Pension CPI switch ruled lawful in High Court

The government's decision to switch from RPI to CPI to calculate annual public sector pension upgrades has been ruled lawful in the High Court.

A group of trade unions had accused the government of unlawfully attempting to reduce pension costs in the battle to cut the UK's financial deficit.

Since April this year, the government has used the consumer price index (CPI), instead of the normally faster-rising retail price index (RPI), to measure price increases influencing the uprating of public sector pension schemes.

Government lawyers argued CPI was "a more appropriate measure of changes in the general level of prices". They said the change was legal, will save £6bn a year and help to return the UK to a secure financial footing.

This week, the Office for Budget Responsibility revised its estimate of the annual differential between RPI and CPI, suggesting it could be as low as 1.3% a year.

Up to two million public sector workers went on strike on Wednesday.