Today, the Treasury and the Ministry of Defence have issued communications on the public service pensions consultation which is the next stage in the process to remove the discrimination identified by the courts in the 2015 pension reforms.
We welcome the public consultation, which seeks views on two issues:
First, which of two options to correct the age discrimination between the period 1 Apr 15 and 31 Mar 22 is preferred, either:
- Immediate Choice (a decision based upon your likely future pension benefits using assumptions and possible future career outcomes) or;
- Deferred Choice Underpin (a decision based upon your actual pension benefits earned, calculated towards the end of your service using factual information, with the right to do so ‘underpinned’ by legislation) and;
Second, transferring all active members to the reformed 2015 schemes on 31 Mar 22. For those who may be unfamiliar with this issue, here’s a brief summary:
- in Jul 19 the transitional arrangements that allowed some older members to remain on their legacy schemes whilst the younger members were made to move to new 2015 schemes was ruled discriminatory on grounds of age;
- for members of the Armed Forces Pension Scheme (AFPS) this affects those who were in service on or before 31 Mar 12 and on or after 1 Apr 15. (This wider ‘net’ now includes those with a qualifying break in service of less than 5 years).
- the ‘remedy’ is not as simple as putting everyone back into their old pension scheme because whilst this might be attractive to some, others will have benefitted from the switch to AFPS 15;
- there are some who were denied the option to transfer to the 2015 Scheme that may have chosen to do so;
- the MoD has stated that for the remedy period it will ensure all eligible Service Personnel will keep their accrued benefits.
The Forces Pension Society will apply the following 3 ‘tests’ to the Government’s proposed remedy when considering our response. These are that the remedy:
- unequivocally addresses the age discrimination contained in the 2015 Scheme’s transitional arrangements;
- in relation to the remedy period, provides the Member with the same unequivocal assurance that no one will be worse off and that those with accrued benefits will keep them;
- provides the Member with the full understanding and opportunity to make informed decisions about their financial future.
The public consultation period starts now and will last until mid-October 2020, and is a useful start in addressing these 3 tests.
There are proposals contained in the documents that still require detailed analysis, which will inform our response. Please continue to check the website and Social Media for further updates so that we can continue to consult with you during this process.
You can read all communications released today by clicking the links below:
- The update from the Ministry of Defence
- The update from the Treasury including the full public consultation document
- The House of Commons Public Service Pensions Consultation written statement
And, the full background to the McCloud case with all our previous updates can be found here.