On 16th July HM Government issued its public consultation document indicating ways in which it proposes to deal with the discrimination created by the transitional arrangements that accompanied the introduction of new pension schemes across the public service sector in 2015.
We appreciate that this is a very detailed document, and it is our intention to keep members informed during the 12 week consultation process. However, we cannot engage in personal 'what if' scenarios at this time. At the moment members are being asked to choose when to make their decisions, we are not yet at the point where you can decide what the decision will be.
What is the document not doing?
This document is not asking, or indeed allowing, members to make their choice regarding the remedy period now. At this stage it is pointless trying to identify what might be the best situation in your own circumstances.
In due course and depending upon the immediate choice (IC)/deferred choice underpin (DCU) option that is selected by the Government, information (including calculators) will be made available to allow relevant members to make better informed decisions regarding the remedy period scheme choice. As this is an area of developing policy and procedure please do not ask FPS to provide you with any sort of 'what if' calculations.
What does the consultation document tell us that is new?
- The consultation document identifies a “remedy period” from 1st April 2015 to 31st March 2022 inclusive. It makes it clear that the Government has decided to offer relevant members a choice of which scheme benefits they want to have in respect of their service during the remedy period.
- Relevant members are identified as “members who were in service on or before 31 March 2012 and on or after 1 April 2015, including those with a qualifying break in service of less than 5 years”.
- From 1st April 2022 onwards all “active” (ie serving personnel in AFPS terms) scheme members will secure their future pension benefits from the reformed 2015 scheme (so in AFPS terms this means that from 01/04/2022 everyone will be placed on to AFPS15).
- Through this consultation the Government is asking for views upon the timing of the decision that relevant members will have to take regarding their pension scheme accruals during the remedy period. There are two choices identified as the immediate choice option (which really means at some point after 01 April 2022) and a deferred choice underpin (DCU) (which for members of the AFPS typically means when you leave service and take your benefits).
- If the immediate choice option is selected, members will remain on their current scheme (legacy scheme or AFPS15) until they make their decision. If the DCU option is chosen members will be placed into their legacy scheme for the remedy period and will be moved back to AFPS15 if that is their choice at the point of taking benefits. The government will choose one option for all relevant members (ie there will be no individual choice over the timing of the decision). Regardless of the option ultimately chosen by the Government (immediate choice or DCU), all serving personnel will be placed into AFPS15 from 01 April 2022.
The consultation document also has sections devoted to relevant members that have or will have: -
- Retired before the end of the remedy period,
- Paid additional/ voluntary contributions
- Been medically discharged before the end of the remedy period
- Died since 01/04/2015
- Made contingent decisions because of implications regarding the introduction of the reformed pension schemes in 2015.
- Voluntary pension transfers
- Suffered pension abatement on re-employment
- Annual Allowance or Lifetime Allowance tax charges
Will FPS be responding to the consultation?
Of course. Our Pension team are poring over the detail of the consultation we will submit our responses to all the questions which are relevant to AFPS, in good time. We will also publish a copy of our response in the member’s area of the website.
The consultation document can be read here and individuals are invited to submit their comments and responses to any/all of the 24 questions asked in the document by email to PensionsRemedyProjectConsultation@hmtreasury.gov.uk or by post to: Pensions Remedy Project Team, HM Treasury, 2/RED, 1 Horse Guards Road, London, SW1A 2HQ
The closing date is 11th October 2020.
(Please do not send your responses to the Forces Pension Society).
Further updates and guidance to follow