Blogs and Briefings
Pensions Peacemaker?
Connect’s Peter Barrett sees Pensions Minister Steve Webb address the Civil Service Pensioners’ Alliance Annual Conference
7 October
Pensions Minister Steve Webb yesterday delivered the keynote speech at the Civil Service Pensioners’ Alliance Annual Conference in Coventry. In many respects the timing could not have been better.
In three weeks’ time the CSPA will enter the High Court to hear the results of its Judicial Review against the Government over changes to pensions indexation.
The CSPA has been campaigning against the Government’s planned changes since before the last election and today, at its Annual General Meeting, the issue was understandably at the top of members’ priorities for discussion.
A quick explanation of the situation: the Coalition Government announced last year that it would in future use the Consumer Price Index (CPI), rather than the Retail Price Index (RPI) to measure the annual up-ratings of benefits and tax credit, the second state pension and public sector pensions.
Seems like a small, technical and rather nondescript change? In fact the implications are huge, not only for the current generation of pensioners, but subsequent generations as well.
CPI is historically a much lower measure of inflation than RPI. In short, the value of public sector pensions (as well as many private sector pensions) will be decimated overnight. It is estimated that a switch would mean that a pensioner currently on a pension of £10,000 a year will, by 2016, be more than £800 a year worse off.
Against this backdrop, Pensions Minister Steve Webb was perhaps always destined to receive a polite but frosty reception from CSPA members at Conference. Before the last election, the CSPA wrote to Webb, then Liberal Democrat Shadow Pensions Minister, asking for reassurance that his party had no plans to alter pensions indexation. His response was unequivocal:
“We are very clear that all accrued rights should be honoured: a pension promise made should be a pension promise kept. Therefore we would not make any changes to pension rights that have already been built up. I have confirmed that I regard accrued index-linked rights as protected.”
Eighteen months on, the outlook is very different. Last year’s Emergency Budget made it clear, despite promises made in opposition by Webb and the Conservative’s Philip Hammond (then Shadow Chief Secretary to the Exchequer): RPI was out, CPI was in.
It is no great surprise therefore that Steve Webb today attempted to strike a conciliatory tone as he sought assuage the palpable sense of frustration among CSPA rank and file in the room. He highlighted the return of the earnings-link as evidence that the Coalition are on the side of pensioners, and that the triple lock would ultimately, in ‘normal years’ ensure pensions payments outstripping price rises.
CSPA members were, nevertheless, less than convinced. The Government may be looking towards ‘the pension system of tomorrow’ as Webb repeatedly stated, but CSPA members, and indeed all pensioners across the UK, are understandably looking at their pensions today. These aren’t ‘normal years’, and the impact of lower pensions payments will be felt immediately.
The event followed a busy Party Conference season for the CSPA and its Judicial Review partners, the GMB, Police Federation, Prospect, NARPO, FDA and NFOP. Pensioners representing all organisations attended each Party Conference, leafleting and protesting outside the main Conference halls. The levels of interest shown by Party Conference delegates suggests the campaign is gaining traction among wider audiences.
So now all eyes turn to the High Court on October 25 – 27th, and the decision on the Judicial Review. If the High Court finds in the CSPA’s favour, the CSPA will seek the revalorisation of public sector pensions in line with the September 2010 RPI figure of 4.6%. Pensioners across the UK are awaiting that decision anxiously.
The impact of the decision will be huge. As ever, Connect will keep you informed.
