“I don’t think there is any more clarity [for fund administrators],” he told PF. So the big question is: what happens next? It is estimated that the annual pension bill as a result of the ruling could cost the government up to £4bn. January 12, 2018 by Robert Bonsall Legacy members of the County retirement systems in Alameda, Contra Costa and Merced counties obtained a tremendous victory from California’s First Appellate District on January 8, 2018 in a closely watched case challenging certain provisions of the Public Employees’ Pension … The courts agreed with the unions and, on 27 June this year, they told the government it could not appeal against this decision. In a decision that will have implications across the public sector, the government has been denied leave to appeal a landmark ruling that pension reforms discriminated against younger workers. Background. The Supreme Court refused the appeal because the government failed to “raise an arguable point of law”. One big issue was whether the changes should be applied just to new members of these schemes or to everyone including existing members, or whether there should be “transitional protection” for those closest to pension age. For people who would have been eligible for basic and/or additional state pensions, they could have been able to “contract out” of the additional state pension completely. This engagement needs to be informed by serious scheme-level discussions involving the relevant unions.”, to receive daily news from Public Finance to your inbox, © 2020 Public Finance. Workers from local government, the civil service, NHS and more will be impacted by a supreme court ruling that found pension changes from 2015 were discriminatory based on age, the government has confirmed. The government has admitted a Supreme Court decision which ruled that changes made to firefighters' pensions were discriminatory will have repercussions across the public sector. The Supreme Court decision will also apply for a similar pensions case regarding firefighters; law firm Leigh Day, which acts for around 250 judges, predicts the ruling will have further implications on other public sector employees too, such as police officers, teachers, prison officers and National Health Service (NHS) staff. At first it was unclear whether the decision would apply only to these two particular schemes. The firm said the Supreme Court's refusal to consider an appeal will have a significant impact on all public sector workers 'whose pensions were also curtailed by the government's policy'. Agreeing a way to untangle this mess is likely to take us well into 2020, and may require new primary legislation, which suggests implementation in 2021 or beyond. Taxpayers face £4bn annual pension bill after court ruling. He also noted that the impact would vary between funds, with some individual employers being more adversely affected than others. A firefighter strike in central London over pensions in 2014. he pension prospects of more than six million teachers, nurses, civil servants, local government workers and other public servants are in limbo following. “Each of the schemes is implemented differently, so there will not be a consistent answer across each of them, it’s still really unclear as to what is actually going to happen in the long term,” he added. The latest from the pension age discrimination ruling Recent declarations at Employment Tribunals, following a court ruling that found the public sector pension protections to be discriminatory, are set to have implications across the public sector including the NHS. Public Finance is published on behalf of the Chartered Institute of Public Finance and Accountancy by Redactive Publishing Ltd. All rights reserved. So one option that avoids creating new winners and losers would be to pay people the greater of their “old rules” pension and their “new rules” pension for that period – though this would be messy administratively. Supreme court ruling to apply to all public sector pension schemes. On Monday, the Supreme Court ruled the government’s ‘transitional protection’ scheme – which kept workers closest to retirement on a more generous pension … In December 2018, the Court of Appeal ruled that members of both pension schemes had been discriminated against on the grounds of age. Alternatively, the government could move forward the effective start date for the changes to, say, 2021. In 2015 the Government introduced reforms to public service pensions, meaning most public sector workers were moved into new pension schemes in 2015. It was this age cut-off that was the subject of an employment tribunal case brought by firefighters and judges, which ended up in the court of appeal. Some people may have been able to contract out of the additional state pension if their employer(s) ran a contracted-out pension scheme. The government had an appeal upheld by the court and could now pay out billions to remedy the situation, as valuations on public sector pensions were paused pending the legal process. The biggest change was to raise the pension ages in most schemes to match the rising state pension age. As part of government proposals, public sector workers may have to choose which pension scheme to join and a poor decision … Massive indictment of Government handling of pension reform as it ignored advice that warned against discriminating in favour of older workers. The difficulty in finding a solution is that the changes have created both winners and losers – and putting things right could do the same. Even this assumes that potentially contentious legislation can be got through a House of Commons where the government may not have a working majority. “The government’s commitment to engage with trade unions on the implications of the McCloud judgement is welcome. The government has confirmed that the Court of Appeal ruling that changes it made to judges and firefighter’s pensions were discriminatory on the grounds of age, applies to all public sector