NARPO – The voice of retired police officers
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NARPO – The voice of retired police officers

McCloud and Sargeant -pre-2015 public service pension schemes

Following the Supreme Court’s refusal of the government’s application for permission to appeal the Court of Appeal’s judgment in Lord Chancellor and Secretary of State for Justice v McCloud and Secretary of State for the Home Department v Sargeant [2018] EWCA Civ 2844, a provisional hearing was listed at the Employment Tribunal for 18 December 2019 to agree how discriminatory treatment in the firefighters pension schemes will be remedied.

The Court of Appeal had ruled that the manner in which the transitional protections in the judges’ and firefighters’ pension schemes were implemented, and under which judges’ and firefighters’ entitlement to remain active members were defined by reference to their age, gave rise in both cases to unlawful direct age discrimination which could not be justified. Protections were applied to all members within ten years of retirement in all public service schemes, with the form that protection took varying from scheme to scheme.

This is a complex area and NARPO Members can either contact ceo@narpo.org, or if retiring or recently retired from the Police, their respective Staff Associations; Police Federation, Police Superintendents’ Association or CPOSA. 

 

Update 18th April

Please find below the NPCC Police Pension Chat of 18th April 2024

NPCC Pension Chat 18 April 2024

This pension chat session covers

 

Update 15th April

Please see the below for the NPCC Police Pensions Bulletin 6 of 11th April 2024

NPCC Police Pensions bulletin 6

 

Update 8th April

Please find below NPCC pension chat slides from 28 March 2024, This covers-

 

Pension board chairs have been asked to progress the recommendations relating to-

 

Pension chat 28 March 2024

 

Update 19th March

Please see the NPCC presentation given in their Pension Chat session on 14 March 2024 providing an update on the compensation mechanism.

Pension chat 14 March 2024

Update 12th March

HMRC has provide new information on how existing tax legislation works with the HMT directed interest payments for remedy payments of pension arrears and top up lump sums as a result of increased pensions by returning to the 1987 legacy scheme.

 

5th March 2024

NPCC has produced a Remedy timeline factsheet – https://policepensioninfo.co.uk/wp-content/uploads/2024/03/NPCC-Member-Remedy-Factsheet-Remedy-timeline.pdf

 

Update 4th March

Consultation on combining Legacy and Reformed pensionable service when calculating Annual Allowance.

The Police Pension Scheme for England and Wales Scheme Advisory Board (SAB) submits its response to the HM Revenue and Customs consultation on combining Legacy and Reformed pensionable service for the purposes of calculating an individual’s pension input amount against their Annual Allowance.

Police SAB – Response to Annual Allowance consultation – issued 27.2.24

Update 22/02/2024

We also discussed scheme sanction charges and I have attached the slides from April 2022 where we discussed unauthorised payment charges in more details, covering why the unauthorised payment is generated and the associated charges – 21 April 2022 – Discussion – Police Pension Community – Knowledge Hub (khub.net).  I have also provided a summary below of the charges that occur with an unauthorised payment.

An unauthorised payment happens when the lump sum is over the permitted amount.  The permitted amount is 25% of the capital value (pension *20 + lump sum).  The unauthorised amount is the difference between the permitted amount and the maximum lump sum.  As a result of the unauthorised amount there are three charges arising

Member payments

  1. Unauthorised member payment at 40%
  2. Unauthorised payments surcharge at 15%.  However, for the unauthorised payment surcharge to arise, the unauthorised amount itself needs to be greater than 25% of the capital value of the pension, therefore these are not generated by lump sum unauthorised payments.

