This time last year we mentioned in the Newsletter that there were two ongoing court cases challenging the way new pension schemes were introduced in April 2015 across the public sector.
Judges initially won a case at the Industrial Tribunal, claiming that the transitional arrangements that accompanied the introduction of the 2015 Judges Pension Scheme discriminated against younger judges, whilst Firefighters lost a similar case against the government a month later. Both cases were appealed and heard again in December by the Employment Appeals Tribunal (EAT), which published its judgement on 27 Jan. It upheld the decision in the judges’ case and sort-of overturned the decision in the Firefighters case. This has caused excitement amongst some of our members – several of whom have contacted us in the expectation these judgements will precipitate change in the AFPS 15 scheme because when the scheme was introduced, those on earlier schemes above a certain age were permitted to remain on them, unlikely younger members who were forced to change. This is superficially similar to the arrangement which the Tribunal ruled on in both the firefighters and judges cases. We do not see it like that because of the significant differences between the various schemes and the facts on which the judgement turned.
- Neither case challenged the right of the government to introduce a new pension scheme.
- Both cases challenged the transitional arrangements introduced at the same time to provide preferential protection to older members of the existing schemes.
- Everyone, including the government accepts that the new transitional arrangements were discriminatory in terms of age; the legal challenge hinges on whether this was reasonable or not – in legalese – a proportionate way of achieving a legitimate aim.
- In the judges case the EAT found that the aim of the new rules may have been legitimate but the unique circumstances of the judges meant that the measures taken were not proportionate. Key word here is ‘unique’ – in other words it doesn’t read across to other pension schemes. In any event, the government are expected to appeal the ruling.
- In the firefighters’ case the EAT found the government’s aim legitimate, but that the judge had applied the wrong proportionality test– so the case was referred back to the Employment Tribunal to show again and apply the correct test. It may be that the Employment Tribunal will look at it again, apply the correct test, and still decide that the means were proportionate and therefore the age discrimination was justified and lawful.
- The judge was very clear that he was not ruling on wider public sector pensions’ reform, as this is a matter of public policy.
- There remains one very significant difference between the transitional arrangements adopted by the MOD and others; the MOD opted for a ‘cliff edge’ cut off to determine who transferred to the new scheme (ie those born after a specific date transferred, those before did not). Others opted for a ‘tapering’ approach – which cost more and was paid for out of the new scheme.
There has been no final outcome in either case yet and we remain unconvinced that there is a read across to the military – even in the case of the firefighters, because each public sector organisation negotiated their own transitional arrangements. Furthermore, there remains the possibility than even if the firefighters were to win their case, it would not achieve the outcome intended and that the government, (which negotiated the transitional arrangements for the most part at the behest of the respective Unions) would seek an ‘equal misery for all’ solution. This is certainly the view of the Police Federation who have stated that ‘this case may have consequences that the litigants did not anticipate, and that would cause pension scheme members to lose money.’
We continue to monitor progress, but this may be a case of ‘be careful what you wish for’.