The UK’s Fire Brigades Union (FBU) has won permission for a judicial review of the government’s decision to impose costs resulting from changes to firefighters’ pension arrangements on to scheme members, rather than footing the bill itself.
The ongoing battle relates to the 2015 Firefighters’ Pension Scheme, a career-average defined benefit (DB) scheme introduced on 1 April 2015 as part of government reforms to public sector pensions.
Members of existing (final salary) schemes were required to transition to this scheme unless they were within 10 years of retirement.
However, a Court of Appeal ruling in December 2018 – the so-called McCloud/Sargeant case – said that the 2015 pension reforms were unlawful in that they afforded greater protection to older workers, who were allowed to continue building pensions in the legacy schemes, while younger workers were moved into the new schemes.
To remedy this discrimination, parliament enacted the Public Service Pensions and Judicial Offices Act 2022 last March. The aim is to ensure equal treatment for all members within each of the main public service pension schemes by moving all members into the new schemes on 1 April 2022, irrespective of age.
In addition, the law is intended to remove the effect of transitional protection by offering eligible members a choice over the set of benefits (legacy scheme or new scheme) they wish to receive for any pensionable service during the period 1 April 2015 to 31 March 2022 (the “remedy period”).
This change will not take effect until October 2023.
The change, across public sector workers as a whole, will cost £17bn (€19.7bn) and the FBU maintains that the government is not observing the funding arrangements, but shifting this cost to the members of the new, post-2015 public sector pension schemes.
“The most recent completed valuations of the 2015 schemes showed that they were considerably cheaper,” said Mark Rowe, FBU national officer, in a letter to scheme members. “In the case of the firefighters’ schemes the new scheme was 5.2% cheaper than anticipated, which would lead to an increase in the accrual rate from 1/59.7 to 1/51.2.”
He added: “The government are trying to use financial improvements that should rightfully provide improvements in benefits or reduction in contributions to our members to rectify the cost of the government’s discrimination.”
After a claim to the UK Treasury and Home Office was rejected, the FBU issued formal pleadings to the high court, with other unions including Unite and GMB as interested parties.
They are challenging the government’s remedy on the grounds that it breaches commitments made in legislation and to unions in 2015, that it contravenes the purpose of the cost-control mechanism, and that it discriminates against younger scheme members.
A date for the judicial review will now be set by the court.