Pensions  

Firefighters and doctors cleared to challenge govt on McCloud costs

Firefighters and doctors cleared to challenge govt on McCloud costs

The Fire Brigades Union and the British Medical Association have been granted permission to challenge the government over plans to pass McCloud remedy costs onto their members.

Under current plans, members affected by the McCloud judgement will foot the costs of its remedy, which was included in the 2016 public sector scheme valuations recently completed.

Last year, the FBU and the BMA threatened the government with legal action in a bid to shield their members from these costs.

“The crux of our position is that the funding arrangements for the 2015 scheme are not being observed and that the government is seeking to impose the cost of remedying the government’s unlawful discrimination upon them,” FBU national officer Mark Rowe said in a circular to members on July 4.

The BMA’s claim has been held to overlap with the FBU’s case and will be heard together in the upcoming judicial review, the FBU said.

A date for the review to take place has yet to be confirmed.

Costs ‘must not be passed on to scheme members’

The Public Accounts Committee was critical of the government’s failure to predict the problems arising from the 2011-15 public sector pension reforms, which are expected to cost £2.5bn a year to remedy.

Treasury officials told the committee last year that the costs “will be included in the 2016 valuation and will be borne by member costs going up”.

The FBU observed that the most recent valuations of the 2015 scheme were “considerably cheaper”.

It said that in the case of the firefighters’ schemes, the new scheme was 5.2 per cent cheaper than anticipated, which would lead to an increase in its accrual rate.

“Therefore, the government are trying to use financial improvements that should rightfully provide improvements in benefits or reduction in contributions to our members to rectify the cost of the government’s discrimination,” Rowe said. 

“The FBU have been clear to all parties though, that the cost of rectifying the government’s discrimination within the 2015 scheme transitional protection arrangements must not be passed on to scheme members, but that the improved benefits and/or reduced contributions, as a result of the most recent valuations, must be passed on to scheme members.”

The government has ‘moved the goalposts’

The FBU and two of its members are claimants in the case, with trades unions including GMB and Unite among the interested parties.

The 2015 rules stated that any improvement in benefits as a result of the scheme’s cost-cap mechanism must be passed on to scheme members, Rowe said. 

“The government have moved the goalposts,” he argued. “The McCloud remedy cost must be included as a member cost just because the Treasury says so, according to the new directions. That is plainly unfair and the FBU has a right to challenge that.”

“Improving the benefits of older members (by moving them back into their old scheme) at the expense of members of the 2015 scheme is discriminatory on the grounds of age", Rowe added.