) - is lawful.

Rejecting an application for a judicial review of the decision from a group of public sector unions, Lord Justice Elias and Justices McCombe and Sales said that the government had not exceeded its powers under the Social Security Administration Act in making the decision.

The claimants had argued that statements from ministers that the RPI would continue to be used to calculate pension increases prior to the decision being made meant that the decision was a breach of  scheme members' legitimate expectations. This was also rejected by the court, as was the claim that the changes were in breach of the government's equality duties under the Sex Discrimination Act 1975 and that the Equalities Impact Assessment conducted last year was both inadequate and that ministers had failed to take sufficient account of it when taking their decision.

The judges also dismissed the claim – albeit with a dissenting opinion from Mr Justice McCombe - that the decision had been taken having regard to irrelevant considerations or for an improper purposes (the Padfield principles), driven by the need to make economic savings.

The change in the basis of the public sector pensions inflation-proofing mechanism from the RPI to the CPI – which took effect in April this year - could save the government billions of pounds over future years as the CPI, a narrower measure which excludes items such as rent and mortgage costs, has tended to be significantly lower than the RPI in the past.

A copy of the judgment is available to download from the following link: http://www.judiciary.gov.uk/Resources/JCO/Documents/Judgments/police-negotiating-board-others-v-sec-state-for-work-and-pensions.pdf