I rise today to discuss an issue that I am sure affects not just my constituents in Edinburgh West but many of our constituents across the United Kingdom. Since 2018, thousands of civil servants, teachers, doctors, nurses, police officers and firefighters have been waiting for the compensation they are entitled to through the McCloud remedy, after the judgment in the Court of Appeal which ruled that changes to public sector pensions unlawfully discriminated against younger workers.
That impacted a huge number of dedicated public servants, including at least 400,000 civil servants and more than half a million teachers. In Scotland, more than 13,000 police officers were impacted and are due remediation, as are around 90,000 NHS workers, according to figures produced by the Scottish Government. It is understandable that, with so many people needing remediation, there could be delays, particularly for more complex cases or older cases that need to be examined manually, but these are having a significant impact on people’s lives.
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Motion lapsed (Standing Order No. 9(3)).
Motion made, and Question proposed, That this House do now adjourn.—(Gerald Jones.)
I thank the hon. Member for securing this important debate. I have had a number of cases come into my office as well. My constituent Gavin Templeton, who served 25 years of dedicated service in the Fife constabulary, was forced to return to work because his incorrect pension was so low. Does she agree that it is time we did much more to support hard-working public servants like Gavin to receive the full pensions they worked so hard for?
I thank the hon. Member for raising a very good point, which I will come to later. I agree completely; this has been particularly difficult for many people in the light of the crises we have faced in recent years, with the soaring cost of living and sky-high energy bills.
This is what has happened to my constituents in Edinburgh West who have come to me with their issues with the administration of the remedy—not the remedy, but the administration of it—and the possible future impact on other pension schemes. One of my constituents who was affected is a retired police officer who served 25 years. His pension scheme was forcibly changed in 2017 to the CARE—career average revalued earnings—scheme, which was found to be discriminatory. He retired in February 2023 with his 25% lump sum, on the assumption that the remedial scheme would be in place by October that year. He estimates that he is now owed more than £30,000 in terms of both his commuted lump sum from the new scheme and the lower monthly pension. He is also one of thousands of immediate detriment officers still waiting for their remediation letter from the pension authorities, despite claims that the number of retired officers receiving these has accelerated, including in Scotland.
Another constituent started working for Lothian and Borders police, as it was, in 1996 and retired in 2022, knowing he would only receive his pension for his service between 1996 and 2015, while the remedy was calculated. He was told at the time that he would receive his remediable service statement by April 2025, three years after his retirement. He also estimates a loss in pension income of more than £30,000, given that seven years of his service to our community was not counted when he first retired.
A third constituent of mine has raised a possible issue that he faces when retiring with an NHS pension. The Government’s approach to NHS pension remedies means that pension growth will be calculated under an older scheme from 2008, even if he believes this rollback leaves those in the middle of their careers vulnerable to artificial breaches of the annual pension allowance and significant income tax charges because of the set-up of the 2008 scheme used for calculation.
I congratulate the hon. Member on securing the debate. I spoke to her beforehand to ascertain her focus, which is clearly on the McCloud remedy. The McCloud remedy will have implications on tax for some members, with some needing to pay more tax—she has outlined three—and others being entitled to a refund. My constituents in Strangford are experiencing the same issue as those in Edinburgh West and are in a similar position of uncertainty. Does she agree that discussion with financial advisers is essential, and for those who do not have access to financial advisers, the employer—the national health service, in the case of my constituents—must provide workshops to ensure that workers can understand what their choice will mean in reality?
The hon. Gentleman raises a very good point. This issue has affected all our constituents, in a different way. His is exactly the sort of point that I hope the Minister may be able to address.
All the cases that we have mentioned show the impact that the remedy process has had on people who have dedicated their lives to serving our communities. It is unfair and must be tackled. In written answers to myself and other hon. Members, Ministers have said that it is up to individual pension schemes and their managers to implement the remedy rather than the relevant Government Department, but that seems to allow the schemes to delay, or leaves them without the resources and support that they need to process claims at pace. Will the Minister outline how the Government work with these authorities to ensure rapid delivery of remedial pay?
