UK Supreme Court Pension Ruling to Apply to All Public Sector Plans

Government estimates rectifying age discrimination will add approximately £4 billion per year to plan liabilities from 2015.

The UK government has confirmed that a Supreme Court decision to uphold a lower court ruling that changes made to firefighters’ pensions in 2015 discriminated against younger workers, will now apply to millions of members of public sector pension plans.  

The government estimated that remedying the discrimination will add approximately £4 billion per year to plan liabilities from 2015.

In June, The Supreme Court of the UK refused permission for the government to appeal the Court of Appeal’s December ruling that transitional provisions introduced to revamped pension plans for judges and firefighters in 2015 led to unlawful age discrimination.

“The government respects the Court’s decision and will engage fully with the Employment Tribunal to agree how the discrimination will be remedied,” said the UK government in a statement.

The ruling relates to the so-called “transitional protection” offered to some pension plan members when the reformed plans were introduced. In an attempt to ensure people close to retirement age were treated fairly, the government agreed to transitional protection, which allowed members closest to retirement at the time to remain members of their old plans, which provided more generous benefits.

However, the court found that younger workers who were too far off from retirement to qualify for the transitional protection had been unfairly discriminated against. Because the transitional protection was offered to members of all the main public service pension plans, the government said it believes that the difference in treatment will need to be remedied across all those plans.

“This includes schemes for the NHS, civil service, local government, teachers, police, armed forces, judiciary, and fire and rescue workers,” said the government. “Continuing to resist the full implications of the judgment in court would only add to the uncertainty experienced by members.”

The Trades Union Congress (TUC), a federation of trade unions in England and Wales, lauded the government’s response to the Supreme Court decision.

“The government’s commitment to engage with trade unions on the implications of the McCloud judgment is welcome,” Paul Nowak, TUC’s deputy general secretary, said in a statement. “This engagement needs to be informed by serious scheme level discussions involving the relevant unions. It’s vital that public sector workers have confidence in the future of their pensions.”

And The Fire Brigades Union (FBU), a UK trade union for fulltime firefighters, praised the decision by the high court.

“This is a hard-fought victory for the union and more importantly for our members,” Matt Wrack, FBU’s general secretary, said in a statement. “This ruling proves that the government has discriminated against thousands of younger firefighters. They must now rectify the damage they unnecessarily caused.”

According to the FBU, the firefighters’ pension plan was “substantially worsened” in 2015, and it argued that the protection imposed on younger members was unlawful on age, sex, and race discrimination grounds. It said that the 2015 changes meant that younger members had to transfer to “a new and worse plan,” causing “huge financial losses.” The FBU said it initiated more than 6,000 Employment Tribunal claims alleging that the changes amounted to unlawful discrimination.

The matter will now be sent to the UK’s Employment Tribunal in respect of the litigants in the firefighters and judicial pension plans, and it will be up to the Tribunal to determine a remedy.

“Alongside this process, government will be engaging with employer and member representatives, as well as the devolved administrations,” said the government, “to help inform our proposals to the Tribunal and in respect of the other public service pension schemes.”

The government added that, despite the ruling, it still stands by the reasons for the 2015 reforms—that public pension plans are a significant cost for the taxpayer both now and in the future.

“The judgment does not alter the government’s commitment to ensuring that the cost of public service pensions are affordable for taxpayers and sustainable for the long term,” it said.

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