The McCloud/Sargeant Ruling and the 2015 Remedy FAQs
Why did the governments reforms to the main public service pension schemes lead to discrimination?
Following negotiations with the Trade Unions, the 2015 public service pension schemes reforms included a policy of transitional protection. This meant members closest to retirement stayed in their legacy scheme as they had the least amount of time to prepare for the changes.
The Court of Appeal later found this policy to be discriminatory against younger members in some schemes. Following the ruling the government confirmed that it would take steps to address the discrimination in all affected public service schemes.
What steps has the government taken so far to address the discrimination?
The government set out two proposals in a public consultation in July 2020 to gather views on which proposal would be better to remove the discrimination.
Since the public consultation closed in October 2020, the government has been working through all the responses and has now published its response setting out its final policy decisions. The government will address the discrimination through a ‘deferred choice underpin’ which will allow eligible members a choice when they retire, of which pension scheme benefits they would prefer to take for the remedy period.
What is a deferred choice and why has the government chosen this approach?
Eligible members who were moved to the reformed career average (CARE) pension scheme in 2015 (or later if they had tapered protection) will be moved back into their legacy (final salary) pension scheme for the remedy period, between 1 April 2015 and 31 March 2022.
When those members, or members who were originally protected, reach retirement, they will then receive a choice of which pension scheme benefits they would prefer to take for the period. This is called a ‘deferred choice’.
The choice will be between the members legacy (final salary) pension scheme and their reformed career average (CARE) pension scheme.
By deferring the choice until retirement, it allows individuals to make a better informed choice as to which pension scheme benefits are better for them. This will be based on facts and known circumstances as opposed to assumptions. The value of both pension schemes will be known at retirement.
Who is in scope for these pension changes and will receive the ‘deferred choice underpin’?
Individuals that meet the following criteria are in scope of the changes:
Were members, or eligible to be members, of a public service pension scheme on the 31 March 2012;
were members of a public service pension scheme between 1 April 2015 and 31 March 2022; and
the two periods above were continuous (or treated as continuous under the scheme regulations, including those with a qualifying break in service of less than 5 years).
Why is the government asking members to choose between their legacy and reformed pension scheme? Aren’t all members better off in the legacy schemes?
The differences between the legacy and reformed pension schemes mean the set of benefits that is best for members depends on personal circumstances and preferences. This is why the government is providing members with a choice, to ensure they can choose which scheme benefits are better for them.
We will provide information to members setting out their entitlement under both options, so members will have a clear understanding of the benefits available to them.
Why isn’t the government just returning everyone to their old schemes?
The government cannot simply place all members into their legacy scheme without allowing them access to their reformed scheme benefits, because some members are better off in the reformed schemes.
What was the other proposal set out in the consultation and why didn’t the government choose that approach?
The other proposal set out the consultation was called an ‘immediate choice’ which would allow members to choose which pension scheme benefits they would prefer to take for the period between 2015 and 2022 soon after the point at which schemes implemented the changes.
While this approach would have resolved the issue sooner and provided individuals with more certainty around pension benefits, it would have placed higher risk on the member. This is because they would be basing their choice around assumptions on their future careers, health, retirement and other factors, rather than the facts and known circumstances that will apply at the point of retirement. This would have meant some members may have been much more likely to have chosen the scheme benefits that did not turn out to be best for them.
Why is the period when members will be receiving a choice of which pension scheme benefits they would prefer only between 2015 and 2022?
1 April 2015 was the date the reforms were introduced, and 31 March 2022 will be the point at which the legacy schemes will be permanently closed to future accrual.
Do members need to submit a legal claim to receive any pension changes to address the discrimination identified by the courts?
No, members do not need to submit a legal claim to receive any pension changes. The government has committed to applying these changes across the main public service pension schemes and so eligible claimants and non-claimants will receive the pension changes.