Out-Law News | 28 Aug 2019 | 3:50 pm | 2 min. read
Law firm Leigh Day, which represented a group of judges in their successful challenge to the policy, said that it believed the problem "persists across the public sector". It recently filed a similar claim at the employment tribunal on behalf of around 15,000 police officers, and is now seeking submissions from teachers and doctors too.
Members of the UK's public sector pension schemes were compulsorily transferred to less generous new schemes in 2015. However, scheme members within 10 years of retirement age were permitted to remain on the previous schemes, which the government attempted to justify at the time on public policy grounds and to protect those close to their retirement age.
If the whole basis of the public sector pensions deal agreed in the early 2010s is ripped up, then the government could use this to justify a more radical look at public sector pensions reform and bring the public sector closer into alignment with their private sector compatriots.
In December 2018, the Court of Appeal ruled that the Ministry of Justice had discriminated against the judges on the grounds of age. It also upheld an indirect discrimination claim based on the affected group including a disproportionate number of female judges and judges from Black, Asian and minority ethnic (BAME) backgrounds. The Court of Appeal also found in favour of a group of firefighters on the same issue.
The Supreme Court rejected the government's application to appeal the Court of Appeal's judgment in June 2019.
Pensions experts at Pinsent Masons, the law firm behind Out-Law, said that the issue was both a "generational and procedural one".
"The government's theory was that those closer to retirement had less chance to re-adjust, and therefore needed better protection from the original changes," said Nick Stones of Pinsent Masons. "The problem seemed to be that the government simply did not substantiate this 'hunch' and provided no evidence. In reality, it is the younger members who stand to lose the most from pension changes."
"You would not want to bet against similar issues arising in the private sector, but the key difference is the ability of the public sector to mobilise, and union backing to research and fund the litigation. And a short term windfall for employees may be a long-term loss: if the whole basis of the public sector pensions deal agreed in the early 2010s is ripped up, then the government could use this to justify a more radical look at public sector pensions reform and bring the public sector closer into alignment with their private sector compatriots," he said.
Employers in the outsourcing sector should check the terms of their contracts to see whether they could recoup any additional payments back from their public sector customers.
Pensions expert Stewart Murphy of Pinsent Masons said that, assuming the employees were ultimately successful in their claims, the results "may not all be plain sailing as there may be issues over tax and backdating higher employee contributions".
"Employers in the outsourcing sector should also check the terms of their contracts to see whether they could recoup any additional payments back from their public sector customers, or whether they would need to absorb the extra costs themselves," he said.
In a written statement to the UK parliament in July Elizabeth Truss, then Treasury secretary, said that the government intended to remedy the difference in treatment for younger pension scheme members "across all" the main public service pension schemes, including those for teachers and doctors. Remedying the discrimination will add around £4 billion to scheme annual liabilities from 2015, according to initial estimates.
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