PDA welcomes outcome of Government pensions consultation

The Government has responded to the consultation on removing age discrimination in public service pension schemes including the NHS Scheme and agrees to the PDA and other trade unions preferred approach.

Wed 10th February 2021 The PDA

Members in the NHS will recall the Government invited interested parties to set out how they believe unlawful age discrimination in the NHS Pension Scheme and others should be addressed. The response can be found here.

Members can see the Government has accepted all of the arguments made in the PDA response to this consultation which was published on 22 October 2020 and can be found here.

The consultation covered possible ways of addressing age discriminatory aspects of the scheme following a High Court judgement in the McCloud case. This related specifically to the Firefighters Pension Scheme, but the Government felt it also applied in other public services such as the NHS Scheme. The discrimination arose because of the protection offered to those within 10 years of retirement when the new 2015 scheme was introduced.

As a result of the consultation and the widespread consensus among unions, employers, and scheme administrators, the Government has decided to opt for the deferred choice option. The PDA’s reasons for advocating this approach are set out in their consultation document. The information published by the PDA in advance of that can be found here.

Paul Moloney, PDA Union National Officer, who sits on the NHS Pension Board, commented:

“We very much welcome this decision. It ensures that members will receive a pension based on the better of the two calculations that will be required to ensure the scheme is non-discriminatory. Crucially however the deferred choice option, which we argued for and is now Government policy, will mean members can make that choice when they retire, or when their benefits crystalise on ill-health or, in the case of their dependents, on their death, meaning they can make an informed decision based on real figures. Any other option would have meant members having to make this decision based on guesswork about the variables that are inevitable when predicting pension in relation to their career progression, future pay increases and inflation between now and when they draw their pension.

This approach means members will effectively choose between two real figures on retirement, based on facts, not predictions, and will not need to access detailed financial advice to pick the higher of the two.

Although the choice relates to that part of a pension earned between 2015 and 2022, for many it is a significant chunk of their overall pension benefits, so it was vitally important that the Government recognised what we and others were saying had to be heard.”

It is expected that the NHS scheme will be making arrangements to put these changes in place expeditiously, particularly for those who are near to drawing their pension either because of retirement, ill-health or because of death or have already received pension benefits already. The Government is allowing schemes until 2023 to make the necessary changes but it is hoped the NHS Scheme will be able to make the changes more quickly. Paul explained that one of the roles of the Pensions Board will be to monitor this, ensuring the scheme administrators are able to fulfil their obligations to scheme members.

Paul added: “There is no denying the NHS pension scheme arrangements have become complex in recent years but we applaud the Government on this occasion for supporting the only option that not only does not exacerbate this further but also removes the need for members to consult a crystal ball when deciding which of the two calculations produces a better pension for them.”

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