In 2010 the coalition government commissioned Lord Hutton to review public sector pensions. In his final report in 2011 Lord Hutton recommended that the existing final salary pension schemes should be closed and a new pension scheme made available for public sector workers.
After a series of consultations the government enacted Lord Hutton’s recommendations by the Public Service Pensions Act 2013 (this is known as primary legislation). The primary legislation required the restriction of existing final salary schemes, however, by virtue of paragraphs 5 to 7 certain members could be protected and retain the rights to their previous scheme.
The Firefighters' Pension Scheme regulations 2014 provided this protection under Part 2 and Part 3 of Schedule 2. This gave protection to all members of the scheme who would be 55 by 31 March 2022. It also provided for tapered protection, which meant that members were protected in their original scheme on a tapered basis depending on age until 31 March 2022. Anybody who did not qualify for protection or tapered protection was immediately moved into FPS 2015 scheme.
A legal challenge was bought by the Fire Brigades Union (FBU) on behalf of FPS members on whether these protections constituted direct age discrimination, and indirect race and sex discrimination.
The legal argument primarily centred on two premises:
- Did government have a legitimate aim in providing protection and tapered protection, and
- Was the aim achieved proportionately
Employment Tribunal [ET] heard in January 2017
The case was first heard by the ET in January 2017. The judge deciding the case determined that the government did have a legitimate aim and that this was achieved proportionately. However, just before the firefighters' case was heard a similar case for members of the Judiciary Pension Scheme had been heard in November 2016. In that case the judge had determined that there was no legitimate aim and it was not proportionate.
Judgment of the Employment Tribunal 14 February 2017 (PDF, 44 pages, 2,270kb)
Employment Appeal Tribunal [EAT] heard in December 2017
As the issues in both cases were similar the EAT decided to hear the case together, albeit considering each scheme under its own merits. This case was heard in December 2017. The judge decided that for judges [McCloud] the government did not have a legitimate aim and the effects were not proportionate, and for firefighters [Sargeant] the government did have a legitimate aim, however, the case law supporting the decision on proportion was based on EU law and the judge should have considered based on UK law.
Judgment of the Employment Appeal Tribunal 29 January 2018 (PDF, 41 pages, 159kb)
Court of Appeal [CoA] heard in November 2018
The case was appealed again and was heard by the CoA in November 2018. This time it was heard by a panel of three judges and again the judges heard both the judges' and firefighters' cases at the same time. The Court found that, having introduced the protections, the government should have justified the discriminatory impact but that it had failed to do so, and therefore justification on the grounds of legitimate aims must fail. As a result they dismissed any further deliberation over the question on proportionality of means. The CoA dismissed any right to automatically submit an appeal to the Supreme Court, and the government made an application to the Supreme Court seeking permission to appeal the Court's decision.
Judgment of the Court of Appeal 20 December 2018 (PDF, 70 pages, 698kb)
On 27 June 2019 the Supreme Court denied the request for an appeal and the claimants' cases were remitted to the ET to determine remedy.
On 15 July 2019, the government made written statement HCWS1725 accepting the Court’s decision and confirming their intention to engage with the ET to agree remedy. The written statement confirmed that remedy would apply across all public sector schemes, and the government also confirmed their intent to extend the same treatment to all members, who are in the same legal and factual position as the claimants, whether they are claimants or not.
An interim order was made by the ET on 18 December 2019 which stated that claimants would be treated as satisfying the age criteria regardless of their actual age, thereby providing protection to those members to be treated as members of FPS 1992, as long as they met the other criteria, which was to have been in the scheme at 31 March 2012 and 31 March 2015. An employer’s circular from the National Employers was sent to FRAs informing of the detail. At that time, the Home Office also provided a Sargeant factsheet which could be issued to members.
In order to remedy age discriminatory treatment across public sector schemes by removing the discriminatory treatment while protecting members who may have been better off in the reformed schemes, HMT committed to launching a formal consultation in 2020. Ahead of that formal consultation, the Government engaged informally with public sector Scheme Advisory Boards via a series of technical discussions.
On 25 March 2020 the Economic Secretary to the Treasury, John Glen, made written statement HCWS187 regarding progress toward remedy in public service pension schemes following the age discrimination case. The statement confirmed that no qualifying scheme member will need to make a claim for the remedy to apply to them.
A detailed background to the 2015 pension reforms and subsequent legal challenges is available in Commons Research Briefing SN05768.
The HMT consultation references at paragraph 1.21 the informal technical discussions held with scheme administrators and employer and member representatives earlier this year. The Firefighters' Pensions (England) Scheme Advisory Board has published its informal response dated 2 April 2020 to those technical discussions.
Within the response the Board highlighted the following points:
- The lack of information available to them in order to fully assess the impact of the proposals, including at that time no mention of post remedy plans
- The considerable challenge administrating the remedy would present to locally administered unfunded schemes
- Concern that a default to the final salary scheme, may not be appropriate for some members in the FPS 2006
- An immediate need for guidance on processing immediate cases
The formal HMT consultation was published on 16 July 2020 with a closing date of 11 October 2020. The paused employer cost-cap process will also resume. The consultation and associated documents are available below.
|Public Service Pensions Consultation and Update: written statement HCWS380||(HTML)||16 July 2020|
|Public Service Pensions Consultation||(PDF, 74 pages, 851kb)||16 July 2020|
|Public Service Pensions Consultation - questions||(PDF, 2 pages, 97.7kb)||16 July 2020|
|Public Service Pensions leaflet||(PDF, 3 pages, 63.1kb)||16 July 2020|
|Public Service Pensions Equality Impact Assessment||(PDF, 38 pages, 378kb)||16 July 2020|
|Update on Cost Control Element of the 2016 Valuations||(PDF, 2 pages, 95.8kb)||16 July 2020|
|Home Office McCloud - Sargeant consultation FAQs||(PDF, 5 pages, 215kb)||16 July 2020|
|GAD technical bulletin - Public Service Pensions update||(PDF, 3 pages, 376kb)||July 2020|
|Home Office immediate detriment note||(PDF, 6 pages, 830kb)||21 August 2020|
|Stakeholder information note on HMT consultation proposals||(PDF, 8 pages, 240kb)||1 October 2020|
|LGA response to the HMT consultation on changes to the transitional arrangements of the 2015 Public Service Pension Schemes.||(PDF, 23 pages, 285kb)||9 October 2020|
|SAB England response to the HMT consultation on changes to the transitional arrangements of the 2015 Public Service Pension Schemes.||(PDF, 65 pages, 741kb)||9 October 2020|
|SAB Wales response to the HMT consultation on changes to the transitional arrangements of the 2015 Public Service Pension Schemes.||(PDF, 9 pages, 425kb)||9 October 2020|
|SAB Scotland response to the HMT consultation on changes to the transitional arrangements of the 2015 Public Service Pension Schemes.||(PDF, 11 pages, 274kb)||9 October 2020|
|LGA immediate detriment information note for FRAs||(PDF, 11 pages, 296kb)||26 October 2020|
|Immediate detriment matrix||(xlsx, 22.7kb)||26 October 2020|
FRAs will also have employees who are members of the Local Government Pension Scheme (LGPS). As the LGPS is a funded scheme and members within 10 years of retirement at 2012 were protected in a different way, the Ministry of Housing, Communities & Local Government (MHCLG) are consulting separately on changes to that scheme. More information can be found on the McCloud page of the LGPS SAB website.
On 16 September 2020 GAD published a special feature: GAD support for McCloud remedy, detailing the support they have been providing to clients as they navigate the complexities falling out of the age discrimination judgments in McCloud and Sargeant.