The government has announced a public consultation seeking views on how to remove the discrimination caused by the transitional protections
This meant older members of the Teachers’ Pension Scheme (TPS) remained in the Final Salary Scheme or delayed joining the CARE scheme when younger members transferred into the CARE Scheme in April 2015. The consultation seeks the views of stakeholders and can be found here. The consultation closes on 11 October 2020. The NEU will be responding to the consultation. The response will be placed on the website when available to aid members if they wish to make their own submissions.
Of the two options presented in the consultation, the NEU favours the ‘Deferred Choice Underpin’ (DCU). The key advantage of the DCU is that the choice is made at the point of retirement, so the decision is based on known facts rather than assumptions about the future.
The NEU can confirm that no member of the TPS will suffer a detriment and the options proposed in the consultation are based on giving eligible members affected by the discrimination a choice between Final Salary Scheme benefits or CARE Scheme benefits for the relevant period 2015 to 2022. The option that produces the best results will be applied. It is proposed that all members of the TPS will join the CARE Scheme from 2022.
The Court of Appeal decided that protection arrangements in the pension schemes for judges and firefighters constituted unlawful age discrimination against younger scheme members who were excluded from protection. The Government was refused leave to appeal this decision to the Supreme Court. The case has being returned to the Employment Tribunal, which will determine compensation.
The protection arrangements in those schemes were similar to those in other public service schemes (many of which were agreed by the unions concerned). Members who were less than 10 years from their scheme’s normal pension age (NPA) as at 1 April 2012 were given full protection, which allowed them to remain on their existing final salary pension arrangements until retirement. Members who were between 10 and 13.5 years from NPA were given tapered protection, which allowed them to remain on final salary arrangements for a limited period but then moved them onto the new career average pension arrangements.
The Government has stated that the position established in these cases will be applied to all public sector schemes. Compensation will also therefore be applied to members of the Teachers’ Pension Scheme (E&W) and Local Government Pension Scheme (LGPS) who were denied protection. Compensation for members in the LGPS will be different owing to the different benefit structure.
It is also not clear what impact this will have on the future of public service pension schemes going forward, given that the payment of compensation is an obvious additional cost. The Teachers’ Pension Scheme (E&W) was due to implement improvements in member benefits from April 2019 following its four-yearly actuarial valuation, but this was paused by the Government until the outcome of the compensation issue was known. As this can now be assessed, the cost control element of the 2016 valuation can now be finalized. HM Treasury will set out the technical detail in directions and the valuation process for 2016 will be completed. Other public sector pension schemes are in a similar position. The NEU and other unions are continuing to press the Government to implement the improvements which were due. Given the Government’s undertaking at the time of the 2015 changes that the schemes would not be subject to further political changes for a 25 year period, the NEU will not accept any attempt to worsen the schemes in order to recoup the cost of compensation or for any other reason.