Public sector pension reform

Posted by Emma Ferdinando on
Recent challenges to public sector pension reform have highlighted some of the risks arising from age discrimination legislation – objective justification can be a tough hurdle to overcome.

There have been two recent Employment Tribunal cases in which the Tribunal had to decide whether transitional provisions attached to reforms of a judicial pension scheme (JPR 2015) and the 2015 Firefighter' Pension Scheme, which were potentially discriminatory on grounds of age, could be objectively justified.

In respect of the JPR 2015 the Employment Tribunal has ruled that the Government discriminated against 210 judges when it implemented the transitional provisions for the new judicial pension scheme.

In April 2015, Judges at various levels were moved from the existing pension scheme to a new scheme with greatly reduced benefits; including;

  • A less favourable accrual rate.
  • Removal of the entitlement to a lump sum payment on retirement.
  • The equating of normal pension age with state pension age, meaning that this would be higher than 65 for some younger judges.
  • A smaller pension for surviving spouses or civil partners.

Transitional provisions were put into place which allowed Judges of 58 years of age or over, to remain in the original scheme. Judges between 55 and 57 years were allowed to remain in the original scheme but only for an additional period of "tapered protection". 

The protection period was set at 10 years from the introduction of the changes. A ten-year transitional period had been agreed in the context of various other public sector pension schemes.

As a result of the move to the new pension scheme, some Judges (those being the highest earning), would incur hundreds of thousands of pounds in losses, unless they contributed an additional £30,000 per year to the scheme themselves. 

The Judges who were removed from the original scheme or those who were allowed to remain and receive "tapered protection" claimed discrimination on the basis of age.

The Government argued that differential treatment was justified on the basis that the transitional provisions were meant to protect members who were closest to retirement.

The Employment Tribunal held that the transitional measures, which were acknowledged as being discriminatory on the grounds of age, were not objectively justified. Older judges would in fact be least affected, so providing them with special protection was not a legitimate aim. Whilst consistency with other public sector pension reforms was capable of being a legitimate aim, the Government had failed to provide evidence to demonstrate that consistency in this case served a social policy objective, particularly as judges' pension arrangements differed significantly from other public sector pension arrangements.

About the Authors

Emma is a Solicitor in our Employment and Pensions team based in Southampton.

Emma Ferdinando
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023 8085 7433

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John advises corporate and trustee clients on pensions law and is a director of Blake Morgan's Pension Trustees Limited, the firm’s independent trustee company.

John Hamilton
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023 8085 7089

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