McCloud judgment

Last updated 30/03/2020Mccloud Judgement Image

Background

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

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 difference in treatment will need to be removed across all those schemes for members with relevant service.

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.

Legal process - updated March 2020

The Employment Tribunals will oversee the process of agreeing a remedy for claimants. The government has agreed to an interim declaration with claimants in a number of cases and the declarations mean that the claimants in those cases are entitled to be treated as members of the appropriate pre-2015 schemes.

However, this is not straightforward as simply returning all relevant members to the pre-2015 schemes would cause detriment for some members. 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.

Public Consultation - updated March 2020

On 25 March 2020, the Economic Secretary to the Treasury made a written ministerial statement confirming that, since February 2020, pension schemes have been conducting technical discussions with member and employer representatives to seek initial views on the government’s high-level proposals for removing the discrimination.

We have shared those views with HM Treasury as they are leading the work on behalf of the government. Feedback from these discussions is being used to help shape a government consultation to decide the best way to treat people’s service for the period during which they were discriminated against. This may involve affected members choosing to keep the affected service in the post-2015 scheme or having it put back into their pre-2015 scheme. The government will also set out its proposal to remove the discrimination for future service in the consultation.

We will provide an update once we know when the consultation will open and let you know how to put your views forward, should you wish to contribute.

The government confirmed that members of public service pension schemes with relevant service who are in the same legal and factual position as the claimants will not need to make a claim in order for the eventual changes to apply to them.

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

A copy of the statement is available via the link below:

Written Ministerial Statement: Pensions Update

Scheme valuation - updated March 2020

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.

In January 2019, the government announced a pause to the cost control mechanism in public service pension schemes, due to uncertainty about benefit entitlements arising from the McCloud judgment.

In March 2020, the government confirmed that alongside its proposals later in the year for addressing discrimination, the government will also provide an update on the cost control mechanism.

If you wish to review the January 2019 written ministerial statement it can be found at:

Written Ministerial Statement: Pensions

Further information can be found in the McCloud judgment FAQs