Despite attacking the government repeatedly for uprating state pensions scheme to the consumer price index (CPI), the Labour Party has quietly switched over from Retail Price Index (RPI).
The financial statement for 2010 released by the party showed £4.2 million had been cut from the Labour Superannuation Society’s deficit as the switch over was made from Retail Price Index (RPI), which is generally lower.
Surprisingly, this was effective from 31 December 2010, shortly after Rachel Reeves, the Labour spokesperson slammed the government for “changing the rules of the game”, after the latter announced using CPI as the statutory inflation measure.
“Following the government’s announcement in summer 2010, the inflation index to be used to derive statutory pensions increases, has been changed from RPI to CPI,” the financial statement of the party said.
The Labour lords tried to discuss the issue during the debate on the Pensions Bill three months later and were extremely critical of the government.
“Due to a number of differences between the indices … CPI is expected to be less than RPI over the long-term which means that the defined benefit obligation has been reduced,”, the report stated.
The savings of £4.2 million has helped the schemes liabilities to return to black and report a surplus of £19,000 on FRS 17 basis. The Labour party however, refused to comment on the issue.
The proposed legislation has been challenged by a group of trades union, led by Public Commercial Services union in court.
The unions alleged “an inappropriate index has been chosen for an invalid reason” and has criticised the government for the “morally wrong” switch.
Individual schemes like British Airways have also faced trouble on the issue, resulting in the resignation of three trustees and legal action threats.