The Firefighters’ Pension Scheme 2015 saw thousands of younger firefighters compulsorily transferred into a scheme where they have to work until 60, pay more and work for longer only to receive a pension that is greatly reduced in value. Firefighters younger than age 45 on 1 April 2012 were unfairly penalised as they were forced into a worse scheme whereas older firefighters were allowed to remain in their original scheme.
Sound familiar? The Police Pension Scheme 2015 was introduced by the Government which changed the pensions of many serving officers that had previously been in the Police Pension Scheme 1987 or the New Police Pension Scheme 2006.
The PPS 1987 was a two thirds final pension scheme where the officer had to complete 30 years to qualify, whilst the NPPS 2006 was a half final pension scheme whereby the officer had to complete 35 years. The PPS 2015 is a Care Average Revalued Earnings (‘CARE’), whereby officers accrue annual increments to their pension pot based on 1/55.3 of their annual salary. The normal retirement age under the PPS 2015 is 60. Needless to say that each subsequent pension scheme costs more to contribute to with less final rewards.
Ordinarily, new pension provisions cannot be introduced for existing members that would be worse, but the Government introduced new primary legislation to circumvent this restriction. As with the fire service, there was a complex set of rules as which serving officers should remain on their existing pension plans and those who should be moved across to the new scheme. Tapered protection was provided to those with more service, whilst those with less service had no choice.
The Police Federation sought legal advice, and here is a summary of the conclusion, the full text of which can be found here –
All possible challenges have been considered including:
Public law as primary legislation was used to introduce the CARE scheme judicial review was not available.
European law and Human Rights law (in several recent cases the European Court of Human Rights has not been swayed by arguments that those on the public service have had to bear the brunt of economic reform)
Discrimination. (The key challenge here considered was whether these pension changes would be age discrimination: however, the law states that age discrimination can be justified as a proportionate means to a legitimate end, and it is likely to be considered as such in this instance).
At this time, we will therefore not be challenging the introduction of the Police Pension Scheme 2015. However, we will continue to monitor how the scheme operates in practice and we maintain an open mind should circumstances change that give rise to a potential successful legal challenge.
The Fire Brigades Union (FBU) however took their own legal advice, and following pension claims from over 6,000 firefighters, the FBU launched a significant age discrimination legal challenge against the government. A number of employment claims were made, but the crux of the matter hinged on the two following points –
- Whether the Government could discriminate (by introducing the transitional protection) as long as they have a “legitimate aim”, and
- Whether that discrimination was a proportionate means of achieving a “legitimate aim”.
Disappointingly, the original Employment Tribunal found in favour of the government and against firefighters. The FBU lost both points and the ET concluded that the introduction of the new pension scheme was a social policy aim of the Government, affecting all public service employees, and European law allows member States a wide discretion when deciding their social policy objectives.
However, a similar Employment Tribunal, at around the same time, but affecting judges, found in favour of the judges.
The FBU appealed the finding against the firefighters. The government also appealed the finding that was in favour of the 210 judges. Both cases were tied together in a new joint Employment Appeal Tribunal.
The EAT was held between 11th and the 14th December 2017 at which point, judgement was reserved. The decision was handed down on 29th January 2018 whereby the EAT overturned the original decision of the ET in favour of the FBU.
The case was then heard in the Court of Appeal between 5th and the 9th November 2018 following a further challenge by the Government, again combining both cases.
The court has determined that there is only one possible answer to the question as to whether the government was pursuing a ‘legitimate aim’ when it introduced the transitional protections. On the evidence produced by the government, the answer is, “No”.
Because the FBU won on this first question, the court determined it did not need to go into the second question.
The government has asked for permission to appeal to the Supreme Court. This is not an automatic right and they would need permission either from the Court of Appeal or from the Supreme Court to do so. To get permission they would need to show that there is an arguable point of law of general public importance.
The court also ruled that the other side (government) should pay the FBU legal costs, which is an additional victory.
The case itself hinges not on whether the Government can introduce such a scheme, but the transitional arrangements for members of existing schemes. If the current ruling is not overturned it is likely that the FBU members would demand to be put back on their original pension schemes.
So, what is the relevance of this on police pensions and injury pensions?
Firstly, there are many thousands of officers that have been affected in a similar manner by having to transfer to the PPS 2015. For some, this means working for an extra 10 years, paying higher pension contributions and eventually leaving with a much smaller pension.
It also affects those retiring today under the PPS 2015 with an ill-health pension as they are calculated across two schemes with a lower pension as a result. In addition those transferring from the PPS 1987 are finding that the SMP’s are having to consider whether to place the pensioner in a lower or upper/enhanced tier which didn’t exist in their original scheme. Again, this may result a lower ill-health pension.
As injury pensions are partly calculated using ‘other’ pensions received, this too would affect the value of injury awards, which in turn may have to be re-calculated.
After the ruling, Alex Duncan , the National Secretary of the Police Federation made the following statement –
This remains a complicated issue, with no certainty over how the government will choose to address the ruling.
Today’s announcement seems like good news, but we need to digest the full judgement and of course we will continue to keep our position under review.
We will keep you updated of any further developments.
Some interesting times ahead!