Scheme Payments

  1. Scheme sanction charge, this is a charge applied to benefits built up after 6 April 2006 only of 40% that is reduced to 15% if the member mandates that the member payment of 40% is deducted from lump sum

Unauthorised payments are dealt with in slides 16 – 39 of the pension tax conference for Police and Fire held in November 2019 – Firefighters’ Pension Conference 2016 (fpsregs.org)

 

Update 12/02/2024

Scheme Sanction Charge

Some Branch Secretaries have contacted HQ regarding information being circulated by their Members and on social media concerning Scheme Sanction Charges

NARPO CEO has contacted and met with Clair Alcock, Head of Police Pensions for National Police Chiefs’ Council to discuss this issue and to understand the background with regards to the charge being implemented.

The Scheme Sanction Charge is a charge related to an unauthorised payment. An unauthorised payment happens when a commutation lump sum is above the Pension Commencement Lump Sum (PCLS) threshold. Unauthorised payments have been happening since 2011 when commutation factors rose and the size of the lump sum increased.

There is a member charge of 40% of the unauthorised payment, and a 15% charge known as scheme sanction charge, which should be paid by the scheme, but some scheme managers have been passing this charge to the member

As background to this issue-

In 2010 the commutation factors changed to above 20, that breached the HMRC maximum limit introducing the unauthorised payment charges, and with them the scheme sanction charge.
Neither Home Office or HMRC were able to advise scheme managers on how to treat scheme sanction charges and who should pay these.
Scheme managers are responsible for managing, administering and governing the scheme.
Scheme managers who took the decision to pass the charge to the member should have an audit as to why the charge would be passed to the member, and their reasoning.
Since 2021 when a national pension team was established within NPCC, advice has been given on the matter of the scheme sanction charge.

The charge should not be passed to the member, because the scheme rules do not allow it.  The finance act 2004, says in section 239 paragraph 2 that the person liable to the scheme sanction charge is the scheme administrator.  To clarify for the purposes of the term ‘scheme administrator’ they mean the scheme manager – Finance Act 2004 (legislation.gov.uk).  Therefore, the person liable is the scheme, and the scheme sanction charge is not chargeable to the member if the pension scheme rules do not allow for it, the 1987 regulations have never been amended to allow the scheme to deduct the tax charge from the member.

Retired officers who paid tax on their commutation should have received information from the Force. In that information it would state if a Scheme Sanction Charge had been applied.

NARPO’s advice is for Members who have had a Scheme Sanction Charge applied should contact their Force Scheme Manager, the Chief Constable or Commissioner, not the Pension Administrator, to ask for the Charge to be repaid.

 

Update 08/02/2024

The NPCC website has updated its website, and in particular, members guides for contribution adjustments, divorce and Ill-health – Member Remedy Documentation – policepensioninfo.co.uk

 

Update 12/01/2024

Ill Health Reassessment

Please see the latest update from NPCC on Ill Health Reassessments.

Ill health re-assessment note

 

Update 14/12/2023

The NPCC has prepared a short animation video aimed at Immediate Choice members (those that retired between 1 April 2015 and 30 September 2023 and are affected by remedy). It helps prepare them for receipt of their Remediable Service Statement and gives an overview of the information it contains. The video can be seen using the following link https://policepensioninfo.co.uk/

NPCC will be looking to do a slightly different video for active and deferred members next year as this will need to focus more on the contribution adjustment rather than benefits in payment.

Update 06/10/2023

HMRC has published two sets of new guidance on the McCloud public service pensions remedy, one for scheme administrators and one for members. The new guidance has been published as part of the McCloud remedy regulations that came into force on 1 October 2023 across the public service pension schemes.

The McCloud remedy for members of the public service pension schemes deals with those were affected by the age discrimination which arose when the schemes were reformed in 2015. The purpose of the remedy is to ensure that members are, as far as possible, in the same tax position they would have been in if the discrimination had not happened.

All eligible members are to be offered a choice, at retirement or death (for beneficiaries), to receive benefits for any remediable service during the remedy period (from 1 April 2015 to 31 March 2022), based on either ‘legacy scheme’ or ‘new scheme’ rules (deferred choice underpin (DCU).

The Guidance can be found here.

