The British Medical Association is the latest public sector trade union to threaten legal action should the government persist with plans to make its members pay for the cost of the McCloud remedy.
As FTAdviser reported earlier this month, the Fire Brigades Union sent a letter to HM Treasury signalling its intent to file for judicial review over plans to have members foot the bill for the remedy - which was triggered by a legal case aiming to prevent age discrimination in public sector pensions.
The government refused to comment on ongoing litigation.
While the government has said it does not want members to be in a worse position than they would have been prior to the McCloud remedy being implemented, it said it is “ultimately members who will pay these costs”.
The public accounts committee has esimtated the cost of the McCloud remedy could be £17bn.
Now the BMA has writing both to the Treasury and to health secretary Sajid Javid threatening legal action.
Broken promises?
The BMA said the dispute centres on a cost-control mechanism, which is part of the 2015 pension scheme to which many NHS doctors belong.
The BMA said: “A valuation in 2016 found [...] there was a ‘cost floor breach’ — the cost of running the NHS Pension Scheme was significantly less than had been forecasted and, under the terms of the 2015 changes, this should have automatically triggered a process to reduce member contribution rates and/or increase pension benefits to bring the costs back within the agreed parameters.”
The government’s initial response to the 2016 valuation was to promise “improved pension benefits” for employment between 2019 and 2023, but this changed when the cost-control mechanism was paused in 2019 in response to the McCloud ruling.
Once the pause was lifted, the government said it intended to transfer the cost of the McCloud remedy to the 2016 valuation.
“If this were to happen, the improved benefits to members that had been previously agreed to be implemented would now no longer be honoured as the McCloud remedy costs, if incorporated, would remove the cost floor breach,” the BMA said.
“The BMA is challenging the government’s actions in both lifting the suspension of the cost-control mechanism and rolling in the costs of the McCloud remedy for the purposes of resuming the cost-control mechanism and reconfiguring the valuation of the scheme.”
BMA pensions committee chair Vishal Sharma said: “It is entirely wrong in principle that the government is passing the costs of remedying age discrimination, for which it and it alone was responsible, on to NHS Pension Scheme members. It is effectively trying to make NHS scheme members pay for its unlawful age discrimination.
“The cost-control mechanism in the scheme was designed to allow it to react to changing circumstances, but certainly not designed to accommodate a ruling such as McCloud.”
“The government’s actions are manifestly unfair. It has tried to remedy one injustice — an unlawful act of age discrimination — with another, which has no reasonable basis. We will take the strongest possible action to resist it,” he added.
Case unlikely to succeed
Irwin Mitchell partner Penny Cogher told FTAdviser's sister publication Pensions Expert: “Judicial review can be used to successfully challenge the decisions of public bodies on grounds of illegality, irrationality, procedural unfairness and/or failure to meet a legitimate expectation. Primary legislation (ie, acts of parliament) are typically not subject to judicial review.
“However, secondary legislation such as these directions can be challenged successfully if they are not compliant with the primary legislation.”
“The only way that the BMA or Fire Brigades Union would be successful is if they can demonstrate that the 2021 directions are incompatible with the primary legislation, and this is the details that they have not set out in their letter before claim,” she continued.
“Furthermore, as these directions were enacted on October 7, the BMA will have until January 7 2022 to launch a challenge as the limitation period for judicial review is very short.
“I would be surprised if this materialised into actual litigation as it seems the BMA’s prospects are limited. The challenge for the government will more likely be the court of public opinion, which is possibly what the BMA is really targeting,” Cogher added.
Mercer partner Mike Harrison was critical on Twitter, writing: “They know ‘the government’ doesn’t have any money, right?
“This would just be redistribution from other equally hard-working taxpayers, many of whom do not have generous defined benefit pensions at all.”
Benjamin Mercer is a reporter at FTAdviser's sister publication Pensions Expert
