PENSIONS
The McCloud judgement
MathewAkriggACIPP, policy and research officer at the CIPP explores the complexities of theMcCloud judgement, and how this impacts public sector pensions
B y now you may have heard terribly exciting, it is extremely important. What does this mean for payroll, pension schemes and what else does it affect? While the schemes involved are for public sector employers, there are aspects of the judgement that may be important to consider in other areas of employment law. about the McCloud judgement. Although case law is not always This situation is far from over, further litigation is likely to come of this and, in fact, already has What happened to cause all the fuss? To answer that, we must go back to 2010, when the coalition government organised for an Independent Public Services Pension Commission to review public sector pensions. The report, released in March
2011, ahead of the budget, recommended the final salary scheme be replaced by a career average earnings scheme. The plan was to move existing members across to the new scheme once this had been set up. They also advised to link normal pension age to the state pension age to mitigate against life expectancy risks, apart from schemes for uniformed services which would sit at 60. The government accepted the Commission’s recommendations and put the Public Service Pensions Act 2013 into legislation. The Commission stated it was ‘not possible in practice to provide protection from change for members who are already above a certain age.’ However, on 11 November 2011, the chief secretary to the Treasury, announced age-related transitional and tapered protection would be introduced. He said: “I have listened to the argument that those closest to retirement should not have to face any change at all. That is the approach that has been taken over the years in relation to increases to the state pension age, and I think it is fair to apply that here too. […] No-one within ten years of retirement will see any change in when they can retire or any decrease in the amount of pension they receive.” This is taken from: http://
ow.ly/2sXb30s6WSZ. Transitional protection meant that members within ten years of normal pension age would stay in their existing schemes. Members between ten and 13.5 or 14 years of normal pension age could stay in schemes for a brief period – this was tapered protection. All other members would be required to make the change to the new 2015 reformed scheme. These protections are what caused an issue and all the ‘fuss’.
What was the McCloud judgement?
Members of the judges’ (McCloud) and firefighters’ (Sargeant) pension schemes argued in the employment tribunals (ETs) that transitional protection given to older members was unjustified direct age discrimination. In December 2018, the Court of Appeal ruled that the transitional protection offered to older members did constitute age discrimination. The government confirmed that, even though the case related to the judicial and firefighters’ pensions, the judgement will affect the main public service schemes managed by the government (responsibility may be devolved for
| Professional in Payroll, Pensions and Reward | February 2022 | Issue 77 32
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