The guidance for members covers:

• overview of the public service pensions remedy

• information on Chapter 1 schemes and impacts on members

• information on Chapter 2 schemes and impacts on members

• information on Chapter 3 schemes and impacts on members

• annual allowance

• lifetime allowance

• unauthorised payments

 

Update 14th September 2023 

The NPCC has launched a new website containing information for both active and retired members on Remedy – https://policepensioninfo.co.uk/

 

Update 25th May 2023

Proposed Public Service Pension Schemes – Rectification of Unlawful Discrimination – Tax Administration Regulations

HMRC has now published the consultation on the second set of draft tax regulations. The document produced by HMRC  gives further information on the tax years in scope (known as relevant tax years) and self-assessment returns before 31 January 2024.

 

Update 24th May 2023

The Police Pension Scheme Advisory Board (SAB), NPCC and  Police Staff Associations  responses have been submitted.

Please see the following links-

SAB Response

NPCC Response

Police Staff Associations response

NARPO Letter to Home Office 

Update 3rd March 2023

Home Office Public Consultation 

Home Office has launched a formal consultation on the amendments to the Police Pension Scheme (England) Regulations 2014 . This is to bring into effect the retrospective second phase of the McCloud/Sargeant remedy.

The consultation will run for twelve weeks and close on the 23 May 2023 and can be accessed on the following link:

Police Pension Scheme retrospective remedy – GOV.UK (www.gov.uk)

The consultation will look at the changes required to implement the retrospective McCloud/Sargeant remedy which includes:

NARPO will be making a submission through the UK Police Pensions Consultative Forum and Scheme Advisory Board, of which it is a Member.

Any queries can be directed to ceo@narpo.org

Letters to Members regarding Ill Health Retirement 

We are aware that Members on ill health retirement (IHR) pensions and affected by this judgment have received letters from their Force.

This is based on a template produced and circulated to Forces by the NPCC.  This is linked to the McCloud and Sargeant Remedy and may raise concerns.

The remedy legislation includes a requirement for forces to remove any detriment for all officers who retired between 2015 and 2022. Therefore,  all officers who retired during this period should be offered the opportunity to consider their no-detriment pension options, including those who received full protection of their 1987 PPS benefits under the ‘transitional arrangements’.

Members in scope of the Remedy who have ill-health retired from PPS 87 since 1 April 2015, will have a choice of benefits for the Remedy Period  This means that they could have ill-health retired as active members of the 2015 CARE Scheme which in turn means they would have been assessed under the ill-health provisions of that scheme which has two tiers of benefit.

If they would have met the test for the higher tier benefits under the 2015 CARE Scheme, it is possible that, taking into account factors such as age and length of service, the enhancement under the 2015 CARE Scheme would have been better than that payable under PPS 87 therefore giving a greater overall Ill Health Retirement pension.

The letters are intended to identify retired officers who might potentially benefit, and if appropriate,  give them the choice of the better benefit. Consent is being asked to carry out the necessary reassessment using the 2015 CARE Scheme criteria .

This is not a reassessment of pensioner qualification for IHR pension. The reassessment will be carried out using only the evidence available and used in the original assessment and nobody’s pension will be withdrawn or reduced as a result . There is only the likelihood that in a few cases a retired officer will be able to opt to receive a larger pension, if they wish.

NPCC is putting together a template for a certificate for completion by the SMP who carries out the reassessment. This, it is hoped, will help to focus SMPs work in this process  i.e. using only the original evidence to reassess against the 2015 CARE Scheme higher tier test, and not considering other aspects of individual cases.

Update 2nd August 2022

TPO publishes its approach to McCloud and Sargeant age discrimination complaints
The Pensions Ombudsman (TPO) has published a factsheet on its approach to the age discrimination complaints which led to the Court of Appeal judgments in the cases of McCloud and Sargeant. The publication outlines the background of the issues at hand, TPO’s view on what pension schemes and members affected by the judgments can do, and TPO’s current approach to complaints regarding the issue. The factsheet states that a remedy is expected in October 2023, but that if a member continues to be unhappy then advises them to complain under their pension scheme’s internal dispute resolution procedure before complaining to TPO if the matter remains unresolved.
The full factsheet can be read here.

