Written statement on Treasury Directions under the Public Service Pensions and Judicial Offices Act 2022

Statement by John Glen, Chief Secretary to the Treasury

The Government is committed to public service pensions which are fair to public sector workers. In 2015 (2014 for local government workers in England and Wales), reforms were made to Public Service Pension Schemes in England and Wales to provide workers with fairer pensions arrangements and to make the pension schemes more sustainable and affordable for the longer term. These reforms followed the recommendations of the Independent Public Service Pensions Commission. The Government believes the 2015 changes to public service pensions balanced the interests of public service workers, employers and taxpayers fairly.

However, when the reforms were introduced, they provided ‘transitional protections’ which allowed members who were close to retirement to remain in the previous scheme (the legacy scheme). In December 2018, the Court of Appeal found that these transitional protections in the judicial and firefighters’ pension schemes gave rise to unlawful discrimination (the McCloud and Sargeant case).

The Public Service Pensions and Judicial Offices Act 2022 was enacted to remedy the discrimination identified by the courts. The Act provides a retrospective remedy, such that affected members are treated as if they had always been in the legacy scheme for their period of remediable service, as well as providing affected members a choice of which pension benefits they wish to receive for that period when those benefits are put into payment. The detail of the retrospective remedy for affected members will be set out in scheme regulations made under the Act for each affected pension scheme. The retrospective remedy is due to come into force by 1 October 2023.

The Act provides for HM Treasury to make directions to set out how schemes must exercise the powers provided in the Act in making scheme regulations. The government has made and published Treasury Directions today and they are available at https://www.gov.uk/government/publications/public-service-pensions-and-judicial-offices-act-2022-treasury-directions(opens in a new tab)

The Directions ensure that scheme regulations for the public service schemes can implement a comprehensive remedy for affected members. The Directions provide for consistent treatment across the public service pension schemes to enable schemes to return members to the position they would have been had the discrimination not arisen. The publication of the Treasury Directions today enables the responsible authorities (Secretaries of State with responsibility for the public service schemes and the Welsh and Scottish ministers for the devolved schemes) to proceed to develop and consult their stakeholders on scheme regulations to deliver the remedy in each of the public service schemes. Following consultation, the Secretaries of State responsible for the pension schemes for the NHS, Teachers, local government workers and Police in England and Wales, Firefighters in England, the UK Armed Forces and the Civil Service in Great Britain, will then make and lay secondary legislation in Parliament. Scheme regulations must come into force by 1 October 2023.