Public Sector Pension Reform In Trouble?

jimi_man

Paul_Herring wrote: »

Simplistically, I can only see the ruling being applicable if greater than 50% of current employees are subject to the same exemptions as the judges - i.e. within 10 years of retirement and totally exempt, or 51½-55 and given transitional exemption, thus making a minority of the rest of the workforce at a disadvantage.

Since I don't believe the demographics of either NHS or prison service are anywhere like that criteria, I think they'll have to find another argument to fight this on.

In law discrimination doesn't work like that. The result would be the same if 99% were affected or if 1% were affected.

BobQ

Paul_Herring wrote: »

Simplistically, I can only see the ruling being applicable if greater than 50% of current employees are subject to the same exemptions as the judges - i.e. within 10 years of retirement and totally exempt, or 51½-55 and given transitional exemption, thus making a minority of the rest of the workforce at a disadvantage.

Since I don't believe the demographics of either NHS or prison service are anywhere like that criteria, I think they'll have to find another argument to fight this on.

But such schemes in the rest of the public sector are like that when they introduced a higher retirement age. In the civil service those given preferential treatment were in the 50-60 age group and those 47-50 were given transitional protection. Those under 50 will almost certainly have a greater proportion of female and BME and will be a majority of the workforce.The same is probably true of the NHS and Teaching profession.

The rationale for the different treatment probably had nothing to do with the age as such, it was simply to ensure that those closest to retirement were not disadvantaged by having a change sprung on them so close to retirement. However, that does not make it fair.

hyubh

jimi_man wrote: »

In law discrimination doesn't work like that. The result would be the same if 99% were affected or if 1% were affected.

The '10 years within NPA in 2012' thing was just something done for every public sector scheme, albeit not necessarily in the form of keeping oldies in the old version of each scheme (in particular, the LGPS got an underpin instead). Is the implication that no transitional protections are better than some? (Genuine question... if I've put things too crudely, I'm all ears for the reason!)

Tromking

I think the claimants in this case were the younger judges who weren't allowed to remain in their original scheme and maybe also not covered by any transitional arrangements. I could be wrong though.

jimi_man

hyubh wrote: »

The '10 years within NPA in 2012' thing was just something done for every public sector scheme, albeit not necessarily in the form of keeping oldies in the old version of each scheme (in particular, the LGPS got an underpin instead). Is the implication that no transitional protections are better than some? (Genuine question... if I've put things too crudely, I'm all ears for the reason!)

Yes, exactly that. The Transitional Protections were put in place, largely to appease the unions. They were an offer by The Treasury Secretary to the TUC during the negotiations, in an attempt to stave off a load of strikes. The original Hutton proposals didn't contain any such protections; it was recommended that everyone should go straight on to the new pension scheme and according to the judge's conclusions, that wouldn't have been discriminatory.

Ironically, in trying to do the right thing and appease the unions, it seems that by putting in these Transitional Protections, they have fallen foul of discrimination, hence why the judges won. The Fire Service are currently in the final part of their case and the Police also have one lined up fairly soon after. One assumes that they will follow in a similar fashion as they are more or less based on a similar premise.

One wonders how the Govt will resolve the matter. Interesting times.

Andy_L

hyubh wrote: »

The '10 years within NPA in 2012' thing was just something done for every public sector scheme, albeit not necessarily in the form of keeping oldies in the old version of each scheme (in particular, the LGPS got an underpin instead). Is the implication that no transitional protections are better than some? (Genuine question... if I've put things too crudely, I'm all ears for the reason!)

AIUI "a little bit" of discrimination is allowed to meet the legitimate aim of reforming the pension. However in the case of the judges the difference is worth ~£30k pa which exceeds "a little bit". In the other schemes the difference isn't as drastic so might be legal.

jimi_man

Andy_L wrote: »

AIUI "a little bit" of discrimination is allowed to meet the legitimate aim of reforming the pension. However in the case of the judges the difference is worth ~£30k pa which exceeds "a little bit". In the other schemes the difference isn't as drastic so might be legal.

Again, not correct. You can't have 'a little bit of discrimination'!! (Ok, what we're doing is unlawful, but only 'a little bit', so it's fine, don't worry!)

The legislation is quite specific around discrimination, you cannot discriminate whatsoever, by reason of age, unless it can be justified as being a proportionate means of meeting a legitimate aim, which is maybe what you were thinking of. But it's nothing to do with a 'little bit of discrimination'. If it can be justified, then you can discriminate - period.

In terms of who was affected the most, a recent study found that the NHS and Local Government and Civil Service came out the best, teachers, slightly worse, and the Fire Service and Police were the most heavily affected - they lost up to around 40% of their pensions.

hyubh

jimi_man wrote: »

The Transitional Protections were put in place, largely to appease the unions. They were an offer by The Treasury Secretary to the TUC during the negotiations, in an attempt to stave off a load of strikes.

Transitional protections are hardly specify to the 2014/15 public sector pension reforms. Private sector DB changes include have included, to state the obvious,

- Closing a DB scheme to new entrants
- Capping rises to pensionable pay to inflation
- Closing a DB scheme to future service accrual, but keeping a final salary link or some other sort of special benefit for 'closure deferreds'
- Closing a DB scheme to any sort of future accrual, but giving closure deferreds an extra special DC contribution instead.

All of these are 'discriminatory' to younger employees. How can transitional protections on a final salary scheme being dismantled not be?

The original Hutton proposals didn't contain any such protections; it was recommended that everyone should go straight on to the new pension scheme and according to the judge's conclusions, that wouldn't have been discriminatory.

Great, hopefully sanity will prevail then - use this to cap spiralling liabilities for all!

In terms of who was affected the most, a recent study found that the NHS and Local Government and Civil Service came out the best, teachers, slightly worse, and the Fire Service and Police were the most heavily affected - they lost up to around 40% of their pensions.

That study (if it's the one I think it is) was rather dubious - the authors took as their benchmark a point before the 2006/2008/2009 changes, i.e. when new joiners to the FPS and PPS no longer had their respective 30 year scheme available (the difference between the 1987 police/1992 fire and 2006 police and fire schemes was much larger than that between the 2006 and 2015 schemes, and with fire there was also a sharp tightening of ill health/injury provisions at the same time).

jimi_man

I think the authors of the study just took the worst possible stance, though with an average retirement age of 51, they were always going to feel the pinch.

I agree, should have let Hutton's proposals be introduced without being watered down. It would have been the fairest for everyone and avoided all this (expensive) litigation. That's unions for you.

jamesd

Yes, it does seem that the unions sought and obtained transitional protections that discriminated against the majority of their members on the basis of their age. Outrageous that the unions which were supposed to be looking out for them argued so hard and even got those members to strike in favour of being discriminated against.

I do wonder though: what percentage of the union negotiators and executives were in the group that was to benefit from the discrimination?

Meanwhile, things have moved on in a particularly notable way: the single tier state pension allows those who have been in contracted out pension schemes, notably almost all public sector employees, to continue accruing more state pension benefits long after those not contracted out ceased to accrue. In effect this has delivered substantial additional pension benefit to the public sector members who are fairly close to retiring and the gain will for some time increase in proportion to how greatly affected their members are.