Supreme Court Judgement Affecting Public Sector Pensions
July 3, 2019
Some of you may be aware of recent developments relating to a legal challenge following the introduction of transitional arrangements to a number of public sector Pension schemes.
Detail surrounding the case was shared with our reps to cascade locally to members in February 2019.
In essence, challenges were led by two groups of Judges (The Lord Chancellor and Secretary of State for Justice and The Ministry of Justice v McCloud & others (High Court and Appeal Court Judges) and N Mostyn & others (Judges who were not High Court or Appeal Court Judges).
A similar case was linked to the subsequent Judges appeal hearing, led by the Fire Brigades Union (FBU) - (The Secretary of State for the Home Department, The Welsh Ministers & Others v R Sargeant & Others).
The FBU appeal raised common or similar challenges which highlighted three issues but focussing primarily on whether or not the ‘transitional’ arrangements led directly to unlawful age discrimination.
The appeal hearing found that the manner in which transitional protection for older members of the judicial and firefighters schemes was implemented, gave rise to unlawful and direct age discrimination.
The Government were unhappy with the finding of the Appeal Court and were granted leave to appeal to the Supreme Court. Last week however, the Supreme Court finally closed the door to further challenge by supporting the earlier Appeal Court ‘verdict’.
The transitional changes are therefore deemed in law to be discriminatory (there was greater benefit afforded to older individuals) and the Government was wrong to force them through.
Although the court finding is quite complex and areas are bespoke to the relevant schemes they address, it seems likely that the judgement will have a knock on effect for all Government controlled Pensions Schemes including the Civil Service and the Police Pension Schemes.
Prior to the Supreme Court decision I had been in direct contact with the relevant Pensions Director at The Cabinet Office who fully recognised that, ‘it may have relevant implications for the Civil Service pension arrangements’.
It is believed the financial impact will be in the region of £4 billion a year.
How does this affect NCOA members?
Although the issues are complex and varied, in simple terms two groups of members ‘may’ be affected by this ruling;
1. Members of the 1987 Police Pension Scheme (PPS) who were unable to complete their pensionable service within a predetermined timescale (10yrs from date following the introduction of the New CARE (Career Average Revalued Earnings) scheme in April 2015. These officers retained an element of their ‘paid up’ 1987 scheme at the point the new scheme was introduced and then switched for the remainder of their service to the 2015 scheme. This was carried out through a period of ‘transition’ or tapering to lessen the effect of the changes to the 2015 scheme. (This scheme required officers to work longer for increased contributions but less pension on retirement). (This will be a relatively small group of ex Police NCA officers)
2. Officers who in the same circumstances were members of the Classic Pension scheme who transitioned or tapered into the Alpha pension scheme given that they would not reach the normal Civil Service retirement age within a predetermined timescale. Those who could do so, were allowed to remain on the Classic scheme until retirement. (This is likely to be a larger group of NCA officers with previous Civil Service careers including HMRC).
Who is it unlikely to affect?
1. Officers who became contributing members of Public Service Pension schemes ALPHA or PPS 2015 schemes at the commencement of their relevant careers (Civil Service/Police).
2. Those who at the introduction of the relevant changes which saw everyone move to either the Alpha Pension or PPS 2015, were more than 10 years from the point of ‘normal’ retirement (as opposed to state retirement age).
The matter will now be referred back to an Employment Tribunal for a remedy hearing and the matter will be formally concluded. Given the strong position reached, I anticipate that the Government will be working to ensure their schemes comply with the law and that the transitional changes introduced in 2015 are changed significantly or removed entirely.
Clearly the Government has not yet made clear how it intends to respond and act as a result of the ruling. This may include considerations around;
- Determining whether the ALPHA Scheme or the PPS 2015 will be subject to changes as a result of this ruling.
- Whether affected officers will be placed back on their respective ‘initial’ schemes.
- Whether affected officers will be paid back monies owed.
- Whether affected officers will be given a choice on any of the above.
Given the uncertainty that this determination brings at this time, I will be engaging with partners in the Civil Service and Policing community as well as directly with the Government and relevant Pension Boards to understand how our members are affected and what they should expect to see happen next.
As soon as I have further information I will update you as soon as I am able.
NCOA General Secretary