Update 11th July 2022

Please see the following link to the NPCC Flyer for eligible retired officers

Update 8th March 2022

Please find the link to the Home Office response to the 8-week formal consultation on the regulations to implement prospective remedy in the police pension schemes in England and Wales that closed on 2 January 2022:

Amendments to police pension schemes in England and Wales 2022 – GOV.UK (www.gov.uk)

Please also find a link to the Home Office Prospective Changes Consultation Response Comms Key Messages & Frequently Asked Questions

Update 1st January 2022

NARPO has submitted its response to the Home Office consultation document . The response can be found here

Update 15th December 2021

Press Statement from the Police Superintendents Association (PSA) on the outcome of their Judicial Review and the ruling that the consultation on public services pensions schemes carried out this year was unlawful and that the Government had breached its Public Sector Equality Duty.

The full judgement and the PSA press statement can be viewed here:

https://www.policesupers.com/news/police-leaders-deem-unlawful-treatment-by-government-as-deceitful-and-showing-complete-contempt-for-officers-in-months-of-underhand-and-unfair-actions-towards-police

Update 29th November 2021

The Home Office has provided an update on the Government’s position on the existing Immediate Detriment guidance

Update 9th November 2021

The Home Office has launched a consultation on amendments to police pension schemes in England and Wales, to enact the first phase of the remedy in the McCloud/Sargeant cases.

The first phase of the remedy is to make changes to the scheme regulations, in line with the Public Service Pensions & Judicial Offices Bill, which will close the legacy pension schemes to future accrual from 31 March 2022 and ensure all members who remain in service from 1 April 2022 do so as members of the reformed scheme. This is intended to ensure future equal treatment going forwards.

This consultation on the Police Pension Scheme seeks responses from interested parties on the amendments to the regulations needed to enact the first phase of the remedy, as set out in the Public Service Pensions and Judicial Offices Bill. The intention is that these come into force on 1 April 2022.

Please also see the following link to FAQ’s

Consultation responses can be sent to Policepensionspublicservicepensionsremedy@homeoffice.gov.uk. The consultation will close at 3pm on the 2nd of January 2022.

 

Update 13th August 2021

HMT Public Service Pensions and Judicial Offices Bill

 The government introduced the Public Service Pensions and Judicial Offices Bill (PSP&JOB) to Parliament on 19 July 2021. This legislates for how the government will remove the discrimination identified by the courts in the way that the 2015 reforms were introduced for some members. In addition, the Bill will reform the pension arrangements and increase the mandatory retirement age for the judiciary, and put judicial pay and allowances on a firmer legal footing.

The Bill will implement changes across all the main public service pension schemes in response to the Court of Appeal judgment in the McCloud and Sargeant cases:

 

The Bill will provide public service workers with greater certainty of their benefit entitlements. It ensures that public servants receive guaranteed pension benefits in a way that ensures that they are affordable and sustainable into the future.

The judicial measures acknowledge the unique constitutional position of the judiciary by updating their pension arrangements to reflect this. This, alongside changes to their judicial mandatory retirement age, will help to ensure our judiciary can continue to meet the demands of the justice system.

The Bill, and other supporting documents, can be found here.

There is also al list of FAQ’s which can be found here

Update 14th June 2021

The Home Office has published updated guidance for police pension schemes.

The updated technical guidance is for processing certain immediate detriment cases as part of the McCloud/Sargeant pensions litigation. It is informal and non-statutory.

The keys issues from this guidance document for retired officers are reproduced below-

Transition members who are already in receipt of a pension

4.3 There are cases (in respect of both ill-health/ordinary retirements) where transition members have already retired and are currently receiving an ill-health/ordinary pension. It is recognised that many of these members’ pensions are lower than they would be if they had instead been members of their legacy pension scheme since April 2015. For example, where a transition member has retired on ordinary grounds below age 55, their benefits accrued under the 2015 Scheme will currently be deferred until their State Pension Age.

