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Armed Forces Pensions – McCloud Update

Published 20/02/2020 14:33:00, by Marina Maher

The following update on the ongoing challenge to the compulsory transfer of members of the Armed Forces Pension Schemes 75 and 05 to AFPS 15 was published on the Government Website this afternoon:


Background
1. The Independent Public Services Pensions Commission Final Report of 10 March 2011 recommended changes to Public Service Pension Schemes in order to place public sector pension schemes on a more sustainable footing. One of the recommendations was to adopt Career Average Revalued Earnings (CARE) schemes. The Government accepted most recommendations as a basis for consultation and new schemes were introduced in April 2015 (2014 for local government in England and Wales).

2. During consultation the coalition government agreed that members who were within 10 years of their Normal Pension Age and in service on 31 March 2012 did not have to move to the new pension schemes. This was known as transitional protection.

3. Employment Tribunal claims were brought subsequently by members of the judges (McCloud) and firefighters (Sargeant) pension schemes, who argued that the transitional protection arrangements were discriminatory on the grounds of age. The Court of Appeal found that the transitional provisions in those schemes were discriminatory on the grounds of age and the Supreme Court refused the Government permission to appeal. On 15 July 2019 the Government announced that the difference in treatment would need to be addressed across all the main public service pension schemes and for all affected members, regardless of whether they have submitted a claim.

4. Initial Case Management hearings have now been held for the cases involving Judges, Police, Ministry of Defence Police and Firefighters and interim or final declarations have been made by the Employment Tribunals. The effect of these declarations is that, the claimants are entitled to be treated as having remained members of the pre-2015 pension schemes from 1 April 2015.

5. The government has confirmed that changes will also be made for non-claimants who have suffered discrimination, who will therefore also be entitled to have service accrued post 1 April 2015 in the old schemes. However, it is not as simple as putting all members back in pre-2015 pension schemes as some members will be better off in the old schemes, and others better off in the new schemes. The government has commenced pre-consultation technical discussions with a range of interested parties on possible changes to remove the discrimination identified by the courts and to allow members to keep the benefits they have accrued in the new schemes instead if they so prefer. Service personnel will be able to keep the pensions they have earned to date, irrespective of the pension scheme they are in or the outcome of the Employment Tribunal.


Technical Discussion
6. On 6 February 2020 Ministry of Defence held initial discussions with key Armed Forces Pension Scheme stakeholders, both internal and external to the Department, to gain initial views on a preferred option for addressing the difference in treatment. Feedback from these discussions will help to inform a public consultation on a preferred option later in the year.


Next steps
7. All members with relevant service will be eligible for changes to their pension entitlements to address the discrimination. This will take time to process, but we are committed to ensuring that all members are treated equally and are able to choose to receive benefits from either their old/legacy scheme (Armed Forces Pension Scheme (AFPS) 75, AFPS 05, FTRS 97, RFPS 2005 or NRPS) or new/reformed (AFPS 15) scheme. In order to do this, we need to ensure that interested parties are appropriately consulted, changes are carefully developed and implemented, and that the steps we ultimately take are adequate. Legislation will be required before the changes can be made, and new administrative processes will need to be developed and put in place. Service personnel will be kept informed of developments as they progress.

8. For members of Civil Service Pension Schemes further information can be found on the Civil Service Pension Schemes website

For additional guidance and some Q&A follow the link below:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/867267/20200212-AF_REM-MAJOR_MCCLOUD_UPDATE-V3-O_-_11.2.20_SW.pdf

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