McCloud – Prospect welcomes Treasury announcement to rectify discrimination at retirement

4 February 2021

The Treasury has today published their response to their public consultation to remedy the discrimination identified in the McCloud and Sargeant Employment Tribunals.

The Treasury consulted last year on proposals to remedy the ruling that the transitional protections granted to existing public servants when public sector pensions were reformed in 2015, were discriminatory on the grounds of age.

Steve Barclay MP, Chief Secretary to the Treasury issued a written ministerial statement announcing that the proposed deferred choice underpin has been chosen to remedy the discrimination. The Treasury received 3,000 responses from the consultation that were overwhelmingly in favour of the deferred choice underpin. This is the outcome that we argued for in our response, which we encouraged members to submit themselves.

Prospect welcomes the Treasury announcing that a deferred choice underpin has been chosen to remedy the unlawful age discrimination.

We have been clear that the remedy should provide members with the opportunity to make an informed decision, have clarity on their pension benefits and not be in a position of detriment. This remedy meets our criteria.

The announcement confirms all civil servants will contribute to the new schemes from 1 April 2022. The remedy period will therefore be from 1 April 2015 until this date.

Deferred Choice Underpin

The deferred choice underpin will provide members with a choice for their service during the remedy period at retirement. This will enable members to clearly understand what they will receive under either option. For those that have already retired or will retire before the remedy is implemented, members will get a retrospective choice.

This remedy applies to our members in the Civil Service, Fire, Teachers and NHS Pension Schemes who were active members as at 1 April 2012.

Please note there was a separate consultation for the Local Government Pension Scheme (LGPS). The LGPS already operates an underpin, therefore the LGPS consultation was focussed on receiving technical feedback regarding the implementation of the proposals. Read our LGPS submission.

The legal proceedings resulted in a pause to the process to transfer members of by-analogy schemes and the Combined Pension Scheme to the Civil Service Pension arrangements. Once the remedy has been implemented, we are expecting this process to be resumed and will update members in affected branches in due course.

Our FAQs on age discrimination in public sector pensions.

Cost Sharing Mechanism

We are expecting Treasury directions within the next few weeks that will allow the cost sharing mechanism for the 2016 valuations of all public sector pension schemes to progress.

Whilst we welcome the government confirming that no changes to benefit structure will happen in any of the schemes in the event cost ceilings are breached. We are adamant that the costs of the remedy should fall on Government and not scheme members through the cost sharing mechanism.

Prospect, FDA and PCS are united in the view that any breach of the cost floor following the 2016 valuation should result in a reduction to member contributions and we are pressing Cabinet Office on this matter.

Public Sector Pay Freeze and Pensions Update Webinar

Please register to  join our Public Services Pay and Pensions webinar next Tuesday 9 February at 10:00am to learn more about our campaign on ending the pay freeze and how this remedy will impact members.