pension schemes. UK public sector pension fund administrators remain in the dark despite the government accepting defeat in a landmark pension ruling, PF has learned. The Government has been refused permission to appeal a decision ruling that transitional arrangements in public sector pension schemes are discriminatory. Workers in Britain’s public sector may be facing a payout following a new court ruling on a “contracting out” process. The government is committed to providing public service pensions that are fair for public sector workers and for taxpayers. A high court ruling in a landmark pensions case means the Government should pay back an estimated 2.4 billion it owes to public sector workers immediately, says GMB Union. But it would be surprising if the government did not attempt to reinstate the overall spending reduction that was the purpose of the reforms in the first place. “It is now with the government to sit down with the tribunal and go through this, and it will be months, hopefully not years,” Sellstrom said. The government will now consider how best to compensate those affected by the judgment as part of the court process. The other major change was to pay pensions on the basis of someone’s “career average” earnings rather than their final salary. Other important changes were made to the rate at which pension benefits were built up for each year of service, and to the way in which those benefits were “revalued” up to retirement age to take account of inflation. As a result of the Supreme Court’s decision, the government issued a Ministerial Written Statement on 15 July 2019 confirming that it believes that the difference in treatment provided by the transitional arrangements will need to be remedied across all public sector pension schemes including the NHS, civil … We can safely assume that the government will not simply scrap the reforms. This scheme … This would mean younger workers might accrue pensions on the “old” terms for an additional six years. There are also issues about what would happen with people who retired in the intervening period, or those who started to draw pensions on the basis of ill-health or bereavement, and whether their pensions would need to be adjusted. Public sector unions take government to court over pension reform Judicial review sought over alleged breach of 2015 law, claiming cost benefits should go to scheme members He also highlighted timing as another issue, with the remedy being decided by the employment tribunal while actuaries try to decide new contribution rates – scheduled to be done by Christmas. As part of Government’s effort to reduce the cost of public service pensions to the taxpayer, reforms were proposed to replace existing pensions schemes with new, less … Statement. Sellstrom said that the lack of detail on a remedy was an area for concern, although the government previously estimated that it could add around £4bn per annum to scheme liabilities. The Ministry of Defence said personnel would be updated on the next steps for the department once the details for Armed Forces pensions had … The Treasury could be forced to make extra public sector pension payments of £4bn a year due to a landmark supreme court ruling on Thursday. Further complications could impact higher earners who are affected by annual or lifetime tax relief limits. Further reform of public sector pensions seems inevitable to control cost but risks … But the Government is announcing a pause to the valuations of public service pensions following a court ruling on part of the 2015 pension reforms. She also said that the exact cost of remedy would be decided in conversations between government and the employment tribunal. The ruling, made on Thursday, means three million people, including teachers, nurses, police officers, firefighters and civil servants, are set to recoup an average of £5,600 each. Court of Appeal rules that protection for accrued right and transitional protection arrangements could give rise to unlawful discrimination. Each scheme was changed in different ways in response to individual negotiations between the government and trade unions. For those who would have qualified for basic and/or additional state pensions, it may have been possible to “contract out” of the additional state pension entirely. Most civil servants were moved into the alpha pension scheme. Substantial reversal of PSPR has taken place in recent years and when the PSPR reversal provisions in thePublic Service Pay and Pensions Act 2017are fully in effect from 1 January 2020, only a small number of public service pensions and new pensi… One obvious response would be to scrap the idea of transitional protection and impose the changes on all public sector workers, regardless of age. It is hard to believe that the government would retrospectively cut the pensions they have built up in the past few years. On 27 June 2019, the Supreme Court denied the government permission to appeal the Court of Appeal’s judgment that transitional provisions introduced to the reformed judges and firefighters pension schemes in 2015 gave rise to unlawful … The court upheld a ruling last year that changes made by the government to the pensions of judges and firefighters were unlawful on the grounds of age discrimination. The Treasury’s recent statement said that putting things right would cost around £4bn per year. Millions of public sector workers will have to be compensated, costing around £4billion a year. In December 2018, the Court of Appeal ruled that the ‘transitional protection’ offered to some members of the jud… LCP partner and former Pensions Minister, Steve Webb, added that the statement showed the "massive complexity of unpicking public sector pension reforms" following the court ruling. Sweeping changes to public sector pensions came into effect in 2015 (or 2014 for local government pensions in England and Wales), and these had a significant impact on the way people’s pension entitlements were calculated. Paul