What’s next in the pension discrimination row?

On 15 July 2019 Liz Truss, the Chief Secretary to the Treasury, laid a written statement before Parliament accepting the Supreme Court’s decision to refuse a government appeal against the Court of Appeal’s determinations in the Judges’ and Firefighters’ pension discrimination cases. This was the case that found that younger members of the pension schemes, who were not eligible for transitional protection from moving to the new schemes in 2015, had been discriminated against. In that statement, she also conceded that the same discrimination also applies in the other public sector schemes, including the NHS.  So, what next?

The Judges and Firefighters will now have their cases referred to the original Employment Tribunal, which will have the responsibility of finding a remedy. Truss advised that the “government will engage fully with the Employment Tribunal to agree how the discrimination will be remedied. Alongside this process, government will be engaging with employer and member representatives, as well as the devolved administrations, to help inform our proposals to the Tribunal and in respect of the other public service pension schemes. Initial estimates suggest remedying the discrimination will add around £4bn per annum to scheme liabilities from 2015.”

What does this tell us? Nothing really. Whilst many public sector schemes are similar, they are not identical. They have different accrual rates and contributions rates. In the new Teachers’ Pension Scheme, for instance, you earn 1/57th of your annual pay in pension each year, whilst in the NHS it is 1/54th. Contribution rates in the Teachers’ Scheme range from 7.4% to 11.7%, whilst in the NHS they range from 5% to 14.5%. The quantum of the ‘remedy’ will therefore not be the same in both cases, just as it would not be for members of different ages at different levels within the transitional protection scale.  So perhaps what we will see is general principles being agreed and the Government Actuaries Department providing ‘remedy tables’ for everyone. But we aren’t any the wiser at this stage in knowing what the government may propose or what they are basing the £4bn on.

Another way of looking at it, though, is this; if you accept the stance that the Court of Appeal’s decision effectively made transitional protection illegal, the remedy may be that everybody is retrospectively forced into the 2015 Pension Scheme on 1 April 2015. Everyone is therefore treated the same, so there is no discrimination. Maybe the BMA should be careful what it wishes for.

For more information on this subject contact David Walker or call 01772 821021