Written Statement: Remedying Age Discrimination in Public Sector Pension Schemes

In 2013 the UK Government announced its intention to reform all public sector pension schemes to make them less costly to the taxpayer and, consequently, less beneficial to scheme members.  Those plans were implemented in April 2015.  However, older workers were permitted to remain in their existing schemes, having been granted so-called “transitional protection” from the reforms.

In December 2018 the Court of Appeal found that transitional protection in firefighter and judicial pension schemes amounted to unlawful discrimination on the grounds of age.  In July 2019 the UK Government accepted that the Court’s judgment had implications for the other public service schemes that had similar transitional arrangements, and consulted on proposals to remedy this discrimination last year.

Occupational pensions are a reserved matter.  Primary legislation about them, and therefore the overall shape of the changes needed to address this judgment, is a matter for HM Treasury and for the UK Parliament.  However, Welsh Ministers have functions within that legislation.  The Welsh Government is the responsible authority for firefighters’ pensions in Wales, so decisions about the details of how the discrimination is addressed in the regulations for those schemes are matters for the Welsh Ministers.  We have no responsibility for the pensions of other groups of public-sector workers, although public sector pensions for teachers, NHS staff, local Government staff and some civil servants are paid for from devolved budgets.

Today the UK Government published its detailed approach to addressing the discrimination following consultation in Autumn 2020 (external link).  The UK Government plans to introduce primary legislation to make retrospective changes to address the unlawful discrimination for the remedy period between 1 April 2015 and 31 March 2022.  This will give eligible members a choice of former or current pension scheme benefits in respect of their service during that period; and that choice can be exercised when they retire.  This will ensure scheme members make an informed and optimal choice based on their actual entitlements in both schemes.  The primary legislation will also close the existing final salary schemes for all members from 1 April 2022, and all active members will transfer to the 2015 scheme from that date.

However, these changes apply across the whole of the public sector in Great Britain.  There are many detailed implications for firefighters and their pension schemes which will need to be addressed too.  The Welsh Government will work closely with Fire and Rescue Authorities, Trade Unions and employee representatives to ensure these changes are made promptly and fairly.  

We will continue to seek early certainty from the UK Government about what these changes mean for public sector organisations to enable them to plan ahead.  We will also seek assurances from the UK Government that it will fully meet any costs associated with the changes it introduces, consistent with the principles in the Statement of Funding Policy, to ensure vital funds are not diverted from frontline public services.