16 December 2021

PCS pension campaign – the basics

It is clear that when it comes to the issue of pensions, PCS members are deeply concerned and rightly angry.

Thousands of you have already used our pensions robbery calculator, which sets out in stark detail just how much you’re losing out. The government has done nothing to address the problems and that’s why we’re stepping up our campaigning efforts.

Over the coming weeks and months, you can expect to see content that comprehensively covers the pensions issue and why it’s so important. From the basics to pensions overpayments, to legal challenges, to organising around pensions, this will be the place where you can learn more and arm yourself with the important facts.

In early 2022, we will be holding a consultative ballot on members' willingness to take industrial action on the issues of pensions and pay. Improving the confidence of members to talk about these issues is going to be vital as we build the national campaign.

The basics: pension reforms have left you out of pocket

Age discrimination

In 2015, the government made changes to public sector pensions. The majority of civil servants were moved onto a new scheme called Alpha on 1April 2015. The decision on whether someone was moved onto the new Alpha scheme or could stay in their current scheme was taken based on the age of each scheme member on 1 April 2012. By April 2022, everyone will have been moved on to the Alpha scheme.

Those above the age of 50 were able to stay in their current scheme and not move onto Alpha, because they were within ten years of retirement. Meanwhile, those aged 40 or over would be moved onto the Alpha scheme eventually but not straight away. For everybody else, they were moved onto the new Alpha scheme immediately on the 1April 2015.

This is crucial because some members were disadvantaged by these changes due to a lack of protection when they were transferred from their previous scheme to Alpha. The reverse is also true, as some members who would have been better off on the Alpha scheme were not allowed to join. This was confirmed in 2018 when the Court of Appeal found that the 2015 changes were discriminatory based on age. This is what is known as the McCloud judgement.

The McCloud judgement makes it clear that the Alpha scheme itself and its introduction is not discriminatory. The decision relates to the way members were transferred to the Alpha scheme, which was done purely based on age. This meant some members were better protected than others because of their age alone.

Who is affected?

It’s important to note that the McCloud judgement doesn’t apply to everyone. To be eligible, you will need to have been in the scheme on 31 March 2012 and to have been switched to Alpha on 1 April 2015 or later. This means that you will be part of the remedy group, which is those who lost out and for whom a remedy must be provided by the government. If you joined the scheme after 31 March 2012 the remedy does not apply and you remain in Alpha.

Some members are part of a group of cases known as immediate detriment. This refers to members who are already out of pocket due to having already retired and have therefore been paid a pension and retirement sum smaller than they should be. These cases are most common among members who have retired early due to ill-health.

The remedy

It is now the responsibility of the government to right this wrong. With everyone moving onto the Alpha scheme by April 2022, all members in the remedy group should have the option of having their pension calculated up to this point, according to which scheme produces a better outcome. This remedy will benefit those who moved onto Alpha and were disadvantaged, as well as those who would have been better off moving onto Alpha but were unable to do so.

This choice doesn’t have to be made until the point of retirement and the scheme has agreed to provide the information required to make the choice that suits you best. There are concerns that those who retire before the default remedy process is in place may be at risk of delays and PCS is pressing for improvements in this area.

The government announced new legislation aimed at rectifying the issues. The bill is currently making its way through parliament and will become law in early 2022.

The government will then update the scheme regulations that will enable them to close the old pension schemes and transfer all remaining members onto the Alpha scheme. The regulations will also require the scheme administrators to reopen the cases of all members in the remedy group. The Scheme has indicated that this may be subject to delay which PCS does not believe is acceptable and we are taking legal advice on this.

Most scheme members will not need to take any action for the remedy to be applied as this will happen at the point they retire.

Immediate detriment

For members in the immediate detriment group, PCS has been clear that those affected should not have to wait a day longer to get their proper pension amount. PCS is exploring with our lawyers several High Court test cases to force the government to make the additional pension payments immediately. We will ask members who meet the criteria whether they would be happy to be a test case for the High Court proceedings if selected.

If you have retired early because of health or other reasons, and you know that you are receiving pension benefits that will qualify for the remedy, you should contact PCS via responseteam@pcs.org.uk

You will need to include full details of the finalisation of your pension. 

Pension valuation scheme and your overpayments

As well as the important legal challenges and remedies currently taking place, a key related issue is the 2% overpayments you’re still making into your pensions every month.

In 2018, the pension valuation scheme confirmed that the cost of the pension scheme had been exaggerated by the government. It was therefore recommended by the pension scheme board that monthly employee contributions should be reduced by 2%.

Soon after this announcement, the McCloud judgement was published, including the details of the remedy the government was required to put into action. In an incredibly cynical move, the government announced that the cost of the remedy should be paid by you, the employee. This cost would completely wipe out the benefit from the 2% reduction in payments.

This decision outraged PCS and many other public sector unions. We have now applied for a Judicial Review and we are also having discussions with these unions about joint campaigning on this issue.

Building the campaign

The issue of your pensions robbery isn’t going away, despite the government’s best efforts. As we step up our campaigning on this and the issue of pay, we’re asking you to get involved and encourage others to do the same. And if you haven’t done so, please use our pensions robbery calculator and share your results on social media.