Pensions appeal rulings for firefighters and judges - latest update
The Federation has been monitoring progress in the respective Employment Tribunals and subsequent appeals for both firefighters and judges about the transitional arrangements relating to their new Career-Average Revalued Earnings pension schemes which came into effect on 1 April 2015.
These cases did not challenge the introduction of the new CARE pension schemes themselves. They instead challenged the introduction and form of the transitional arrangements brought in at the same time. These provided preferential protective treatment to older members of the existing schemes.
Everyone involved in the legal action (Government, firefighters and judges) agreed that the introduction of the transitional arrangements were directly discriminatory in terms of age.
So the legal challenges hinged on one aspect alone: in order to justify the age discrimination caused by the transitional arrangements and therefore make them legal, it was necessary for the Government to demonstrate that they were a proportionate means of achieving a legitimate aim.
We’ve summarised the outcomes but Andy Fittes, PFEW General Secretary, said: “There is nothing in the judgements which changes the Federation’s policy position or that warrants us taking further legal advice at this point, but we will continue to monitor the situation.”
Full EAT report.
The Firefighters’ case
In summary, the EAT found the aim was legitimate, but that the proportionality has not been proven and must undergo further legal tests. This specific issue was therefore sent back to the Employment Tribunal (ET).
The Judges’ Case
In summary, the EAT found that there may be a legitimate aim, and that in this case the correct test of proportionality was applied, and the unique circumstances of the judges meant that the measures taken were not proportionate.
There are also some new FAQ’s about the CARE 2015 scheme, which arose from members’ questions raised during the 2017 PFEW Pay & Morale Survey.
Background to the pensions position
An employment tribunal originally ruled on 16 January 2017 that the government's transitional pension arrangements for judges amounted to unlawful age discrimination. This had been reported as a victory, but the outcome was far from clear cut.
In response to the ruling, Andy Fittes said at the time: "Police officers’ and judges’ pensions are different, so we will need to examine the judgement to see if there are implications for the transitional pension arrangements for police officers.”
He added: “The ET ruling was on a narrow part of pension legislation, and ruled against a provision that unions across the public sector had fought for. The PFEW believes that the success of this challenge could have unintended consequences to the detriment of public sector workers.”
So, what was the case about?
The case was solely about transitional protections, and whether these caused direct discrimination by age, and indirect by gender and ethnicity.
What are transitional protections?
Transitional protections are a mechanism that was lobbied for by unions – including PFEW – across the public sector to protect members.
The aim is to ensure those members who cannot remain entirely in “old” schemes, but who have fewer years to serve before retirement, are given special arrangements to help them adjust. The rationale was that these members would already have based future plans on an expectation of a certain pension pot.
There are three types of scheme members:
What did the judgement say?
The judgement did not state that judges in two of the categories - those only subject to the new scheme (without protection) or those in the old scheme - had been treated illegally.
It only stated that those judges with transitional protection had been treated in a way that caused discrimination. In fact, the judge went further, and stated that those with transitional protection had been treated better than they could have been. When considering whether transitional protections were a proportionate means to achieve a legitimate aim, the judge considered whether they may have been “excessive” and stated that an option might have been to simply follow Hutton’s recommendation that accrued rights under the old scheme be protected. The judges’ schemes both protected old rights and offered transitional protection. (As do the police schemes).
The judge stated that in conceding to unions that transitional protections were needed, the employer (the Ministry of Justice) failed to seek or providence sufficient evidence of need.
What were the next steps?
The Ministry of Justice announced in February 2017 their intention to appeal the ruling. This meant in effect they had adopted the position the unions initially argued for – i.e. that transitional protections were a good thing.
Should they have lost that appeal, then there were probably two options:
The Ministry could offer all judges the same protection that members with transitional protection get – but that would cost more money from the public purse – possibly an additional £80 million for judges alone. (The same across the public sector would cost billions of pounds).
Bearing in mind that the unfairness had been deemed to be insofar as those with transitional protections had been treated better (in the judge’s view) than they might have been, one option may have been to remove transitional protections completely.
This would reduce the cost to the public – possibly by £28 million.
Unfortunately if this latter course is taken, some members of the pension scheme lose out. Ultimately it would mean no member of the pensions’ scheme will gain from the claimants’ win, in this ET.
The FBU case
The Fire Brigades' Union (FBU) also had an Employment Tribunal heard in early 2017. In this case, it was ruled that while the transitional arrangements under the 2015 CARE Scheme do discriminate against some of their members, it was justifiable as it was a proportionate means of achieving a legitimate aim.
They announced their intention to appeal the ruling.
What has the PFEW been doing?
“We will continue to monitor the situation, to see whether the Ministry of Justice or the FBU decide to appeal the EAT rulings, or what next steps they take,” said General Secretary Andy Fittes. “We continue to believe that transitional protections are a good thing, and are deeply disappointed that this case may have consequences that the litigants did not anticipate, and that would cause pension scheme members to lose money.
“We believe it is important that we act in the best interests of as many of our members as possible. We believe transitional protections offer a better pension for more members.
“The judges’ position is different in many respects from the police position. However, it remains to be seen whether – in fighting the one common element of schemes, the transitional protection – the litigants have opened the door to poorer pension provision in the public sector.”
More information on police pensions