Rights at work: the verdict on pensions

20 March 2020

Colenzo Jarrett-Thorpe, Unite national officer for health, answers your questions about NHS pensions and the McCloud court case that showed how transitional provisions to pensions breached age discrimination law.

What is the McCloud Case?

Groups of firefighters and judges legally challenged changes made in 2015 to their pension schemes.

On 20 December 2018, the Court of Appeal held that transitional provisions introduced in 2015, which provided protections for workers closer to retirement gave rise to unlawful age discrimination. The government’s attempt to appeal to the Supreme Court failed in the summer of 2019.

This case has implications for changes to other public sector pension schemes, including the NHS pension scheme.

What is the current status of the Case?

The Court of Appeal has now referred the matter back to employment tribunals to determine remedy for claimants.

In December 2019, the employment appeal tribunal made an interim declaration confirming that the claimants are entitled to be treated as members of their legacy pension scheme.

Respondent government departments and employers are currently engaging with the employment tribunals and claimants to reach agreement on the steps that will be taken to remedy the discrimination identified by the courts.

The next tribunal hearing will take place on July 2020.

Why were the pension changes discriminatory?

The court found that the transitional arrangements to protect NHS pension scheme members in previous schemes who were closer to retirement age discriminated on the basis of age: it left younger workers in the pension scheme worse off. It is important to stress that it is the transitional arrangements to the 2015 schemes that were discriminatory, not the 2015 scheme itself.

It is important to stress that it is the transitional arrangements to the 2015 schemes that were discriminatory, not the 2015 scheme itself

Have the firefighters and judges received compensation?

The tribunal confirms that those who have been discriminated against can return to their pre-2015 pension scheme, but it is unknown how long it will take for those who have retired since 2015 to get redress – and indeed if they will be better off.

Simply returning all relevant members to the pre-2015 scheme would cause detriment to some members who were expected to be better off in the new scheme.  There will need to be individual calculations to determine this.

Is this judgement relevant to my NHS pension?

Though the verdict is welcome, work still needs to be done with regard to the NHS pension scheme or other public sector schemes.

The government will still have to talk to Unite about ‘applicability’ to other public sector pension schemes, though it has accepted that it is applicable since July 2019.

Does this impact those in Scotland, Wales and Northern Ireland?

Yes. The NHS pension scheme advisory boards that cover the England and Wales scheme, the Scotland scheme and the Northern Ireland scheme met in January 2020. Present were representatives from trade unions (including Unite) and employers.  

The process for compensating NHS pension scheme members was discussed, and HM Treasury proposed that all members who were discriminated against should return to their pre-2015 pension scheme.

We don’t believe this will benefit all those affected uniformly since they may be pension scheme members who could benefit from current arrangements – individual calculations need to be conducted.

Unite and other trade unions were due to have met with HM Treasury officials to discuss matters further on 3 March.

How much could this ruling cost the Treasury?

The rumoured cost of remedy in England and Wales is £4bn, and in Scotland it is £700m.  

What does this mean for my pension?

Before the general election, the government stated that members of all other public service pension 
schemes – including the NHS pension scheme – who are in the same position as the claimants will be treated the same, and that trade unions will be consulted on how this would apply to NHS pension scheme members.

However, as we have suggested, this is not straightforward, as turning back the clock for all relevant members to their pre-2015 scheme would cause detriment for those members who expected to be better off in the new scheme.

Who will this affect?

  • If you are a long-term member of the NHS pension scheme prior to 2015 with no immediate prospects of retirement (born after September 1965). This judgement will affect you since you would have been discriminated against.
  • If you have already retired (since April 2015). This judgement will affect you because you may have suffered a detriment.
  • If you are considering retirement in the short and medium term. This judgement will affect you, but calculations will need to be made regarding the detriment you may or not have suffered.
  • If you have joined the scheme post-2015, it is likely that you will be unaffected.

Please note that if you are a NHS pension scheme member retaining special class status, you will have to check how this judgement affects you and your retirement age.

What are the potential benefits/risks?

Some members may be substantially better off as a result of compensation from this ruling, although this will depend very much on the individual’s circumstances and choices that they have made around their pensions.  

There are also substantial risks, including the government seeking to force through further changes and cuts to public sector pensions that could be detrimental to many people.    

For more information

Image credit | iStock


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