4.4 These cases are likely to be more complex to resolve, and at this stage it is not clear that cases where an individual has already retired can consistently be processed under current legislation without adverse impacts. Even for cases that do not need legislative change, schemes and in some cases individuals will require further guidance or information to be provided on how the detail of cases should be processed, and on interpretation of existing rules where these do not provide immediate clarity, given the complexity and novelty of this situation. This material needs to be worked through in some detail, to ensure that – as far as possible – individuals whose cases are processed under section 61 receive the same, or as close as possible, treatment as those being processed once new legislation is in place. Work in this area is ongoing. Police forces may be able to process these cases once outstanding points have been resolved. However, providing a full remedy in these cases may not be possible until legislation has been implemented.

Update 4th February 2021

HMT – Public service pension schemes consultation outcome

HM Treasury has published the public service pension schemes consultation outcome, which sought views on proposals relating to the 2015 public service pension scheme reforms. Please see a summary of key points below:

Alongside the consultation response, the government also published an updated Equality Impact Assessment which provides analysis of any potential impacts on those with protected characteristics as a result of the policies, together with a leaflet providing a high-level summary of the government’s policies and who is affected by them. Furthermore, the government gave an update on the Cost Control Mechanism and the 2020 valuations noting, among other things, that any changes to employer contribution rates resulting from the 2020 valuations will be delayed from April 2023 to April 2024.

The government intends to introduce new primary legislation when parliamentary time allows, in order to ensure that the discriminatory features relating to the remedy period and the transition to the reformed schemes are removed from the scheme rules with effect from 1 April 2022. Furthermore, any necessary amendments required to scheme regulations in order to implement the policies will be subject to further consultation on a scheme-by-scheme basis.

Update 18th September 2020

Government publishes guidance for Police Pension Scheme members on public service pension schemes consultation

The Home Office has published guidance for members of the Police Pension Scheme on the public service pension schemes consultation, which was launched on 16 July 2020, concerning proposals to remove the age discrimination identified in the policy of transitional protection that was part of the 2015 reforms to public service pension schemes.
Among other things, the guidance provides information on the purpose of the consultation, details concerning those affected/in scope of the consultation proposals, why members who joined after 31 March 2020 are not in scope, why the government is asking members to make the choice between the different sets of pension benefits, how the proposals address future pension provision and affect those who have retired or will retire before 2022, post consultation steps, and the cost control mechanism.

The guidance also reveals that the claims against the Police Pension Scheme (known as the Aarons case) have been conceded by the government and remedy hearings are underway. The consultation will progress in parallel with the remedy decided by the tribunals in the Aarons case.

 

Update 16th July 2020

Following the Court of Appeal judgment in December 2018 in the McCloud/Sargeant case ([2018] EWCA Civ 2844) that transitional protection in the judges’ and firefighters’ pension schemes gave rise to unlawful age discrimination, the government has now published a consultation which sets out its proposals for addressing this discrimination (which was part of the 2015 reforms to public service pension schemes), along with its plans for the future, in the schemes covering the NHS, teachers, the civil service, firefighters, police and armed forces (the judicial and local government pension schemes, as well as public service schemes in Northern Ireland, are being consulted on separately). The consultation closes on 11 October 2020.

The government has also published an accompanying Equality Impact Assessment and a leaflet which sets out a summary of the proposals.

The government proposes to introduce legislation: (i) to make changes to the schemes to remove the discrimination identified by the courts for the period 1 April 2015 to 31 March 2022 (the remedy period); and (ii) to address future service beyond the remedy period.

Rather than just returning all members to the legacy schemes, the government wants to ensure that people who are better off in the reformed schemes (based on a career average rather than final salary design) can choose to keep those benefits, and also that those who were closest to retirement age, and so were prevented from moving to the reformed schemes, will now have that choice.

