Civil servants are set to have their case to get pensions contributions reduced – and potentially have thousands of pounds in overpayments refunded – examined in full at the High Court next month.
If PCS, the civil service’s biggest union, and five sister public-sector unions are successful in their bid, Civil Service Pension Scheme members will be in line for a 2% cut in contributions.
Because the unions argue that ministers were wrong not to apply the reduction in 2019, victory in the judicial review would likely result in HM Treasury having to provide back payments for three years’ worth of overpayments.
PCS said average losses for its members were in excess of £1,000. For some civil servants the figure would be considerably higher. Rectifying the contributions issue is one of the demands officials endorsed in PCS’ successful strike ballot this autumn.
The Fire Brigades Union is leading the High Court challenge. PCS, GMB, the Prison Officers’ Association, the Royal College of Nursing, and Unite are named as interested parties.
Although they are not named, professionals union Prospect and civil-service leaders union the FDA are interested parties. Civil Service Pension Scheme members would not need to be in one of the challenger unions – or any union – to benefit from a favourable outcome in the case, however.
The case is part of the fallout from 2018’s McCloud Judgment, which effectively declared elements of the government’s 2015 public sector pensions reforms illegal because they were found to discriminate against younger scheme members.
In early 2019, Liz Truss – then chief secretary to the Treasury – controversially paused the routine valuations process for public-sector pensions, which would have demonstrated schemes’ health and triggered the reduction of contribution rates under a mechanism built into the 2015 reforms.
At the time Truss said the move was necessary because fixing the discrimination issues underscored in the McCloud case could cost up to £4bn a year, making it impossible to get “clarity” from valuations.
The cost of fixing the discrimination highlighted by the McCloud case is now given as £17bn. But unions dispute plans for pension-scheme members to fund the cost of the remedy.
Their judicial review is demanding the downward revision of contributions and improvements that pubic-sector pension scheme members were entitled to under the 2015 reforms, and which should have been applied from 2019.
PCS and the five other unions named in the case won their right to a full judicial review hearing to probe the complaint in July.
Yesterday, PCS confirmed that the hearing would take place in the last week of January.
The Treasury has routinely refused to comment on ongoing litigation, including this case.