Defined Benefit  

Union urges govt to give back £2.4bn of ‘owed pensions’

Union urges govt to give back £2.4bn of ‘owed pensions’

A trade union is urging the government to give back an estimated £2.4bn in pension overpayments to public sector scheme members.

The GMB is arguing that since 2015, 4.1m people working for the NHS, the civil service and in local government have been overcharged for their pensions.

With the 2015 public sector pension reforms, the government introduced protection for taxpayers and employees from unexpected changes in pension costs in the form of a cap.

Article continues after advert

The level of the cap is set as a percentage of pensionable payroll, which varies from scheme to scheme.

In September, the government announced there could be cost cap floor breaches in at least some of the schemes, which would imply an increase in benefits for the members of those pension funds.

This increase was going to be determined by the public-sector scheme valuations. But these were halted by the government in January.

This decision was made due to a judgement handed down in December - where the Court of Appeal ruled the government had discriminated against a group of judges and firefighters on the grounds of age, race and equal pay in relation to changes to their pension.

Elizabeth Truss, chief secretary to the Treasury, said at the time that given the "potentially significant but uncertain impact" of the court judgment, "it is not now possible to assess the value of the current public service pension arrangements with any certainty”.

"It is therefore prudent to pause this part of the valuations until there is certainty about the value of pensions to employees from April 2015 onwards," she added.

The GMB, which launched a petition demanding to get the pause lifted, has stated that the government is “withholding the surplus pension money while it appeals the court’s decision”.

The union has also written to Prime Minister Theresa May urging “action to protect public sector workers’ pensions”.

According to George Georgiou, GMB national pensions organiser, “it’s absolutely outrageous ministers think they can swindle £2.4bn out of dedicated public sector workers' pensions”.

He said: “Our public-sector workers graft hard for years, saving for their retirement, only for the government to take their money to pay for ministers’ own mistakes.

“They should be ashamed of themselves and take steps to put it right immediately - these improvements to benefits are needed particularly for low paid public sector workers.”

maria.espadinha@ft.com