The government has confirmed the Supreme Court ruling that changes made to the firefighters’ and judges’ pension schemes in 2015 were discriminatory will now apply to all public sector schemes.
The 2015 changes – which saw younger workers moved to less generous schemes while the oldest workers were able to continue accruing benefits in the more generous schemes as “transitional protection” – were ruled discriminatory by the UK’s highest court last year.
In a statement – published yesterday (15 July) – chief secretary to the Treasury Liz Truss confirmed pension scheme rules will need to be remedied across all public sector schemes, including those for the NHS, civil service, local government, teachers, police, armed forces, judiciary, and fire and rescue workers.
The government must now find £4bn per year to fix the policy mistake across the rest of the public sector after it was denied permission to appeal the decision last month.
Truss said, despite the ruling, the government remains committed to “ensuring that the cost of public service pensions are affordable for taxpayers and sustainable for the long term”.
Hargreaves Lansdown senior analyst Nathan Long said this issue has far-reaching implications and “the Treasury needs more than just spare change and a raid on the piggy bank to plug the public sector pensions funding hole”.
He added: “Rolling this up as an overall review of pension tax relief looks increasingly likely, meaning those receiving higher-rate tax relief on their payments could be on borrowed time.”
DLA Piper partner Tamara Calvert noted: “Certainly, there is a lot of work to do to unravel the changes and reknit them into a legally acceptable shape for the future.”