The McCloud Judgement - What is it?
The McCloud judgement refers to the Court of Appeal’s ruling that the Government’s 2015 public sector pension reforms unlawfully treated existing public sectors differently based upon members’ age on the 1 April 2012.
The judgement came after two Employment Tribunals concerning the pensions of Judges’ (McCloud) and Firefighters’ (Sargeant) respectively.
In order for age discrimination to be lawful, it must be a proportionate way of achieving a legitimate aim. The Court of Appeal ruled that in these two cases the Government failed to demonstrate that the transitional protection arrangements were based upon a legitimate aim.
The key content of the judgment said: “We have found that in both the judges’ and firefighters’ cases the manner in which the transitional provisions have been implemented has given rise to unlawful direct age discrimination.
Across the summer NASUWT will be delivering a webinar regarding how the McCloud Judgement has affected Teachers' pensions and then we will follow up with a series of Wesleyan Webinars which will deal with the implications of the McCloud Judgement and how your pension options can affect the pension amount you receive.
The McCloud Judgement – NASUWT information
Those who have been in the teaching profession a while will remember that in 2011 NASUWT members took part in national strike action regarding the proposed changes by the coalition government to the Teachers’ Pension Scheme (TPS). NASUWT continued to fight against these proposals that were made between 2011 and 2015 and the main reason we opposed the changes was the increase in the pension age from 60 to 67 or 68.
In 2015 the Government introduced the reforms to public service pensions, meaning most public sector workers were moved into new pension schemes in 2015. For teachers, if you were in service before the 31st March 2012 then on the 1st April 2015 you were moved over to a transitional scheme which had a higher retirement age (67) and was a career average scheme rather than a final salary scheme.
In December 2018, the Court of Appeal ruled that the ‘transitional protection’ offered to some members of the judges’ and firefighters’ schemes, as part of the reforms, gave rise to unlawful discrimination. This enabled other public sector unions including NASUWT to revisit the issues.
A judgement was made that the changes to the TPS were indeed unlawful and therefore the Government have put forward a remedy. Whilst from the perspective of NASUWT it will have a positive effect on some of our members it doesn’t fully address the unlawful discrimination, as it only addresses one part of the scheme which is the transitional protections which covered teachers of a certain age range by delaying their transition from final salary to the career average scheme.
The message from the Government regarding the McCloud Judgement is that it is a solution to the age discrimination of the changes to the TPS and other public service pension schemes. NASUWT doesn’t agree with this statement as tens of thousands of our members are missing out on higher pensions because they don’t fall within the scope of the remedy.
The proposed remedy
If you were in service between 1st April 2015 and 31st March 2022 you are able to choose which pension scheme you want to be a member of. So you can choose to be in the final salary scheme (pre 1st April 2015) with the lower retirement age of 60, or the career average scheme (post 1st April 2015) with the higher pension age of 67/68.
The Government will write to every teacher affected by the remedy, starting with those that are nearing retirement age and working backwards.
Members of the TPS will also have a choice as to when they choose their scheme. There is an ‘immediate choice’ or ‘deferred choice underpin’. The immediate choice is as the name suggests, and the deferred choice underpin is an option whereby you choose to wait till nearer retirement age to see which of the schemes will give you the best yield.
The plan of remedy applies to around 3 million public sector workers and to exercise an informed choice then those people will have to access high quality, independent financial advice. If everyone instantly decided to opt for the immediate choice there would not be enough financial advisors to deal with the volume of customers. It is vital that financial advice is sought due to:-
- Taxation implications;
- Some members may have been refused ill health pensions as they didn’t fit the criteria of being ‘permanently unfit to work till pension age’ at that time, and now they would fit the criteria;
- Many people opted out of the scheme due to the fact it would not ‘pay out’ till they were 67;
- Divorcees could find that pension sharing orders could be affected.
To read more about the McCloud Judgement visit:-
To find out more about the ‘Public service pension schemes consultation: changes to the transitional arrangements to the 2015 schemes’ go to:-
Responses to the consultation can be submitted by email to PensionsRemedyProjectConsultation@hmtreasury.gov.uk
It would be very useful if our members could take the time to respond to the consultation.
Teachers' Pension Scheme
Because trade unions are prohibited in law from providing individual financial advice, the NASUWT is in partnership with Wesleyan, which provides members with financial advice on pension changes through personal face-to-face meetings or though ‘Planning for Retirement’ seminars that can be held at your school.
If this is of interest to you, please contact Wesleyan on www.wesleyan.co.uk/appointment.
The Teachers’ Pension Scheme (TPS) is one of the most important and valuable benefits available to teachers.
You are automatically enrolled in the TPS if you are a teacher in a state-funded school or college. A large number of independent schools and other private sector employers of teachers also enrol teachers in the TPS. Some supply teachers are also enrolled in the TPS.
If you are unsure about whether you are enrolled in the TPS, you should check with your employer.
If you need general information about the Teachers’ Pension Scheme, the most comprehensive source is the Teachers’ Pensions Member Hub.