High Court rejects challenge to Civil Service Pension Scheme costs

Judge sides with ministers over failure to reduce member contributions because of botched reforms
The Royal Courts of Justice in London. Photo: R/DV/RS/Flickr/CC BY 2.0

By Jim Dunton

15 Mar 2023

Unions challenging the government’s decision not to pass on thousands of pounds in savings to members of public-sector pension schemes have failed to convince a High Court judge of their case.

PCS, the civil service’s biggest union, was one of six organisations behind a bid to make ministers enact a so-called cost-control mechanism that was part of pension reforms introduced in 2015.

It argued the mechanism should have been triggered by a 2016 valuation that underpinned the Civil Service Pension Scheme’s health and that contributions should have been reduced by 2% accordingly.

PCS said ministers’ decision not to apply the mechanism from April 2019 had cost CSPS members an average of £53 a month – adding up to more than £2,500 each over the intervening four years.

The government's refusal to reduce pension contributions in line with the mechanism is one of the grievances PCS members are currently striking over . The union is also demanding a 10% cost-of-living pay rise following more than a decade of wage restrint.

Although PCS was the only civil service union involved in the challenge, Prospect and the FDA were interested parties and success in the judicial review would potentially have been shared by all Civil Service Pension Scheme members who are currently contriubting.

PCS and the Fire Brigades Union, which led the challenge, said they were considering an appeal of High Court judge Mr Justice Choudhury’s decision in the case.

The dispute over pensions contributions is part of the fallout from the Court of Appeal’s 2018 McCloud judgment, which effectively declared elements of the government’s 2015 pensions reforms illegal because they discriminated against younger scheme members.

The cost of fixing the discrimination highlighted by the McCloud case is now given as £17bn. Pausing the 2016 valuation and deciding not to engage the cost-control mechanism were part of minister’s plans to offset the cost.

PCS, the FBU, the Prison Officers' Association, the Royal College of Nursing and Unite all argued that members should not be responsible for bearing the cost of the shortcomings of the 2015 pension reforms.

They also argued that the decision to suspend the cost-control mechanism was discriminatory against younger scheme members and that it had been without parliamentary control or consultation with members.

In handing down his judgement, Mr Justice Choudhury said there was no dispute that the costs of implementing the government’s McCloud remedy were “substantial” and that a question clearly arose over how they should be covered.

But he said there was “nothing” in the terms of the Public Service Pensions Act 2013 – which underpins the 2015 pensions reforms – to stop the government from taking costs like the McCloud remedy into account in considering the financial health of public-sector pension schemes.

“The fact that those costs are the result of a finding of discrimination against the government does not of itself render it absurd or unconscionable for them to be taken into account, any more than might be an increase in costs that were the result of irretrievably poor economic policy choices made by government,” he said.

“Were that not the case then any additional cost would be subject to scrutiny as to whether it was an ‘acceptable’ cost, in terms of its moral, political or economic legitimacy, to include.”

Mr Justice Choudhury also dismissed the other grounds of challenge brought by the unions.

PCS said it would continue to fight for pensions justice for its members as part of its national campaign. It added that it was “critically important” for members to take part in today’s all-out strike action.

The FBU said “the majority, if not all” of its pensions challenges against government had not been successful at the first hurdle but had gone on to achieve greater success at appeal.

CSW sought a response from the Treasury, which was the lead defendant in the case. It had not provided one at the time of publication.

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