McCloud judgment

Last updated 12/03/2020

Background

In 2015 the Government introduced reforms to public sector pensions, meaning most public sector workers were moved into new pension schemes in 2015. Most civil servants were moved into the alpha pension scheme.

Mccloud Judgement Image

In December 2018, the Court of Appeal ruled that the ‘transitional protection’ offered to some members of the judges’ and firefighters’ schemes, as part of the reforms, gave rise to unlawful discrimination. The details of the ruling are available on the link below:

Court of Appeal Judgment

On 15 July 2019 the Chief Secretary to the Treasury made a written ministerial statement confirming that, as ‘transitional protection’ was offered to members of all the main public service pension schemes, the government believes that the difference in treatment will need to be removed across all those schemes. 

The statement set out that the government, alongside Employment Tribunal discussions, will also engage with employer and member representatives, and the devolved administrations, to help inform proposals to the Tribunal and in respect of the other public service pension schemes.  A copy of the statement is available via the link below:

Written Ministerial Statement – Public Service Pensions

The discrimination that has been identified in the public service schemes arises between the different treatment between members in these categories:

1. those individuals who were members of pre-2015 public service schemes as at 31 March 2012 and were fully transitionally protected by remaining in that scheme after 1 April 2015 (as a result of being 10 years within their normal pension age);

and

2. those who were members of the pre-2015 schemes as at 31 March 2012 and were not treated as fully transitionally protected and moved to new post-2015 arrangements on or after 1 April 2015.

For the civil service the pre-2015 schemes are; classic, classic plus, premium and nuvos and the post-2015 scheme is alpha.

The relevant Employment Tribunal will oversee the process of agreeing a remedy for claimants. The government has previously confirmed that the discrimination will also need to be removed for all other members of public service pension schemes who have relevant service.

The government has agreed to an interim declaration with claimants in the case management discussions for the police, MoD police and firefighter claimants and a further declaration in the Employment Tribunal for the judiciary. The legal process is ongoing and there are three further cases brought by prison officers that remain to be considered by the Employment Tribunal in respect of the Civil Service pension scheme.

The declarations mean that the claimants in those cases are entitled to be treated as members of the appropriate pre-2015 schemes. The government intends to extend the same treatment to all members of the public service pension schemes (whether claimants or not) who are in the same legal and factual position as the claimants.

However, this is not straightforward as simply returning all relevant members to the pre-2015 schemes would cause detriment for some members of public service pension schemes. There are many individuals who were in post as at the 31 March 2012 that are expected to be better off in the post-2015 scheme.

Changes to legislation will be necessary to deliver the commitment to remove the discrimination from all public service pension schemes whilst ensuring that members can instead keep the benefits that they have earned to date.

Any changes to the schemes will be subject to consultation with stakeholders to ensure that any issues are properly understood and addressed alongside the remedy agreed by the Employment Tribunal for individual claimants.

Technical discussions, on how best to make the required changes to the Civil Service Pension scheme, took place in early February, with initial views being provided from the pension Scheme Advisory Board (SAB), trade unions and other member representative groups. Feedback from these discussions have been shared with HM Treasury who are leading the work for all public service schemes on behalf of the government. A formal public consultation will take place after these technical discussions and will give all stakeholders the opportunity to comment fully on the government’s proposals.

Once the consultation has been opened we will let you know how you can be involved.

Please be assured that the pension you have earned to date is safe.

Scheme valuation

The Government was undertaking valuations of public service pensions including assessing the cost of schemes against the ‘cost cap’, which could have resulted in automatic changes to employee contributions or benefits.

On 30 January 2019 the Government announced a pause to the cost control part of the valuations of public service pension schemes, following the Court of Appeal’s judgment in McCloud and this remains the case.

If you wish to review the written ministerial statement it can be found at: 

Written Ministerial Statement: Pensions

Further information can be found in the McCloud judgment FAQs