Landmark Decision on Age Discrimination in Public Sector Pension

Published / Last Updated on 08/02/2021

An announcement was made last week by HM Treasury to implement a “Deferred Choice Underpin” for publioc sector pensions.

This followed a ruling by the Courts in connection with age discrimination in public sector pensions. 

In particular, workers below a certain age were automatically moved to a new pension whilst those closer to retirement were allowed to remain in the old “legacy” pension arrangements. 

The Court ruled this to be unlawful and consulted the Government on the best way to address the discrimination.

There were two options discussed:

  1. An “Immediate choice” where public servants  teachers, nurses and civil servants would choose now which scheme they wanted to be a member of for the period from 2015 to 2022.
  2. A “Deferred choice” where members stay in the “legacy scheme" but can opt at retirement for the alternative scheme if this would produce a larger pension and workers will have to trust that this provision will not have been changed by the time they retire.

The deferred choice would mean members of these schemes will not know what rules will apply to their pension until retirement.  Members will receive forecasts of their pension based on their legacy scheme, but their final pension may turn out to be different if the newer, alternative scheme would have been better.

Comment

It make sense to us, new workers join the new scheme to limit public sector pension costs and existing workers have choice which removes any element of age discrimination.

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