Nowak, deputy general secretary of the Trade Union Congress, said: “It’s vital that public sector workers have confidence in the future of their pensions. Reproduction of any part is not allowed without written permission. The consultation follows a landmark court ruling in two legal cases concerning public sector pension schemes for judges and firefighters. Truss’ statement said: “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 remedied across all those schemes. But it seems inconceivable that these could be imposed retrospectively from 2015. The initial complaint was that ‘transitional protection’ – whereby those within 10 years of retirement were exempt from reforms – was unlawful age discrimination. The unions argued that an age cut-off was discriminatory because it meant younger workers faced changes in their entitlements while older workers did not. Public sector pensions Former pensions minister Steve Webb examines the potential implications of a court ruling on workers’ payments, which could leave the new prime minister with a £4bn headache Workers from local government, the civil service, NHS and more will be impacted by a supreme court ruling that found pension changes from 2015 were discriminatory … “Continuing to resist the full implications of the judgment in court would only add to the uncertainty experienced by members.”. Redactive, 17-18 Britton Street, London, EC1M 5TP, valuations on public sector pensions were paused, Treasury outlines McCloud pension remedy proposals, Law firm to challenge ‘less favourable’ pensions for doctors and teachers, Pension ruling leaves Treasury facing £4bn yearly bill, Unison gives green light for 2% local government pay offer, CIPFA/LASAAC local authority accounting code consultation. PSPR is a reduction of certain public service pensions introduced on 1 January 2011 under FEMPI 2010 and significantly extended on 1 July 2013 under FEMPI 2013. News & insight for public finance professionals. Former pensions minister Steve Webb examines the potential implications of a court ruling on workers’ payments, which could leave the new prime minister with a £4bn headache, Last modified on Fri 2 Aug 2019 15.57 BST. The pension prospects of more than six million teachers, nurses, civil servants, local government workers and other public servants are in limbo following a court judgment last year and the government’s subsequent response. This is why we brought forward reforms in 2015, based on the recommendations of the Hutton report, to ensure that these pensions are sustainable in the future. This could add £4 billion to public sector pension scheme liabilities and result in further contribution rate rises, as well as the possibility of scheme re-design and trade … Public sector unions shun govt request to forego salary hike court hearings. But calculations by my colleagues at Royal London have established that some workers have done better out of the new rules than the old ones. The case, initially brought by the Fire Brigades Union and some judges, successfully argued that an overhaul of the Firefighter's Pension Scheme in 2015, which mirrored reforms across the public sector, discriminated on the basis of age as it included transitional arrangements. In terms of process, the government has said it will engage with the employment tribunal to propose remedies for the firefighters and the judges, and it seems likely this approach will then be applied to other public sector schemes. Despite the concession from the government, fund administrators still lack clarity due to the large variety of schemes in play, according to Neil Sellstrom CIPFA advisor for pensions and treasury management. UK public sector pension fund administrators remain in the dark despite the government accepting defeat in a landmark pension ruling, PF has learned. Chief secretary to the Treasury Liz Truss confirmed in a written statement on Monday that the ruling – which initially related to firefighter and judges’ pensions – would apply to all public sector pensions. Court Ruling Protects the Public Sector Pensions. But earlier this month the Treasury announced that it had concluded the judgment did “read across” to all the other public sector schemes where a similar age cut-off had been used. The court today [1] denied the Government leave to appeal against an earlier ruling that pension reforms in 2015 … Ultimately, the court judgment means some public sector workers may enjoy a period of faster pension buildup than they had been expecting. Responding to the judgement, a Treasury spokesperson said: “We are disappointed by this decision. Public Sector Pension Ruling and the Armed Forces On 15 July the Government issued a statement in response to the Court of Appeal’s ruling against it in the McCloud case (the challenge by firefighters and judges to the transitional arrangements that accompanied their new 2015 pensions schemes) and the subsequent Supreme Court decision … As a result, it applied a principle that those closest to retirement (generally within 10 years) should stay on the old rules. As the Government has now accepted the court's findings that the ruling should apply to all public sector pensions, it is to set out a remedy across all public sector retirement plans. “The judgment does not alter the government’s commitment to public sector pensions that are fair to both … This includes schemes for the NHS, civil service, local government, teachers, police, armed forces, judiciary and fire and rescue workers. The Coalition Government introduced reforms to public sector pensions, meaning most public sector workers were moved to new pension schemes in 2015. 29 July 2019. Following consultation with trade unions, the government agreed it would be wrong for those closest to pension age to see last-minute changes to the rules. The government is facing a £17bn ($21bn) bill for handling “unlawful” age discrimination in public sector pensions. 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