Govt discriminated against younger judges and firefighters, court finds

The Court of Appeal rejected an appeal by the Ministry of Justice on Thursday, saying that “It does not seem to us that [the government’s case] adds anything either to say that it was somehow fairer to older judges to give them protection which they needed less than younger judges”.

Any 'compensatory' or 'transitional' protections offered to members in scheme change exercises need to be scrutinised carefully

Ruth Ormston, Gowling WLG

The unequal treatment in question was brought into government policy in response to the 2011 Hutton report, which recommended that public sector final schemes be downgraded to career average arrangements for future accrual, to make them more sustainable.

In 2013 the government’s response to the report stated an intention that those with less than 10 years until retirement should “see no change in when they can retire, or any decrease in the amount of pension they receive at their normal pension age".

Younger workers out of pocket

Judges and firefighters represented in the court cases argued that this constituted unfair treatment of younger members of the schemes, and indirectly of women and ethnic minorities, who were underrepresented in the protected demographic.

Evidence in the firefighters’ case demonstrated that members of the Firefighters Pension Scheme who fell out of the protection band would have to save up to £19,000 a year to purchase an annuity covering the difference between protected and revised benefits.

Lawyers for the government had argued that as the changes were made in order to enact a deliberate policy aim of protecting older judges, it should be afforded the widest discretion set out by EU and UK equality laws.

Meanwhile, lawyers for the judges argued that the legitimacy of the policy aims themselves and the means of achieving them should be assessed in the context of equal treatment, an argument the court ultimately sided with this week.

Expensive problems to fix

The government may decide to refer the decision to the Supreme Court. If it does not appeal or the appeal is dismissed, “the costs of sorting this out will be significant”, said Ruth Ormston, principal associate at law firm Gowling WLG.

“The government will need to compensate younger members for the less favourable treatment they have received since the transitional provisions came into force, as well as working out how to address the pension scheme changes going forwards so that the discriminatory elements are removed for all members,” she said. “They will essentially have to revisit a liability management exercise that they would have hoped was done and dusted.

Ormston said that similar claims could arise around the government’s changes to other public sector schemes if protections have been put in place in a similar manner.

The judgment will also have implications for the private sector.

“The decision serves as a stark warning that any 'compensatory' or 'transitional' protections offered to members in scheme change exercises need to be scrutinised carefully to ensure that they are do not constitute unlawful age discrimination if they result in different treatment of members on the basis of their age,” Ormston added.