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Press comment: Monumental 2015 pension policy mistake mean gov need at least £4bn a yea

15/07/2019

In a written statement today Elizabeth Truss, chief secretary to the Treasury, confirmed the recent Supreme Court ruling that changes made to firefighter’s pensions in 2015 were discriminatory will apply to all public sector schemes. Under the 2015 changes, workers 10 years from retirement were protected from reforms which saw younger workers moved to less generous pensions.

Jon GreerIf you’re covering this issue please see the following comment from Jon Greer, head of retirement policy at Quilter:  

“As the two remaining Tory party candidates battle it out for the final week they are pledging anything that will win over party members, including to fix the NHS pensions allowance crisis if they are brought to power. This is, however, a pension issue that may pale into insignificance  compared to the £4 billion a year public sector funding gap they need to plug thanks to a monumental mistake presided over by the coalition government.

“Today Elizabeth Truss confirmed that, following the Supreme Court judgement that reforms to judges and firefighters pension schemes was unlawful, the government will now have to remedy the policy across other public sector schemes including the NHS, civil service, local government, teachers, police, armed forces and judiciary.

“Truss says the Government will be trying to control costs and so it’s likely they will want to move everyone onto the 2015 basis for future accrual as soon as possible. This needs to be worked through and means that the younger members are entitled to have their benefits 'levelled up' so that they are treated as having the same protection as the older members, until a non-discriminatory amendment can be made. The cost to the Government is significant since they will have to provide pre 2015 members with higher benefits for a longer period than expected and it’s not clear that the full cost has been factored into the £4bn cost approximation or if indeed there will be an even bigger hole in the new Prime Minister’s pockets.

“Arguably this will feel like a bigger pensions headache for the new Prime Minister than the tapered annual allowance relative to the NHS. But perversely at the same time there is a risk the judgement exacerbates that issue if senior NHS staff are awarded compensation.”

For more information contact

Kathleen Gallagher023 8072 629307990 004932kathleen.gallagher@quilter.com

Notes to Editors:

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