What steps will the Government take to ensure that pension authorities can also deliver RSS notices to speed up the process of calculating and awarding remedial pay? That is particularly important for police pensions, as there appears to be a severe backlog in issuing those notices to retired officers to allow them to make their choice under the law. That is leaving my constituents in Edinburgh West and others facing years of further uncertainty on their finances, as the hon. Member for Strangford (Jim Shannon) referenced, and losing out on money that they are entitled to for their work.
As policing is devolved in both Scotland and, as the hon. Gentleman knows, in Northern Ireland, how are the Government working with the devolved Administrations on these pension schemes to share best practice across Departments, provide increased resource and finally give these public servants, who have served our communities, taught our children and kept us safe for so long, the safety, security and financial stability that they deserve for their retirement? Surely that is what they are entitled to.
I congratulate the hon. Member for Edinburgh West (Christine Jardine) on securing this debate. I am grateful for her speech, and agree that the people we are talking about keep us safe and well, and show true dedication to public service. I absolutely understand the point that she is making.
I will talk a little bit about the background to McCloud, before talking about the progress that has been made to date and what further steps the scheme managers still need to take, as the hon. Lady outlined. The McCloud remedy is, by its nature, a complex undertaking, as I am sure she will appreciate. It applies to 20 public service pension schemes in the UK, and the scheme managers for those schemes are responsible for ensuring that the remedy is administered properly and in accordance with their statutory provisions.
This issue, as the hon. Lady said, arises out of the introduction of new pension schemes for public sector workers in 2014-15. When introducing those pension schemes, the Government at the time gave what is called a transitional protection to older workers, but as she set out, in 2018 the Court of Appeal found that those protections gave rise to unlawful discrimination on the grounds of age, race and sex. In 2019, the Government announced that they would address that discrimination through the McCloud remedy.
There are two main elements to the remedy. The ongoing difference in treatment between older and younger workers was removed by closing the older pre-2015 pension schemes and moving all active members into the new pension schemes in relation to employment after 31 March 2022. However, addressing the discrimination that occurred between 2014 and 2022 is considerably more complex, as hon. Members will appreciate, because whether individual members are better off under the older legacy schemes or newer reform schemes will depend on their individual employment histories and circumstances, and in some cases will not be certain until they retire. The remedy therefore gives a choice over legacy or reform scheme benefits, which is given at the point of retirement for active and deferred members, and is in the process of being rolled out for members who have already retired.
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House adjourned.
Delivering the remedy to more than 3 million affected scheme members is also an intensive administrative challenge. There are many different elements to it, but the most crucial is that all those affected must be provided with individualised information about their pension entitlements during the 2015 to 2022 remedy period, through what is known as a remediable service statement or RSS.
In addition, a smaller group of members, whose tax position during the remedy period may have changed, need to be provided with a remediable pension savings statement—an RPSS. Given the complexity of the McCloud remedy, schemes are also providing significant levels of guidance and online resources to help members understand the information they receive and the decision they need to make. That information is often very complex, as hon. Members know because many have been in the position of receiving it. There is also a dedicated HMRC digital service to allow members receiving an RPSS to understand their tax position. There are processes in place to allow members to pay additional tax or, as will be the case for the majority of members, to claim either a tax refund or compensation from the scheme where a refund is not possible.
Providing these statements to members, together with the other aspects of implementing the remedy, is the responsibility, as the hon. Lady will know, of pension scheme managers. For the largest public service schemes, including the NHS scheme in England and Wales, the teachers’ scheme in England and Wales, and the civil service scheme across the UK, the scheme manager is the relevant Secretary of State. The local government, police and fire schemes are administered locally, which means each responsible authority, force or brigade has its own scheme manager, who is responsible for the operation of the scheme in that area.
The devolved Administrations—this is pertinent to the concerns raised by the hon. Lady, the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Dunfermline and Dollar (Graeme Downie)—have responsibility for administering their schemes. The Scottish Government, through the Scottish Public Pensions Agency, have responsibility for the police, fire, NHS and teachers’ schemes in Scotland. The Welsh Government are responsible for the firefighters’ scheme in Wales. Pension schemes in Northern Ireland are established under a separate legal framework and are the responsibility of the Northern Ireland Government.
