Pension ruling leaves Treasury facing £4bn yearly bill

28 Jun 19

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.

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.

Chief secretary to the Treasury Liz Truss estimated in February that an adverse outcome in the case would end up costing the government £4bn per annum.

In 2015 pension changes made by the government meant that younger judges and firefighters were moved from a defined benefit pension scheme to another one, which the Fire Brigades Union claim was worse.

In 2018 the court of appeal sided with the judges and firefighters, in what became known as the McCloud judgement, arguing this change was discriminatory on the grounds of age, race and equal pay.

The government launched a subsequent appeal, resulting in this week’s decision by the supreme court, which said the government had not raised an arguable point of law.

Matt Wrack, FBU general secretary, said that his colleagues had been “vindicated”.

He added: “We never gave up on our fight for justice, and we are delighted that our perseverance has paid off.

“This ruling proves that the government has discriminated against thousands of younger firefighters. They must now rectify the damage they unnecessarily caused.”

The Treasury previously announced that it would pause valuations on public sector pensions while the legal proceedings were ongoing. The department did not comment on what the next steps were for valuations.

PF previously learned that the decision to halt valuations would cause “uncertainty” for pension fund administrators.

The GMB union said that the government had stopped paying back pension contributions worth £2.4bn for four million public sector workers following the aftermath of the McCloud judgement – and should now resume payments.

George Georgiou, GMB national pensions organiser, said: “Ministers have been doing everything they can to avoid paying back an estimated £2.4bn they owe dedicated public sector workers’ pension pots.

“They should be ashamed of themselves – they are taking money from the people who keep our health service, councils and government running.

“The government should take today’s ruling as an opportunity to do the right thing and pay up what they owe.”

A Treasury spokesperson said: “We are disappointed by this decision. The government will now consider how best to compensate those affected by the judgment as part of the court process.

“The judgment does not alter the government’s commitment to public sector pensions that are fair to both workers and taxpayers.”

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