There have been some very important developments affecting the civil service pension schemes. These include the successful legal challenge taken by the Fire Brigades Union (FBU) against unlawful age discrimination in the transition to new pension schemes which were introduced by the Tory/LibDem Coalition government and the 2018 scheme valuation which showed that future costs. Here are the answers to some of our members' frequently asked questions.
What impact does the FBU ruling have on civil servants?
In 2015, the government imposed detrimental changes on civil service pension schemes, meaning that civil servants now have to work longer, pay more and get less. However, the government also decided to put in place transitional arrangements which limited the impact of the changes on those closer to retirement. The FBU ruling has found that these transitional arrangements discriminate on grounds of age.
On 15 July the then Treasury minister, Liz Truss stated that the government now accepts the legal judgment about age discrimination in the transitional protection arrangements, and that:
“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 statement specifically said that the civil service and other pension schemes are included in this overall position which must be remedied.
The specific remedy in the FBU (McCloud) case will be decided at the Employment Tribunal and may not be known for some weeks. Meanwhile, talks with the Cabinet Office and the Treasury will cover the remedy issues for the Civil Service Pension Scheme.
At a meeting with the Cabinet Office on 18 July, PCS demanded that the remedy involves 6 key points as below:
- No detriment to members’ existing pension entitlement.
- Choice for members to ensure their pensions are maximised.
- An outcome which means all those not included in transitional protection will be better off
- Full attention to equality requirements, including impact assessments.
- Commitment to full negotiations on all aspects
- The recommendations for remedies about the valuation outcome (Cost Cap breach) must be implemented now, giving members at least 2% contribution reductions and benefit improvements.
Both the Treasury and Cabinet Office have agreed that already accrued rights of individual members to their pension entitlements cannot be taken away – therefore we believe that these 6 points must form the basis of the settlement reached in relation to this case. Any remedy must maintain or improve on the current position and no detriment can arise from this process.
What does the over-valuation of the civil service pension scheme mean?
When the government introduced the detrimental changes in 2015 they also wanted to ensure that if the costs of pensions increased that staff would bear the additional costs either through higher contributions and/or reduced benefits. However, in order to present this as “cost sharing” they were forced to accept concede that this would work both ways and that if the costs of the pension scheme decreased then staff would benefit through lower contribution rates and/or improved benefits. The 2018 pension valuation has in fact shown that the civil service pension schemes are now significantly overvalued.
What could be the impact of the valuation on my pension?
The extent of the overvaluation is such that pension scheme members should receive a reduction in pension contributions of around 2% and improved benefits. PCS has met with the Cabinet Office and Treasury and has demanded that the government acts immediately and implement reduced contributions and/or improved benefits.
Why haven’t I benefitted yet from “cost sharing” ?
After exploratory talks had begun the government suspended the process using the unknown cost of the FBU judgement as a pretext. As it could take many months for the impact to become clearer PCS is arguing strongly with both the Cabinet Office and the Treasury that the suspension of the cost sharing arrangement must be lifted now. It is outrageous that our members continue to pay contributions at a higher rate than necessary and it breaks a public commitment that the arrangements in the 2015 pensions would not be changed for 25 years.
How is PCS campaigning on pensions?
PCS continues to campaign with other public service trade unions and the TUC, and we argued for our position in clear terms at a TUC organised meeting of these unions with Treasury Officials on 23 July.It was agreed that, as the picture becomes more defined and specific, further meetings will take place both on the general position across public service schemes but also for each sector.