Two trade unions are seeking permission to launch a judicial review of the government’s decision to halt benefit increases to public sector pensions following the discrimination court case brought by firefighters and judges.
The Fire Brigades Union and the Public and Commercial Services Union will be jointly seeking legal action on the government's decision, according to a statement from PCS.
The issue stems from a judgement in the firefighters case which was first handed down in December 2018, when 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.
Last July the government confirmed the ruling would apply to all public sector schemes, with an initial estimate that remedying the discrimination would add about £4bn a year in liabilities across the board.
The case lead Elizabeth Truss, former chief secretary to the Treasury, to announce in January 2019 that the government was halting benefit increases to members due to the "potentially significant but uncertain impact" of the case.
This was in contrast to public sector employers, which have been increasing their pension payments following a 2018 review.
The PCS, representing about 200,000 current and former civil servants, argued the government was “robbing” civil servants of 2 per cent every month by “making them pay more for their pension than the independent valuation says that they should”.
A valuation of public sector pension schemes in 2018 discovered cost cap floor breaches in at least some of the schemes, which would imply an increase in benefits for the members. On the other hand, it also concluded that the pension funds had become more expensive, which meant contribution rates needed to be increased.
The cost cap mechanism is a protection for taxpayers and employees from unexpected changes in pension costs, which was introduced in 2015.
In an update published on its website on February 12, the PCS stated its officials had had a meeting with government in the previous week, where they were told that representatives intended to “ask parliament in a few weeks’ time to give them the authority to make civil servants carry on paying pension contributions at the current rate”.
A judicial review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body.
Mark Serwotka, PCS’ general secretary, said: “If you think about it, every month you get your pay check, 2 per cent that you are giving the government, should be in your pay packet.
“It’s completely unfair and we’ve told the government that they need to give you that money as soon as possible. But at the moment, they’re not listening.”
Steve Webb, partner at LCP, said: "The funding of public sector pensions has become an Alice-in-Wonderland world in which schemes are deemed to be simultaneously ‘too generous’ and ‘not generous enough’.
"This complexity has been compounded by recent court judgments which have thrown the whole reform process up in the air. The government moved quickly to implement the contribution increases implied by the ‘cost cap’ but has dragged its heels on the other side of the deal and this seems to have triggered the PCS action.
"For the benefit of millions of public sector workers it is vital that all the different elements of this tangled web are resolved as soon as possible, so that public servants can plan for their future with confidence and certainty."
HM Treasury has been approached for comment.
maria.espadinha@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
