McCloud judgment

Last updated 17/07/2020Mccloud Judgement Image

Public service pension schemes consultation - updated July 2020

The public service pensions consultation to remove the discrimination identified by the courts in the 2015 pension reforms is now live.

For more information, visit the dedicated consultation page

Further information can be found in the McCloud judgment FAQs.

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 (opens in a new window).

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 (opens in a new window).

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.

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 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.

Alongside the consultation, HM Treasury has also announced that the cost cap pause will be lifted and has confirmed the next steps.

More details on the cost cap lifting (opens in a new window).

Civil Service Pensions will implement the new directions provided by HM Treasury and will provide a further update as soon as possible.