Public Sector Pension Reform In Trouble?

m_c_s

Some of the early feedback seems to be that the Government will compensate rather than return people to the old final salary schemes. If that is the direction and considering the wide spread of possible scenarios including those that may have already left the CARE scheme or retired early things may get quite complicated.
At least we have a definitive decision.

m_c_s

mapleoak wrote: »

Ahh I see (I think) - I was in the Classic scheme and then moved across to Alpha but I wasn’t moved immediately it was “tapered” so I moved after a couple of years. Presumably some were moved immediately with no protection - I suspect if it does cost £4bn the Government will simply insist on further changes as part of their next spending review to pay for it - you don’t get owt for nowt.

This is not just £4bn is it £4bn per annum!

Tromking

m_c_s wrote: »

Some of the early feedback seems to be that the Government will compensate rather than return people to the old final salary schemes.

Hmm. I'm not so sure.
How do you compensate financially for the quite marked differences between final salary and CARE schemes?
One such example is the criteria for ill health retirement, in the civil service at least the rules for granting it are very different.
If this a discrimination issue you have to treat people the same and not just give them compensation surely?

mapleoak

m_c_s wrote: »

This is not just £4bn is it £4bn per annum!

The Government best start watering the magic money tree then as Boris and Jeremy seem to have found a load down the back of the settee :rotfl:

Golactico

Tromking wrote: »

Hmm. I'm not so sure.
How do you compensate financially for the quite marked differences between final salary and CARE schemes?
One such example is the criteria for ill health retirement, in the civil service at least the rules for granting it are very different.
If this a discrimination issue you have to treat people the same and not just give them compensation surely?

Perhaps the Government will offer a ‘buy off’ for all those affected? Along the lines of: ‘We acknowledge the legal position but we will pay you a one-off lump sum of £X now, in return for you agreeing to remain on the post-2015 pension arrangements and that accepting the payment surrenders your rights to any future legal recourse on this matter’.

I suspect that there are an awful lot of public sector workers who are oblivious to this pension ruling and it’s implications, who would be delighted to take a few unexpected quid on offer, just for agreeing to keep their pension arrangements as they currently are.

Personally, I’ve done a few sums based on my public sector pension. Long term, I am actually better off under the post -2015 arrangements, so would happily take any ‘bribe’ the Government want to offer to make me go away.

Dazed_and_confused

You might be better £ wise but isn't one of the negatives to the new schemes that you can't get that money until you are 68?

Instead of say 60 under the old rules.

Golactico

Dazed_and_confused wrote: »

You might be better £ wise but isn't one of the negatives to the new schemes that you can't get that money until you are 68?

Instead of say 60 under the old rules.

That's correct - new pension only claimable at 67 in my case, but the old pension is still claimable from 60. I've done a projection over 25 years from age 60 and I'm better off on the new terms (i.e. effectively 2 pensions, old one claimed at 60 and new one at 67) than I would have been if things hadn't changed in 2015.

Silvertabby

I know that the LGPS is slightly different, in that it kept the final salary link for all pre 2014 service (regardless of age), but when the CARE details were announced my colleagues and I did wonder how long it would last as it seemed to be a very generous scheme.

Bearing in mind that R85 was already on its way out (stopped completely for joiners after October 2006 without too much of a drama) someone who accrues most or all of their benefits under CARE could actually be better off than someone on purely final salary.

Ok, we're talking extremes here, and obviously someone who joins as the office apprentice and leaves 40 odd years later as the CEO will almost certainly have been better off with a final salary scheme - but the vast majority of lower paid LA employees rarely progress above one promotion during their careers. These are the people who will benefit from the CARE better accrual rate of 1/49th and the annual revaluation (CPI) of all pension accrued to date, not just that year.

hugheskevi

A Written Ministerial Statement has been made today - see this link.

Some especially interesting quotes are:

The court has found that those too far away from retirement age to qualify for ‘transitional protection’ have been unfairly discriminated against. As ‘transitional protection’ was offered to members of all the main public service pension schemes, the government believes that the difference in treatment will need to be remedied across all those schemes. This includes schemes for the NHS, civil service, local government, teachers, police, armed forces, judiciary and fire and rescue workers.

The matter will be remitted to the Employment Tribunal in respect of the litigants in the firefighters and judicial pension schemes...Alongside this process, government will be engaging with employer and member representatives, as well as the devolved administrations, to help inform our proposals to the Tribunal and in respect of the other public service pension schemes.

Initial estimates suggest remedying the discrimination will add around £4bn per annum to scheme liabilities from 2015.

m_c_s

The judgment does not alter the government’s commitment to ensuring that the cost of public service pensions are affordable for taxpayers and sustainable for the long term.

For existing younger members there could be a sting in the tail over the next few years. New pension schemes will be introduced and without any transitional arrangements they will be less generous and could be impactful on those nearing retirement.

Remember that the revaluation process was going to make the existing CARE pension schemes cheaper to the employee. This will most likely be scrapped or reformed and whatever the new pension scheme arrangements are the costs of the recent judgment will be reflected in reduced benefits for future employees.
They will still be valuable pensions though.