The consultation explains how the government’s two proposed options for removing the discrimination between scheme members would work. Under either option, the government would give eligible members a choice of which set of scheme benefits is better for them for the remedy period. The consultation also sets out proposals for moving all active members into the 2015 reformed schemes after this period, regardless of when they joined, therefore providing equality of treatment.

Alongside the public consultation, the government has also published a separate update announcing: (i) that the pause of the cost control mechanism will be lifted and the cost control element of the 2016 valuations process will be completed; and (ii) that the costs of addressing the age discrimination identified in the McCloud judgment will be included in this process.

 

Update 25th April 2020

The Fire Brigades Union (FBU), along with three other unions (POA, PCS, and GMB), has filed court proceedings over the government’s withholding of improved pension benefits from hundreds of firefighters and hundreds of thousands of public service workers.

Please see update

 

Update 25th March 2020

Since February 2020, relevant pension schemes have been conducting technical discussions with member and employer representatives to seek initial views on the government’s high-level proposals for removing the discrimination. The government is considering the initial views of stakeholders and continuing to work through the details of the technical design elements of the proposals. Detailed proposals will be published later in the year and will be subject to public consultation.

The government reiterates in the written statement that members of public service pension schemes with relevant service will not need to make a claim in order for the eventual changes to apply to them. The proposals the government is considering would allow relevant members to make a choice as to whether they accrued service in the legacy or reformed schemes for periods of relevant service, depending on what is better for them. The government will provide more detail later in the year, but if an individual’s pension circumstances change as a result, the government may also need to consider whether previous tax years back to 2015–16 should be re-opened in relation to their pension. The government will also set out its proposal to remove the discrimination for future service in the forthcoming consultation.

Alongside its proposals for addressing discrimination, the government will also provide an update on the cost control mechanism in public service pension schemes, which was paused in January 2019 due to uncertainty about benefit entitlements arising from the McCloud judgment.

 

Update 21st February 2020

The government has said that it is committed to addressing the age discrimination identified in the McCloud case in all public service pension schemes, while ensuring all members can keep their accrued benefits, and that schemes are currently discussing high-level proposals to achieve this with employer and member representatives in order to inform a full public consultation.

The government adds that Employment Tribunals are considering the remedy for claimants in the various cases and that the cost control mechanism remains paused while these processes are underway as the value of pension schemes to members cannot be assessed with certainty.

Update 28th October 2019

A Police Pensions Case Management hearing took place on Monday 28 October 2019.

The below is from CC Matt Jukes, the NPCC Lead on Pay and Conditions:

“Talking to officers every day, it’s clear that you deserve as much clarity as possible around your conditions of service, including pensions and that this has been a difficult issue for colleagues.   As employers, Chief Constables have been unable to resolve this in isolation whilst the wider challenge to pension reform has been ongoing.   Monday’s hearing and the declaration agreed by the Tribunal have moved us on, which is very welcome.

The attached Home Office factsheet summarises the hearing and how claimants with relevant service will be treated as qualifying for full protection and having remained in their earlier pension schemes.  It also provides an overview of Government’s plans to remove the difference in treatment for non-claimants.  This will give greater certainty to officers regarding their pension entitlement.  The Government has been clear in its assessment that the reasons for the 2015 still stand and that for the long-term, public sector pensions need to be sustainable and affordable.

The remedy to this challenge – dealing with thousands of individual officers affected and the specific claims – will generate additional costs.   We have made submissions to Ministers regarding the need to ensure that police resources are protected from the impact of these costs.

We will now be working through the detailed impact of the declaration and it will be some time before all the answers for individuals will be available. That will involve the Police Pension Schemes Advisory Board, where we come together with the Home Office to consult with Staff Associations.  NPCC leads and the Home Office are also working hard with forces to get further information to officers affected as soon as possible.”

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