The government will press ahead with planned reforms implementing the McCloud remedy with respect to members of the police and firefighters’ pension schemes, making amendments to ill-health provisions for the latter, despite concerns the remedy might itself be discriminatory.
The Home Office published on June 21 its responses to two consultations launched in November into the first stage of the McCloud remedy, in relation to the Firefighters' Pension Scheme and the Police Pension Scheme in England.
The first stage of the remedy was designed to cover regulations ensuring that all legacy schemes closed to future accrual from March 2022, and that members remaining in service were moved over to the reformed schemes from April.
Phase two, on which the government intends to consult this year, concerns the choice of benefits available to members during the remedy period, which falls between April 1 2015 and March 31 2022.
We will continue to consider potential mitigations and will discuss them with police member and employer representatives
Home Office
Govt rebuffs police concerns
Members of both schemes raised complaints at the time of the consultation, with members of the police scheme in particular warning that the McCloud remedy had “deeply unfair” ramifications, and that it could itself undermine protected rights and result in sex discrimination.
The Home Office response to the consultation confirmed it received 97 comments, with a “high proportion” coming from individual members of the police scheme.
One concern raised was that closing the legacy schemes may adversely impact members on the grounds of sex and gender.
The Home Office’s response found that this complaint did not fell within the scope of the consultation, since it did not address the question of whether the legacy schemes should have been closed in the way that they were.
Concerns about the provision of ill-health benefits were similarly rebuffed, with the government finding that members will not be treated less fairly based on when and from which scheme they apply.
The most sizeable share of negative responses concerned the impact of the proposed changes on members with protected characteristics, where 18 of the 22 responses received claimed to have identified negative impacts arising from the changes.
However, the government declined to acknowledge these concerns, arguing there “are no additional equality impacts created by implementing the proposed changes as set out in the consultation document”.
It did, however, recognise worries about the interaction between the retirement ages of the reformed and legacy schemes, which it said “is a consequence of the move from a purely service-based pension scheme to one that is also based on age".
“The ‘two part’ nature of the benefits and the different points at which they are paid was set out in 2013 as part of the long-term reforms.”
Following concerns raised during the consultation, however, the Home Office promised it would “continue to consider potential mitigations and will discuss them with police member and employer representatives”.
It added, however, that “the concerns raised do not arise as a consequence of the changes proposed in the draft regulations”.
Firefighters get ill-health amendments
Members of the firefighters’ scheme also voiced their dissatisfaction with the proposed remedy when it was first put to consultation, and especially the plans to make members pay the cost of the remedy.
In the consultation, the Home Office acknowledged concerns around ensuring equitable treatment as regards the provision of ill-health benefits in particular, proposing an “ill-health retirement underpin” for cases that straddle April 1 2022.
The government elaborated on the need for such an amendment in its response, explaining that “further analysis” had revealed there was “only one scenario where a member who transitions on April 1 2022 with an ill-health decision pending could be placed in a worse position”.
"This is due to the operation of the already established ‘single source’ ill-health arrangements. This would be where a legacy 1992 scheme member moves across to the reformed scheme and does not meet the qualifying criteria for ill-health retirement in the reformed scheme, but would have met the corresponding criteria under the legacy 1992 scheme.”
It suggested this may arise due to the differences in the normal pension age between the schemes, which ill-health cases are tested against.
“In short, under the legacy 1992 scheme the issue is whether incapacity continues until age 55, whereas under the reformed scheme it is whether incapacity continues until age 60.”
Govt to consult again on McCloud implementation in 2022
The Cabinet Office, Home Office, Department for Education and Ministry of Defence have each opened consultations into the first phase of the McCloud remedy, covering regulations that will see all legacy schemes close to future accrual from March 2022. However, new consultations on phase two of the remedy will be launched next year.
In order to remove the possibility of inequitable treatment, the Home Office confirmed it would make changes to the reformed scheme’s rules to ensure that, “for members where the ill-health assessment process began on or before March 31 2022, the member is assessed for ill-health retirement against an NPA of 55”.
“This will mean that there should be no cases where an affected member would have qualified for ill-health retirement under the legacy 1992 scheme but does not qualify under the reformed scheme.”
However, this was the only change the government agreed to, since the Home Office considered that all other points in the planned regulations were sufficient to meet its policy objectives.
