McCloud: Pension Consultation
The government has announced a 12-week consultation seeking views on how to remove the discrimination caused by the transitional rules which meant older Service Personnel (SP) remained in their legacy schemes when other, younger, SP were transferred to the reformed scheme in 2015.
In 2015 the government implemented reforms to all the main public service pension schemes, including the Armed Forces Pension Scheme. The reforms included a policy of transitional protection that meant members closest to retirement stayed in their old schemes. The Court of Appeal later found the policy to be discriminatory, primarily against younger members, and so since then the government has been working to address the discrimination. Whilst the simplest option would be to put public service pension members back in their legacy schemes, the Government has been clear that it will not do this as a significant number of personnel will be better off in the reformed (2015) schemes. Therefore, the final policy design needs to allow members a choice of which scheme is better for them.
The public service pensions consultation is the next stage in the process to remove the discrimination identified by the courts in the 2015 pension reforms. The changes proposed in the consultation to remove the discrimination will apply across all of the main public service pension schemes and provide members with a choice of which scheme benefits they would like to receive for the remedy period.
Scheme members who will be in scope are those who had service on or before 31 March 2012 and on or after 1 April 2015. This includes any pre-31 March 2012 re-joiners with a qualifying break in Service of less than 5 years. This includes those members who are currently serving and in-scope personnel who have left the service since 1 April 2015. Members who were originally covered by the transitional protection will also be provided with a choice of which scheme benefits they would prefer to receive for the remedy period.
The remedy period is the time period for which members will be able to retrospectively choose which scheme benefits they will receive. It will run from 1 April 2015 which is when the reforms were introduced, until 31 March 2022 which is the point when treatment will be equalised going forward. This is because the government also proposes that, with effect from 1 April 2022, all those who continue in service will do so as members of the AFPS 15 irrespective of whether they previously had transitional protection or not.
The Government and the Ministry of Defence have issued communications on the consultation, the options and impacts on pension schemes. Service Personnel and families are recommended to read these communications which can be accessed through MODNET or directly on the Government’s website.