The chief secretary to the Treasury announced in January 2019 that the valuations of all the public sector pension schemes were ‘paused’ because of uncertainty caused by the Court of Appeal’s ruling on McCloud in December 2018.
The Court of Appeal ruled that the ‘transitional protection’ offered to some members of the judges’ and firefighters’ schemes, as part of government pension reforms in 2015, gave rise to unlawful discrimination.
Because of the pause to the valuations, the Cabinet Office introduced a temporary ‘rollover’ of contribution rates for 2019/20.
The Cabinet Office now intends to rollover contribution rates for another year.
Prospect deputy general secretary Garry Graham said: “Prospect is opposed to the continued rollover of contributions.
“We believe the minister should follow the Scheme Advisory Board’s advice to resume the valuation and introduce the SAB’s recommendations on the ‘cost cap mechanism’.”
The cost control mechanism was introduced to offer taxpayers and employees protection from unexpected changes in pension costs.
Graham pointed out that if the government implemented the SAB’s recommendations, scheme members would have benefited from at least a 2% reduction in contributions from April 2019, improved accrual, a progressive contribution structure and improvements to death benefit.
“This issue which unites all our members across government. Prospect has worked hard to build a consensus among unions and employer representatives on the SAB to achieve a fair and balanced outcome on the cost cap.”
Prospect made these points in its response to the Cabinet Office’s consultation on amendments to the regulations for member contributions.
The original contribution rates up to 31 March 2019 were set out in legislation. The expectation was that new contributions would be tabled for the next four years.
“The government paused the valuations when there was still uncertainty over McCloud case.
“But that uncertainty ended in July 2019 when the Supreme Court ruled that the government could not appeal the McCloud case.
“We believe the continued ‘pause’ of the valuations is not justified and may be unlawful. We are engaging with unions across the public sector on the appropriate collective action on this.
“We welcome the change to the assessment of the member contribution tier because this solves the injustice of our members having to pay a higher tier of contributions because they’ve received back pay.
“The chief secretary to the Treasury is responsible for public sector pensions policy.
“We will write to him and call on the government to resume the valuations of all public sector pension schemes and introduce the SAB recommendations on member contribution rates, death benefits and accrual,” Graham concluded.
You can read our submission to the Cabinet Office here.
You can find background on the McCloud judgment here.