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Government launches consultations on proposals to rectify the age discrimination arising from the 2015 changes to public sector pension schemes

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The UK government has launched two consultations aimed at removing age discrimination from transitional provisions to public sector pension schemes, including from the Teachers’ Pension Scheme (TPS) and the Local Government Pension Scheme (LGPS), in the wake of a court judgement from 2018.

HM Treasury and the Ministry of Housing, Communities and Local Government (MHLCG) have opened separate consultations on amending transitional protection rules for unfunded public service pension schemes and the local government pension scheme respectively.

The proposals follow court cases brought by judges and firefighters in the wake of changes in 2015, when members of the UK's public sector pension schemes were compulsorily transferred to less generous new schemes in 2015. However, scheme members within 10 years of retirement age were permitted to remain on the previous schemes.

In December 2018, the Court of Appeal (CoA) ruled that the Ministry of Justice had discriminated against younger judges on the grounds of age, and found in favour of a group of firefighters on the same issue. The court said the discrimination must be remedied by the government.

The consultations set out the government's proposals for addressing this discrimination along with the government's plans for the future of the schemes.

Consultation proposals

Depending on a person's circumstances, some scheme members may be better off in the reformed schemes rather than the legacy schemes, and therefore the government has decided it would not be fair to simply move everyone back into the legacy schemes, even though this is reported to be sufficient to remove the unlawful discrimination identified.

The government is therefore proposing to provide members with the option to choose between receiving legacy or reformed scheme benefits in respect of their service during the period between 1 April 2015 and 31 March 2022 (known as the 'remedy period').

The consultations seek views on that proposal and especially on which of two possible approaches should be taken to making this choice, and how each of these approaches might work. The two possible approaches are as follows:

  • an immediate choice – here members would make this decision in the year or two after the point of implementation in 2022 (which might be many years ahead of their retirement, and at a time when there is still some uncertainty over the precise benefits that would accrue to them in the alternative schemes)
  • a deferred choice underpin (DCU) -  here a decision would be deferred until the point at which a member retires (or when they take their pension benefits).

 

There are pros and cons to each option, with different impacts on different members.

Response

NAHT will be considering the proposals for our members who are in either the TPS or the LGPS and will be submitting a response to each of them.  Ahead of the consultation launch, NAHT has been working with the DfE, Treasury and Teachers' Pension Scheme to ensure we safeguard members' interests.

You can respond to the consultation as an individual if you have particularly strong views on the proposal.  However, please note that the law is now clear and as such, the discrimination in the TPS and the LGPS will have to be remedied; the consultations just look at the detail of how this will be achieved.

Further guidance

The Teachers' Pensions website has some additional useful information related to this issue which can be found via the following links:

 

First published 28 July 2020