‘More clarity required’ despite pension ruling

16 Jul 19

UK public sector pension fund administrators remain in the dark despite the government accepting defeat in a landmark pension ruling, PF has learned.

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 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.

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.

“I don’t think there is any more clarity [for fund administrators],” he told PF.

“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.

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.

She also said that the exact cost of remedy would be decided in conversations between government and the employment tribunal.

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.

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.

“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.

He also noted that the impact would vary between funds, with some individual employers being more adversely affected than others.

The initial complaint was that ‘transitional protection’ – whereby those within 10 years of retirement were exempt from reforms – was unlawful age discrimination.

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. This includes schemes for the NHS, civil service, local government, teachers, police, armed forces, judiciary and fire and rescue workers.

“Continuing to resist the full implications of the judgment in court would only add to the uncertainty experienced by members.”

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.

“The government’s commitment to engage with trade unions on the implications of the McCloud judgement is welcome. This engagement needs to be informed by serious scheme-level discussions involving the relevant unions.”

Did you enjoy this article?

AddToAny

Top