The Teachers’ Pension Scheme (England and Wales) is undergoing a valuation exercise - the first since the implementation of the career average section in 2015. Each valuation exercise leads to a review of the benefits and contribution structure in the light of the valuation of scheme costs and liabilities.
The Teachers’ Pension Scheme valuation had been close to completion before this suspension. The Employer pension contribution was set to rise from 16.4 per cent to 23.6 per cent from September 2019. At the same time the Teachers’ Pension Scheme (E&W) was going to be improved for members from April 2019.
The above has now, however, been partly suspended by the Government following a Court of Appeal decision on age discrimination in relation to transitional protection provisions in the Judges and Firefighters’ pension schemes. The transitional protection in these schemes followed the patterns in other public service schemes. Members within 10 years of their scheme normal pension age (NPA) as at 1 April 2012 had full protection and could remain in their final salary scheme indefinitely. Members between 10 and 13.5 years of NPA had tapered protection which kept them in the final salary scheme temporarily but then moved them to the career average scheme. The closer to the NPA, the greater the length of tapered protection.
The Court of Appeal has ruled against the Government, following decisions in the Employment Tribunal and Employment Appeals Tribunal. The Court of Appeal ruled that the transitional protection offered to some members as part of the implementation of career average schemes constituted unlawful age discrimination. The Government is now seeking leave to appeal this decision to the Supreme Court, but its decision to pause the valuation process in all public sector pension schemes suggests that it does not expect to win any appeal.
The Government seems to accept that the eventual outcome will be that unless it wins an appeal, it must take action in relation to all members of public service pension schemes disadvantaged by protection provisions in order to avoid further litigation. However, it still intends to increase employer contributions to 23.6 per cent from September 2019 despite the valuation process being paused.
The NEU sees no need to take legal action at this point. If the Government loses in the Supreme Court then whatever compensation is deemed payable will be applied automatically to the Teachers’ Pension Scheme (E&W). Any cases launched now would only be paused in Employment Tribunals.
The Government has stated that the employer contribution increase will be funded from September 2019 – April 2020 for maintained schools, academies and further education providers. It does not include the post-1992 universities and the independent sector. Post April-2020 the cost will be subsumed into the Comprehensive Spending Review.