This means that the picture on implementing the remedy across the different schemes is complex and may be subject to particular factors that affect one scheme but not necessarily another. The remedy itself varies across the schemes, reflecting the fact that the schemes themselves are specific to each workforce and have different benefit designs. This can be seen in the differing levels of progress that schemes have so far made.
I am aware that across the police scheme in England and Wales, around 90% of the total number of RSSs have so far been issued, and I understand that the picture is similar in the police scheme in Scotland, with 97% of deferred choice and over three quarters of immediate choice RSSs already issued. Although that is not yet matched by other schemes, significant progress is being made elsewhere. For example, the civil service scheme in England and Wales has issued around 45% of immediate choice RSSs and the teachers’ scheme around 47%.
It was always anticipated that providing RSSs to members would be challenging, and that is specifically recognised in the legislation governing the remedy. In particular, the Public Service Pensions and Judicial Offices Act 2022 sets out that for the provision of RSSs, there is a deadline of 31 March 2025, or—here comes the qualification—
“such later day as the scheme manager considers reasonable in all the circumstances in the case of a particular member or a particular class of member”.
Given that I was asked about delays, I think it is worth reflecting that hon. Members have raised concerns about their constituents who are experiencing delays in receiving the remedy. I am standing in for the Pensions Minister, my hon. Friend the Member for Swansea West (Torsten Bell), but I used to be the Pensions Minister myself, so I have some knowledge of the issue, and I encourage scheme managers to take every step possible to resolve those cases as quickly as possible and to prioritise cases where individuals may be in particular need. The hon. Member for Edinburgh West reflected on a number of such cases in her excellent contribution.
I assure anybody in this position that where there is an uplift in interest on pension payments, interest will be paid on arrears, so they will not lose out financially as a result of the delays, but I do understand that the delays are frustrating. As the hon. Lady will be aware, the overarching principle of the McCloud remedy is to put people back in the situation they would have been in if the discrimination had not occurred. In order to do that, it is necessary to apply interest where payments should have been made at an earlier date, whether by the scheme or the member. In this debate, we have heard more about the delays of the scheme towards the member. Interest is applied at 8% when the scheme owes money to the member. Where the member owes money to the scheme, interest is applied at the NS&I direct saver rate, which is currently 3.5%. I hope that reassures the hon. Lady to a certain extent.
We think it is right that these decisions are made by scheme managers, as they are the only ones with full possession of all the relevant information. As I have said, with that information and the variety of different factors, the situation is complex. Having said that, the Government are committed to ensuring that all affected members are provided with the remedy they deserve as quickly as possible, including ensuring that members already in receipt of pension benefits or approaching their retirement are prioritised.
Where scheme managers have exercised their statutory discretion to extend the deadline for providing some members with an RSS, it is therefore important that appropriate new deadlines are set out and that robust plans are in place to ensure the new deadlines are met. Scheme managers must ensure that the plans are properly communicated to pension scheme members to provide them with certainty. The Pensions Regulator must also be kept informed of plans and progress, and I know that schemes have been having these discussions with the regulator.
Similarly, there have been delays in other aspects of the remedy, such as the provision of the RPSSs to those who need them. As I set out earlier, that affects a smaller number of people. However, it is difficult for those people if they are kept waiting. It is important that schemes keep members informed and provide them with appropriate resources and support. Although I am pleased to say that the process of sending out RPSSs in England and Wales is 90% complete and that some schemes have sent them to all affected members, I know that there are issues in other parts of the country. As I said, this is a very complex area. If I have not answered all of the hon. Lady’s questions, I am happy to write to her.
Given the importance of delivering the McCloud remedy effectively, the Pensions Minister has recently written to responsible Departments, requesting details of their plans to issue remaining RSSs and RPSSs to all affected members. All those affected by the McCloud remedy can be assured that a robust and complete statutory remedy has been put in place and that schemes are working to ensure that members receive the information and support they need. I do, though, note the points that the hon. Lady has made about the impact of the delays on her constituents. They will have the opportunity to decide whether to receive legacy or reform scheme benefits in relation to their service. I again thank the hon. Lady for bringing this matter to the House.