Public sector pensions may seem different to those in schools, but appearances can be deceiving
Do you use the post-11 April 2015 section of the Teachers' Pension Scheme (England and Wales) or the Scottish Teachers Pension Scheme 2015 for any of your staff?
If so you may be interested in this article about firefighters winning their age discrimination case (the McCloud judgement).
Following this judgement the Government confirmed it will apply whatever changes are needed as a result of this across all the main public service pension schemes that made similar changes (e.g. increased retirement ages, switched to a career average scheme basis and reduced accrual rates).
This includes the Scottish Teachers’ Pension and Superannuation Schemes and in England and Wales the Teachers’ Pension Scheme, regardless of whether any legal claims have yet been lodged.
Employment Tribunal case management discussions for the Firefighters’ and Judges’ cases, and for Police and MOD Police, in England and Wales have now taken place. Final declaration has been agreed for the Judiciary and interim declarations have been agreed for the Police, MOD Police and Firefighters. This means claimants have an entitlement to be treated as members of the appropriate pre-2015 schemes.
The Government has reaffirmed that any necessary changes to pension arrangements will also apply to all public service scheme pension members with relevant service, not just those who have lodged legal claims.
However, given that some members will be better off in the old schemes, and some better off in the new schemes, it is not as simple as putting everyone back in the old schemes. The solution will need to ensure members can keep their accrued rights. The same complexities exist in Scottish schemes as those in England and Wales.
In the public sector it's very likely the Government will pick up the resultant multi £ billion cost of these changes, but as yet we haven’t seen any commentary on the implications for private sector employers/Independent Schools that participate in the Scottish Teachers Pension Scheme 2015 or the post-11 April 2015 section of The Teachers’ Pension Scheme.
It seems inevitable that there will be implications, though: these will likely be mandatory scheme changes to address what has been ruled as unlawful age discrimination, so it’s probably just a matter of time before it filters through to private sector employers, including independent schools.
What happens next?
Now that the legal position has been confirmed, the Government’s appeal request declined and some declarations have been made, the next step is for the relevant Employment Tribunals to prescribe how and when the discrimination will be remedied and changes taken forward elsewhere.
In addition we expect impacted pension schemes to review their contribution rates in light of this judgement, when next scheduled for review in 2023 if not sooner. This is because pre-2015 members typically had higher accrual rates and earlier normal retirement dates than the 2015 schemes. It means there is a significant cost that needs to be covered on an ongoing basis, over and above any remedial payments for memberships from 2015 to date.
We will be continuing to keep a close eye on proceedings to see what our school clients may need to do next.
If you'd like to talk to us about how we can help your school prepare for the changes, just click here to get in touch.