Unions intend to carry on fighting the government’s decision to switch the inflation measure for index-linking pensions.
A legal challenge has been lodged against a recent High Court decision that backed the government move to link public sector pensions to the consumer price index (CPI) rather than the retail price index (RPI).
State pension cost of living increases are also linked to CPI.
The CPI returns a lower inflation rate than RPI as the calculation excludes housing costs.
CPI is currently 4.8% while RPI is 5.2% – an 8% difference in returns on indexation which leads to cuts in pension payments, say the unions.
Four trade unions and a pensioner group have combined for the appeal.
Paul Noon, general secretary of civil service union Prospect, said: “The CPI switch is just one of the measures the Government is seeking to introduce as part of its pensions reforms. It must be challenged as it would cut the income of our members in retirement, in both the public and private sectors, by up to a quarter.
Meanwhile the boss of a leading pension finance firm has explained that the latest fall in CPI – and predicted further drops in the year will affect retirement income for millions of over 55s.
Aston Goodey, sales and marketing director of MGM Advantage, said: “The latest fall in the consumer price index rate will still have a significant impact on the finances of retired people.”
The firm reckons the cost of maintaining living standards at the same level as 12 months ago amounts to everyone in the country finding an extra £700 per head to spend – and that calculation includes the recent drop in CPI inflation.
A report from the firm in December, Our Retirement Nation, disclosed the over 55s feel they need almost £100 extra a week for financially security and 40% claimed a lack of money was their biggest retirement worry.
“We are seeing more interest in alternative retirement income solutions that can provide some protection against inflation and the rising cost of living,” he said.
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