The government is braced for more McCloud drama after the Fire Brigades Union published a letter threatening legal action to stop the cost of the remedy falling on members.
It has been admitted that members will be expected to foot the bill for the McCloud remedy once the 2016 public sector scheme valuations are completed. The 2016 valuation process was paused following the McCloud judgment but, as Pensions Expert reported in October, Treasury reforms to the cost control mechanism mean these valuations can now conclude.
The Public Accounts Committee was highly critical of the government’s failure to predict the problems arising from the 2011-15 public sector pension reforms, which are estimated to cost £2.5bn a year to put right.
Treasury officials told the committee in April that the costs “will be included in the 2016 valuation and will be borne by member costs going up”.
It was the government who introduced the cost-control mechanism into the new pension scheme. The mechanism provided that savings from the new scheme should be passed on to those scheme members. The government now wishes to ignore the legislation that made that provision, legislation that they introduced
Mark Rowe, FBU
Though the government has said, as part of its reform of the cost-control mechanism, that it will waive ceilings where target costs are exceeded, as it does not want “members to be in a worse position than they would have been prior to the McCloud remedy being implemented”, it is “ultimately members who will pay these costs, and this process will be managed through the cost-control mechanism”.
“HM Treasury wants members to pay to put this right — at an estimated cost of £17bn — despite this being its own mistake,” the PAC noted in October.
Now, the FBU has sent a formal letter before a claim for judicial review against the government’s decision, hoping to stop the changes, which, it says, will see its members foot the cost for the unlawful discrimination introduced into their pension scheme by the government.
“The government has said that it will try to impose the cost of the discrimination on to those who are now on that 2015 pension scheme — a large number of whom will have been those who were discriminated against,” it explained.
FBU national officer Mark Rowe said: “It is unbelievable that the government is trying to make firefighters pay for their own discrimination, and unbelievable that it is forcing firefighters to come back to the courts time and time again to try and win pensions justice.
“The government needs to get a grip, recognise its mistakes, recognise the highly valuable contribution that firefighters make every day, and sort out firefighter pensions in a timely and straightforward manner. Six years after the relevant pension reforms came in, the government is still in a mess over this.
Rowe continued: “The government is trying to make these firefighters pay via a scheme in their pensions called ‘cost control’. Cost control adjusts pension contributions or benefits if the actual cost of the pension scheme diverges from the target cost of the pension scheme by 2 per cent or more, with firefighters losing out if the actual cost is higher.”
Public sector schemes told to conclude 2016 valuations
The Government Actuary’s Department has agreed with HM Treasury that its amendments to the cost-control framework used in public sector schemes meet the government’s policy objectives, drawing a line under the troubled 2016 valuation process and allowing public sector schemes to complete these.
“It was the government who introduced the cost-control mechanism into the new pension scheme. The mechanism provided that savings from the new scheme should be passed on to those scheme members. The government now wishes to ignore the legislation that made that provision, legislation that they introduced.”
The Treasury and secretary of state have been asked to provide a response by November 19.
Asked for comment, a government spokesperson said: “We cannot comment on ongoing litigation.”
