Q1. What is the McCloud /Sargeant Judgement?
This was the outcome of a legal challenge to aspects of the UK Government’s pension changes introduced in 2015. The Court of Appeal held that in relation to the judicial and firefighters’ pension schemes, the transitional provisions (essentially the 10 year protection offered to those closest to retirement) introduced in 2015 gave rise to unlawful age discrimination.
The UK Government has agreed to remedy the age discrimination in all public sector schemes and this will have a direct impact on the Scottish Teachers Pension Scheme. The change of pension age from NPA 60 has not been ruled as discriminatory.
Q2. Who will be impacted by this judgement?
All those who were members of the pre-2015 schemes on 31 March 2012.
Q3. What is the remedy to the age discrimination?
The proposed remedy provides the option to gain benefits from the old scheme longer to "match" the benefit to those who were provided with the tapered protection but it does not reinstate the right to retire at 60, without detriment. The proposal is for a remedy period from 1 April 2015 to 31 March 2022.
The choices being considered at present are for members to decided immediately or before the point of retirement (deferred option) if they wish to move back to the NPA 60 Scheme benefits or remain in the CARE Scheme for that period.
All benefits from the Scheme chosen will be applied for the time period 1 April 2015 to 31 March 2022. On 1 April 2022 all scheme members will be in the CARE Scheme.
Full details on the proposal and the public consultation can be found here and is open until 11 October 2020: UK Government Consultation on Pensions
Q4. What is EIS position on the remedy?
In terms of the best benefit available for period in the NPA 60 scheme against the CARE scheme, the EIS view is that choosing one of these options should be delayed as long as possible to calculate in real time which is most beneficial to the individual. The EIS has responded to the consultation indicating a strong preference for the deferred option.
The EIS policy position is that all members in post on 31 March 2012 should be allowed to return to their pre-2015 pension arrangements for the remainder of their teaching career, including the NPA of 60. However, the options offered in the remedy fall short of this as they only allow a return for a fixed period and do not reinstate the right to retire without detriment at age 60.
Q5. I intend to retire early and draw both age 60 and CARE pension in summer 2021, should I delay my retirement?
You are not required to reconsider any retirement decisions already made. Pension benefits will be calculated on current terms. Any adjustment to calculations will be made by SPPA following agreement on the remedy to the age discrimination.
Q6. I am 55 will I now be able to retire at age 60 on an unreduced pension?
No. The current proposals do not provide for any age 60 benefit accrual after April 2022. Any age 60 benefits already accrued remain payable unreduced at age 60.
Q7. I have seen adverts from legal firms offering a no win no fee claim, should I sign up to this?
No. There is no benefit in pursuing individual claims as individual litigants will not receive any remedy to the age discrimination above than that offered to other scheme members through the changes being introduced to the Scheme. There may also be hidden costs and fees associated with signing-up.
Q8. I am planning to start a phased retirement and hope to work on for a few years. Will this affect my ability to retire fully before my state pension age and receive the rest of my pension and lump sum?
A. There will be no issue with you starting a phased retirement but come April 2022 if changes are made in line with the current consultation all scheme members will move to the CARE (career average) pension scheme. This has a normal pension age in line with your state pension age.
You will still be able to retire at any time you want to but as the CARE scheme is payable in full at your state pension age then you would get the balance of your final salary pension and then would have to decide whether to take your CARE pension early on an actuarially reduced basis or leave it until a later date.
We will of course need to wait and see the outcome from the consultation and what remedy will be implemented.
If further information is required please contact Gillian Sutton, email@example.com