Listening mode? Chief secretary to the Treasury Steve Barclay
Professionals’ union Prospect has called on the government to lift the pause on public sector pension scheme valuations, which it said was an “abuse of power” that was depriving civil servants of reduced contributions and enhanced benefits.
In a letter to newly-appointed chief secretary to the Treasury Steve Barclay, Prospect deputy general secretary Garry Graham said members of the Civil Service Pension Scheme had already lost out on a cut in their contributions of “at least 2%” since April 2019.
His letter follows civil service union PCS’s announcement that it would challenge the valuation pause in the High Court, in conjunction with the Fire Brigades Union. Independent valuations in late 2018 indicated that without the pause a “cost control mechanism” would have triggered automatic changes to members’ benefits and contributions from the current financial year.
The government paused the valuation process to deal with uncertainty following the Court of Appeal’s ruling against the government in the landmark McCloud case – which related to firefighters and judges but had implications for all public-sector pension schemes.
The ruling which found “transitional protections” introduced in 2015 in connection with the creation of new pension schemes effectively discriminated against younger firefighters, a decision that former chief secretary Liz Truss said could have an impact of £4bn a year on public sector pensions.
An employment tribunal is considering possible remedies for the original litigants in the case after the government's appeal was refused by the Supreme Court, while Truss said last July government would be engaging with employer and member representatives, as well as the devolved administrations, on possible changes for other schemes.
Ministers say the cost control mechanism remains paused as the value of pension schemes to members cannot be assessed before the employment tribunal sets out possible remedies, but Graham said there was no justification for the pause to continue.
“This issue unites all our members across government,” he said. “The government paused the valuations when there was still uncertainty over McCloud case but that uncertainty ended in July 2019 with the Supreme Court ruling. The continued ‘pause’ of the valuations is not justified and may be unlawful.”
In his letter to Barclay, who returned to the Treasury in last week’s reshuffle, Graham said the Civil Service Pension Scheme’s advisory board had been “very clear” in its advice to ministers that it would be inappropriate for scheme members to shoulder the cost of the government’s failed legal action in the McCloud case.
“The scheme advisory board is also deeply concerned that its recommendations to the minister, which should have been implemented by 1 April 2019, remain on hold and that scheme members now find themselves subject to an ongoing detriment,” he said.
Because of the pause to the valuations, the Cabinet Office introduced a temporary rollover of contribution rates for pension scheme members for 2019-20 and unions have been told that ministers now intend to continue the rollover for another year.
Graham said it was imperative for Barclay to end the rollover of contributions, resume the valuation, and introduce the Scheme Advisory Board’s recommendations on the cost cap mechanism.
“We believe the lengthy pause of the valuations is disproportionate, an abuse of power and may be unlawful,” he said, and pointed to the PCS and FBU’s plans to seek a judicial review to test the last point. In addition to the contributions cut for pension-scheme members, the civil service unions said the cost-cap mechanism would have also seen the introduction of improved accrual rates, a progressive contribution structure and improvements to in-service death benefit, had the pause not been enacted.
Truss first announced the government was pausing the scheduled valuation of public-sector pension schemes in January last year, arguing that the Court of Appeal’s decision the previous month made it impossible to conduct the valuations “with any clarity”.
At the time, Truss said that changes to employee benefits, which unions were expecting based on provisional valuations, would only be introduced if the government was successful in challenging the Court of Appeal’s firefighters decision, which had implications for a swathe of public sector pensions.
In an answer to a parliamentary question last week, Treasury minister John Glen said that the government “has committed to addressing the discrimination identified in McCloud in all public service pension schemes, while ensuring all members can keep their accrued benefits”.
He added: “Schemes are currently discussing high-level proposals to achieve this with employer and member representatives, to inform a full public consultation. In addition, Employment Tribunals are considering the remedy for claimants in the various cases. While these processes are underway, the cost control mechanism remains paused as the value of pension schemes to members cannot be assessed with certainty.”