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Pensions update: Government has announced no further action at this time to rectify cost cap.

//Pensions update: Government has announced no further action at this time to rectify cost cap.

Pensions update: Government has announced no further action at this time to rectify cost cap.

Last week, the Government announced it will not be taking further action to rectify the public service pension cost cap breach at this time due to the ‘uncertain impact’ of December’s Court of Appeal (CoA) ruling that the transitional protection provided for older judges and firefighters amount to unlawful discrimination.

 

The Government’s decision to halt the remedy for the cost cap breach means that the higher accrual rate for all existing members of the 2015 CARE Scheme that would have been put in place is now on hold until the judges and firefighters’ case has reached its conclusion. We are disappointed that this positive outcome for our members has now been put on hold.

 

The Government has applied to the Supreme Court for leave to appeal the decision of the CoA, and we expect to hear if this is granted in early summer.

 

It is our view that the suspension of the remedial action relating to the cost cap breach suggests that the Government is moving towards an “industrial resolution” across public sector pension schemes, in keeping with the potential outcome of the judges’ and firefighters’ claims. Potential remedies could alter the liabilities of the schemes, and require them to be reassessed by the Government Actuary’s Department to see where the schemes stand in relation to the cost cap. Our interpretation is that the Government now fears that the higher accrual rate we had agreed as a cost cap remedy will not now be affordable.

 

There are currently a lot of uncertainties, but be assured that anything that has already been accrued by way of pension, and continues to be accrued until any changes are made, is protected. We cannot predict what will happen next: whether the Government’s application to appeal will be accepted, or how they will choose to deal with the potential outcomes of the case. We were in the process of getting legal advice following the CoA ruling, but the cost cap announcement has changed the situation significantly. We hope to have more information for you in the coming weeks and will update you as soon as we know more.

 

In the meantime, however, we need to consider all possibilities, one of which could be the removal by the Government of transitional protections from a future date, but before April 2022. This is a very complicated situation with a number of possible outcomes, and we are working hard to gain further insight and provide further guidance as soon as we can. We understand people’s frustrations and concerns, but it would be irresponsible of us to speculate and provide guidance based on guesswork about the eventual outcome. Currently, our recommendation to members is to not rush into taking decisions and/or actions. The police pension schemes remain better than alternatives.

 

For example, our understanding is that those who are representing the police pension challenge group are inviting officers who have not currently signed up with them to do so now. Our advice is to wait. The Government’s recent moves suggest that it is now planning to take action across the public sector, and implement an industrial resolution. This means it is possible that only the judges’ and firefighters’ cases will be heard in court, as the police pension challenge case has been stayed. In those circumstances, any remedy will cover all impacted members. Even if this proves not to be the case, we believe it would still be possible to lodge a claim. However, we are not taking claims, and any choice to do so remains a personal matter.

 

Alex Duncan

National Secretary

2019-02-19T13:48:10+00:00February 19th, 2019|

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