A campaign group representing police officers dissatisfied with the government’s handling of the 2015 public sector pension reforms have reiterated their complaints in response to the McCloud consultation, calling for the changes to be reversed.
The Pension Challenge Administration Team, comprising officers from every federated rank in the UK, successfully challenged the transitional protections applied to police pensions in 2015. Though not formally constituted, it boasts around 33,000 current and retired police officers in its social media group.
Pensions Expert reported in May on its criticisms of the McCloud remedy. The consultation into phase one of its implementation closed earlier this month, and the PCAT has submitted its criticisms as a formal response to that consultation.
The officers contend that the remedy itself undermines protected pension rights and could potentially lead to sex and age discrimination.
We have always contested the only way to guarantee complete fairness and negate all forms of discrimination is to allow all officers to remain on their legacy scheme pensions until the normal pension age of those schemes
Pension Challenge Administration Team
McCloud is not the issue
The police officers argued that the terms of the consultation are misleading, as several of the points raised have nothing to do with the McCloud remedy, stemming instead from the 2015 decision to move all unprotected officers to the career average revalued earnings scheme.
As the PCAT reiterated in its consultation response, the officers contend that the McCloud remedy would create a “pensions trap” in which, if officers work longer to avoid the actuarial reductions of the CARE scheme, they lose value in their 1987 scheme.
“[This is] mainly by virtue of not claiming it every month (that in itself is contrary to conventional pension wisdom whereby unclaimed pensions are normally actuarially enhanced), but also by reducing the commutation factor of their tax-free lump sum,” they explain.
“If officers retire at the NPA of the 1987/2006 scheme to realise their protected accrued rights, they lose value in the CARE scheme due to the large actuarial reductions. Either way they are worse off than older direct comparators.”
They further argue that the remedy would give rise to sex discrimination because of the way it interacts with maternity leave, and periods of part-time work in which women are disproportionately represented.
They contend that, while the remedy does remove the age discrimination introduced by the transitional protections introduced in 2015, it does not tackle the age discrimination arising from the move to the CARE scheme.
An illustrative example is used to show that, depending on how old an officer was when he joined the legacy scheme in 1987, the difference in the ultimate worth of their CARE pension could be as much as 33.3 per cent.
Reverse the changes
“We have always contested the only way to guarantee complete fairness and negate all forms of discrimination is to allow all officers to remain on their legacy scheme pensions until the normal pension age of those schemes. We remain of this view,” the officers wrote.
“The bulk of the saving in terms of police pensions comes from the 1987 scheme, and the last officers to join that scheme will be due to retire (based on the provisions of that scheme) in 2036. This is only a further 14 years.
“The savings made from the 2006 scheme are not as significant and, as is often pointed out, some officers on the 2006 scheme may actually be better off on CARE (hence the need for the deferred choice underpin).”
The officers argued that the government “should be able to console themselves in the knowledge they have successfully changed police pension provision for all officers with 10 years service or less, and as such will still make longer-term sustainable savings in public sector pensions”.
Cabinet Office opens consultation as McCloud challenges mount
The Cabinet Office has launched a consultation on how the McCloud remedy is to be implemented for members of the civil service pension scheme, while the GMB union has joined the list of those challenging it in the courts.
Additionally, they ask whether — when compared with changes to police pensions made in 2006 — where only new recruits were impacted, the 2015 reforms were “worth it”, given “the loss of confidence in public sector pensions, the lowest ever subscription rates, and the embarrassing and costly legal defeats”.
“Notwithstanding our belief that officers should be allowed to continue on their legacy pensions, we recognise HM government can legitimately change public sector pensions mid-term, but trust the intention of this consultation is to avoid yet further unfairness and discrimination,” the officers wrote.
“It is there we have a shared goal, and it’s in that spirit that we offer full explanations of where the unfairness and discrimination still persists within this new legislation.
“We also offer reasonable alternatives, which could be included in the police-specific regulations, to ensure police officers are not again bearing a disproportionate brunt of the cost of public sector pension reform.”
