Public service pension age
Looks at the pension age in the reformed public service schemes introduced in 2015, and concerns raised about the impact on certain occupational groups, such as prison officers and ambulance staff
The last Labour Government introduced reforms to public service pension schemes, with the aim of improving financial sustainability and reflecting changes in life expectancy, working practices and the private sector. They included increases in the pension age for new entrants.
After the 2010 election, the Coalition Government set up the Independent Public Service Pensions Commission, chaired by former Labour Work and Pensions Secretary, Lord Hutton of Furness, to conduct a review of public service pensions. In its interim report in October 2010, the Commission said reforms to date had not gone far enough in responding to demographic change and did not significantly reduce current costs to taxpayers.
The Commission’s final report in March 2011 recommended replacing the existing public service pension schemes with new ones by 2015. In most of these new schemes, members’ normal pension age in the new schemes would be linked to their State Pension age (SPA). It said this link should be regularly reviewed, to make sure it is still appropriate, with a preference for keeping the two pension ages linked. For the ‘uniformed services’, the Commission recommended a normal pension age of 60, to be kept under review.
The Coalition Government accepted the Commission’s recommendations as the basis for negotiation with the trade unions. It legislated in the Public Service Pensions Act 2013 for a framework for new schemes to be introduced for future service from 2015 (2014 for local government).
Section 18 of the Act provided for the ‘legacy’ schemes to close, except for those covered by transitional arrangements for those ‘closest to retirement’, who could remain in their existing scheme either until retirement, or for a limited period, depending on their age. Otherwise, active scheme members on 1 April 2015 were transferred to the reformed schemes.
Section 10 of the 2013 Act provided that individuals in the new schemes would have a normal pension age linked to the State Pension age, except for the new schemes for firefighters, police and armed forces, which have a normal pension age of 60.
The link to the State Pension age caused widespread concern among public sector unions, some of whom launched a ‘68 is too late’ campaign. An area of particular debate was the impact on certain groups – such as paramedics, prison officers, MoD police and firefighters and Civil Nuclear Police – given the demands of those roles.
In December 2018, the Court of Appeal ruled in McCloud v Ministry of Justice that the ‘transitional protection’ offered to some members as part of the 2015 reforms amounted to unlawful discrimination. The Government said in July 2019 that, although the court’s judgement was in relation to the schemes for the judiciary and firefighters, the difference in treatment would need to be remedied across public service pension schemes.
In its response to the consultation in February 2021, the Government said it would legislate to allow public service pension scheme members a choice, shortly before their benefits came into payment about whether to have built up benefits in the relevant legacy or reformed 2015 scheme for the ‘remedy period’ (1 April 2015 to 1 April 2022). From April 2022, it would close the legacy schemes to future service. From that date all members would build up benefits in the relevant reformed scheme. The impact of higher pension ages was the main issue raised by respondents to the consultation in relation to transfer to the reformed schemes from April 2022 (para 2.14-5).
The Government is currently legislating in the Public Service Pensions and Judicial Officers Bill [HL] 2021-22 for a remedy to the unlawful discrimination identified by the Court of Appeal and to close the legacy pension schemes to further accruals from 1 April 2022.
A Westminster Hall debate on the pension age for prison officers is scheduled for Wednesday 16 November.
For more detail, see Public service pensions – response to McCloud, Commons Library Briefing Paper, CBP 9177. For more on the background, see Public service pension age – the Labour Government’s reforms, Commons Library Briefing Paper CBP 2209, November 2018.