Union to fight pension inflation changes

Union to fight pension inflation changes

Workers union Unite has promised to “take action” against the government if its proposal to change the retail price index – which could affect defined benefit pensioners - goes ahead.

Len McCluskey, Unite’s general secretary, warned it was important that people understood what is at stake.

He said: “The RPI is not just a statistic. If we don't fight this then millions of ordinary people will face cuts to their pay and pensions.”

Chancellor of the exchequer Sajid Javid announced earlier this month (September 4) that the government will consult on a reform of the RPI, with the goal to align it with the consumer prices index, including housing costs.

RPI generally runs at about 1 percentage point higher than CPI and is currently 2.8 per cent, compared with a CPI of 1.9 per cent.

Scrapping RPI could leave pensioners of DB schemes £12,000 worse off, according to calculations from trade union Unison.

Mr Javid was responding to a proposal from the UK Statistics Authority, which stated that RPI isn’t a good measure for inflation, as it was intended to be a legacy index and was dropped as the official measure in 2010.

However the chancellor declined to make changes to RPI before 2025, as requested by the UK Statistics Authority.

Instead, the government will launch a consultation in January 2020 to ask whether this change should be made at a date other than 2030, and if so, when between 2025 and 2030.

Pension schemes can link increases to their employees' pensions - and therefore the employers' liabilities - to CPI, as long as their own rules don’t specifically mention RPI.

This has been the subject of several recent court cases, such as BT's or Barnardo’s, in which trustees and employers sought approval to change their inflation indexation to reduce benefit payments to members.

Unite also announced that it has started an inquiry into the 'cost of living' and will now up the ante, working with academics to formulate a Unite Bargaining Index for use by union negotiators.

Mr McCluskey added: “Whatever happens we will not let employers use this as an opportunity to short change our members.

"There will be a choice; in negotiations you can use either RPI or a new Unite index. The CPIH will not be an option for collective bargaining.”

What do you think about the issues raised by this story? Email us on to let us know.